Archive: 1 in 20 house prices are reduced after offer
(written on 8th August 2022) According to the latest index, average house prices have risen to £250,000 for the first time. With prices booming, figures also show that 1 in 20 house prices are reduced after offer. In this article, we discuss the dangers of overly inflated prices and Adam urges caution when offering too much for the property of your dreams.
Why 1 in 20 house prices are reduced after offer?
Adam Nanson, impartial Mortgage Broker at Your Mortgage Expert in Salisbury comments:
“Part of the process when applying for a mortgage is for the lender to carry out a valuation of the property. This is an essential check by the mortgage company to ensure that the amount of money the house buyer has offered for the property is in line with what it is actually worth.
“More and more, we are finding that the valuation reports are coming back with a “down value”. Meaning the valuer does not believe it is worth what has been offered for the property. And, when a property has been down valued, all the mortgage calculations have to be reworked.
“Added to this, we have noticed that nearly all the lenders have been looking very carefully at affordability. With the cost of living crisis many lenders have now factored higher prices into their affordability calculators which means it can be more difficult for people to borrow higher amounts.
“Our experience definitely reflects these latest figures that 1 in 20 house prices are reduced after offer. Many predict that this could be a sign of a cooling of the market. As house prices have reached a ceiling for what they are currently worth.
What does this means for buyers?
“Whether the market is starting to slow down or not, we would urge caution when making an offer on a house. When demand for houses outstrips supply, it can be easy to get carried away with bidding wars. Or offering more for a house because there are so few properties on the market.
“We would advise house buyers speak to a impartial mortgage broker who will take the time to assess your circumstances. We will let you know how much you can realistically afford and help you understand what sort of affordability calculations the lenders are likely to now make.”
If you have read this article about 1 in 20 house prices are reduced after offer and are interested in having a no obligation chat about your mortgage, why not get in touch? We don’t charge anything up front, so by speaking to us, you are under no obligation. We are based in Salisbury, Wiltshire, but we can help you no matter where you live in the UK.