Down valuations highlight the importance of No Sale, No Fee conveyancing

Posted 24/07/2018

An increasing number of properties are being valued at less than the amount that buyers have agreed to pay for them resulting in property chains becoming more and more fragile.

The scale of down valuations is now thought to affect up to one in five sales, compared to two years ago whereby the same issue would only impact one in 20 sales, online estate agents emoov reports.

What is a down valuation?

A down valuation occurs when the property is valued at a lower amount than the buyer has agreed to pay for it. This commonly occurs when the mortgage provider completes a survey on the property. Typically, a surveyor will look at the sale price of other comparable properties locally, market conditions and the specific condition of the property in question. The surveyor, employed by the mortgage provider (and in this instance separate to a surveyor that the buyer may have contracted to ascertain the condition of the property) may deem the property to be worth a lower value than what the buyers have agreed to pay for it.

This means that the mortgage provider would only lend on the value of the property as determined by their surveyor, and any difference between the purchase price and the amount the buyer can borrow as mortgage and fund by way of deposit either needs to be renegotiated as a new selling price of the property, or the buyers may have to fund this difference themselves by finding additional monies. Failing either of these, then the property transaction would fall through.

Down valuations can affect anyone purchasing a property that requires a mortgage but are more typically seen in instances where the buyer has a lower deposit and is therefore relying heavily on the mortgage, or where significant renovations have been completed to the property.

The importance of no sale, no fee conveyancing

With up to 20% of properties being subject to a down valuation, the effects can ripple through the entire property chain should a solution not be implemented. This is thought to directly impact the number of property transactions that fall through as a result. Figures from Rightmove last year suggested that 30% of property transactions fall through and the numbers may only increase as the number of down valuations increases.

Although it is hard to prevent a down valuation from occurring, those looking to buy or sell a property can protect their interests through using no sale, no fee conveyancing to ensure that should their property transaction go abortive through a down valuation in the chain (or for any other matter) they do not have to pay the legal fees associated with that transaction, potentially saving hundreds of pounds. Those selling or purchasing a property without a no sale, no fee promise in place may find themselves having to pay up to 75% of the legal fees they were quoted should their transaction fall through, creating additional stress during an already difficult time.

To find out further information on Holmes & Hills Solicitors No Sale, No Fee conveyancing solicitors or to obtain a quote for your conveyancing needs please contact us on 01376 320456 (Braintree) to find out how one of our five offices can help you.


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