House Doctor: 'Our lender's report is less than the price we've offered. What can we do about it?'

Question: We've made a first-time offer on a flat in Leeds but our lender's surveyor report says it is worth £25,000 less than the £215,000 we agreed with the vendors. What do we do? Can we back out or should we reduce our offer? They're pretty eager to sell. We'd like to buy it but aren't sure what we can do. Any advice gratefully accepted.

PD, Leeds

Answer: The adage that a property is only worth what somebody is actually prepared to pay for it holds true – but it does help if you've got your lender on side.

You may well be happy to pay £215,000, and if you were a cash buyer able to pay upfront you'd already be the owner.

However, with a bank or building society on board to help you fund your purchase, their opinion matters rather a lot.

A significant so-called "down valuation" will affect the size of mortgage it's prepared to advance you, warns Melanie Bien of broker Private Finance.

"If you're aiming to borrow 90 per cent of the £215,000 cost, your mortgage would be £193,500," she says. "But with the lender's new £190,000 valuation, the maximum you could borrow would be £171,000 – leaving you to find the £22,500 difference."

While the surveyor's report has thrown a spanner in the works, all is not lost. Assuming you don't have a huge savings cash pile you can tap into to make up the shortfall, you've a choice: challenge the valuation or negotiate with the vendor to lower the price and resolve the matter.

"Don't necessarily assume the valuer's report is spot on – put the onus back on the agent," says Andy Montlake at Coreco.

"If they're selling the flat at £215,000, they should be able to provide comparable evidence of similar properties selling at that amount. If they can provide this to the lender, the valuer may re-consider."

If that fails, you can also ask for a more senior surveyor to review the original valuation: however, there's no guarantee of success and it will cost you more.

This route will certainly show the vendor that you mean business but, says David Hollingworth at broker London & Country, haggling may solve the problem much more quickly – and save you thousands.

The vendor may argue that the valuation is too severe, he adds, "but in the current market you as the buyer hold more of the cards and so you should certainly look to strike a deal and not pay over the odds."

Start by being frank with the seller: explain the problem, stressing that down valuations are common in today's market, and outline the revaluation options above.