House prices may be rising, but 46% of properties have been down valued since March

Negotiating house prices is more important than ever, as new data reveals a huge proportion of homes is being down valued by lenders

house prices: couple browsing online
(Image credit: Getty)

As UK house prices continue to rise, seemingly with no end to the hikes in sight, property sellers should pause for thought before raising their house price automatically. New data from a survey of 1,000 UK buyers commissioned by Bankrate UK is showing that 46 per cent of those who put in an offer on a house since the March lockdown have had their prospective home down valued. 

What is a down valuation? This is when a mortgage lender values the property as being worth less than the price agreed between the buyer and the seller. Very sadly, the cost of the down valuation is passed on to the buyer not seller, and if the buyer isn't able to renegotiate the price, they will lose their mortgage offer altogether. 

In fact, the survey demonstrates that the buyers most vulnerable to down valuations are the younger ones, especially people aged 18-34: a whopping 50 per cent in this group have received a down valuation since March. Unsurprisingly, buyers aged 18-24 received the most substantial down valuations, with 33 per cent of buyers in this age group receiving markdowns of £20,000-£30,000; 30 per cent of 25-34-year olds admitted to having their property devalued by £10,000-£20,000, while for buyers over 45, the majority of down valuations were between £5,000-£10,000. 

The youngest buyers were also most at risk of losing the property altogether because they couldn't cover the extra costs that come with the down valuation. However, slightly older buyers also can find themselves in a dead-end situation if the owner refuses to reduce their house price following the down valuation. Sam, a 30-year-old software engineer from Essex, told Bankate UK: 

'In August I attempted to buy a semi-detached property in Billericay Essex for £450,000. My offer was accepted by the seller but following a survey from my mortgage lender, the property was devalued by £50,000. As the seller was unwilling to reduce their asking price, I subsequently lost the mortgage offer and the property, as I was unable to increase my house deposit to cover the cost of the devaluation.'

Fortunately, Sam's case is not the most common outcome of renegotiating the house price following a down valuation. Most sellers are unwilling to lose their buyer and do typically agree to reduce the house price to cover the costs of the down valuation. It turns out that of the buyers surveyed, only 33 per cent asked their seller to reduce the price, and yet – 72 per cent of those who did ask had their offer accepted. 

This entire data set highlights the importance of negotiating house prices. Younger house buyers may believe that it's awkward or rude to haggle for a better house price, but, as this study shows, it could cost you your mortgage. Especially if you're buying an expensive home of over £400,000 in value, you should be able to negotiate; if the seller refuses, this may be your cue to move on in your property search.  

Read more:

Anna is a professional writer with many years of experience. She has a passion for contemporary home decor and gardening. She covers a range of topics, from practical advice to interior and garden design.