What went wrong?

Unfortunately, this is fairly common – the mortgage valuation survey takes place on the house you’ve put an offer in for and it comes back as zero.  Worthless.   This hasn’t happened to me, but it has happened to a friend of mine.  It does not mean that the property is worthless of course, but that the lender is unwilling to lend any money against it.  Usually because of a issue that the surveyor has uncovered.  

When you apply for a mortgage, the lender values the property to ensure that it is lending against the right value.  This may take three forms. 1/ They value it from the comfort of their desks.  Looking at similar properties sold in the local area.

Picturesque small stone cottage

2/ They do a ‘drive by’ valuation from the outside of the house. Again, using local area data to establish the value.

3/ They make an appointment and view the property inside.

The latter is generally used when the property is older, and a

more thorough valuation is needed.

Note that a mortgage valuation survey does not replace the survey that you should obtain yourself.  

 

What he had to do

The first thing to do, is to find out why the valuation is zero.  There is generally a reason that can be fixed.  In the case of this example, the property was old, and the roof beams were not deemed in good condition, risking the roof collapsing and taking the rest of the property with it.  You can see why the lenders were nervous and wouldn’t lend.  

A discussion took place with the seller, through both conveyancers.  The seller was asked to ensure that the roof was fixed, ensuring that the beams could support it, ensuring that the property could then be mortgaged.

3D grey wooden table, with a grey sopfa and background in Berkshire

Although obtaining a mortgage is the buyers concern, it is in the seller’s best interest to get any issues like this fixed as most buyers will need a mortgage.  If the property is un-mortgageable, then the seller reduced the number of people who could buy and usually must decrease the asking price to attract investors willing to do the work themselves.  

After the work was completed, the mortgage lender was informed and sent a surveyor to re-value the property.  The mortgage valuation was successful, and the mortgage granted.  

Although the mortgage was eventually provided, clearly this added both time and stress to the process.  Moving home may not be as straight forward as you think.  

 

Lessons Learned

  • Get the mortgage valuation done as early as possible after your offer has been accepted.
  • Make sure that you get your own survey completed.
  • Do not spend money on instructing the conveyancing searches and survey until the mortgage valuation survey has been completed and the mortgage offer received.
  • If the mortgage valuation is zero, find out the issues and go back to the seller to ask them to complete the work. If they refuse, walk away.
  • If the seller is wiling to complete the work, ensure you agree timescales and communicate this to all parties in the chain.

 

I hope you found this article useful.  Have you ever received a mortgage valuation of zero?  If so, why and what did you do about it?  I’d love to hear.