| Comment | I know what you're saying makes sense to you, but you're missing how the value plays into the market.
The valuation is not what the house will sell in a flat market with no multiple buyers or haggling.
People are paying over the value because they're trying to outbid each other. So if the house is valued at £210 people end up paying £250 to beat the competition. If you, personally, looked at the house and said - accurately - "this'll go for about £250", then it would go for £290 because, again, competition, and - boom - you've created runaway inflation in house prices.
Second to this is insurance and mortgages. These have to be dealt based purely on the value of the house, and not what people pay due to competition ... which, don't get me wrong, is a shitty thing, because if you've already tossed away £50k just to beat your competitors out, and then you only get a 75% mortgage on the rest, you're out a massive chunk of money. But the competition is not guaranteed - feasibly, if the stars aligned just right, you might not get anything over asking price - so the banks' responsibility to lend on tangible assets and not speculation comes up, and they can't give out money based on selling prices.
It isn't a great situation for us buyers, but I'm afraid that valuation = sale price isn't accurate and would make things worse. |
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