Mortgage down valuations rising due to sellers 'trying their luck'

Mortgage down valuations are being driven-up by sellers trying their luck and ignoring their estate agent’s advice, a broker claims.

Analysis by online broker Mojo Mortgages found that the rate of down valuations on purchases was 12.8% in April 2022, up from 10.4% for the same period last year but down slightly from a high of 14% in November 2021.

Richard Hayes, co-founder of Mojo Mortgages, said this doesn’t suggest a property market crash is on its way but is a sign of the low levels of supply and buyers being willing to pay above the odds to secure a home.

He also suggests that sellers could be to blame for seeking higher prices than what an agent recommends.

Hayes said: “Devaluations are sometimes seen as a precursor to a price crash, and this fuels headlines, but our data is not showing this to be the case. It is more likely to be people trying to take advantage of a buoyant market and not quite getting it right.

“The property market has seen unprecedented demand over the last couple of years, with month after month of record price rises. 

“This level of demand means that, in my opinion, some sellers are trying their luck and setting a selling price higher than estate agents recommend. With some properties, like three-bed homes, in such high demand, sellers are trying to see what they can achieve. 

“With supply of new homes onto the market still well below demand, buyers are also willing to pay more for a property because of the lack of similar alternatives.”

He suggested it could still be worth buyers increasing their deposit, challenging valuation decisions - especially if a desktop valuation was conducted - or negotiating a new price.

Hayes added: “If a seller has already found another property, they may be more willing to negotiate so they can move forward with their own purchase. 

“Being able to show evidence of similar sale prices in the area could also help to encourage a seller to lower their asking price.”