Feel like punching the Valuer

[vluu28]

Hi All,

Quick question. Is it just me or are bank valuers deliberatly not giving proper market valuations.

I've got a 6 year old 4 bedroom double Garage (evaporative cooling etc) 156m2 property in Bundoora Victoria. I know its worth about 320-330k BECAUSE a property RIGHT NEXT Door with the SAME ..and I mean the SAME features(ie, 4 bedroom double garage, evaporative cooling etc) has sold for $345,000. It looks the same only the colour of the brick is different.

The valuer values the property at $290,000. I couldnt believe my eyes. He used comparable sales of properties that are about 5-10kms away, in a different time period, (end of last year) plus he compared mine to an old BUT renovated 3 bedroom which on the valuation he reckons is COMPARABLE to my 6 year old almost new 4 bedroom house.

In addition he thinks that the property is 119m2. I rang the council and they said it was 156m2. Unbelievable.

So i went back to the bank and told them why the valuation is wrong. Fingers crossed. Not sure what the bank will say.

Has anyone gotten similar issues or how do u overcome these undervalued valuations? What should i do next?

Your comments are much appreciated

Vinh

[Jacque]

Hi Vinh,

I can empathise with your situation. A similar thing happened to me on one of my valuations a couple of years ago. I composed a two page letter, which I faxed off to the valuer personally with sound and balanced reasons why I disagreed with his valuation.
I included different recent comparable sales and statistics to back me up. Some of the compared properties were also on busy roads, whilst my property was in a quiet cul-de-sac. It also helped that his initial report contained inaccuracies about the actual property (age of building, floor coverings etc) that I was also able to point out.
Remain calm. Put it all in writing logically and clearly. The biggest ball in your court is that house next door.
Remember that most valuers are conservative by nature. Their valuation is not necessarily a reflection on what you could receive on the open market (though it should be!) They are simply trying to protect their client's (banks) interests in case it all goes belly up.
Good luck!

[Aceyducey]

Could also be a typo :)

Cheers,

Aceyducey

[RightValue]

Vinh,

A quick question or two.

Was the house next door on the same size block of land. Is yours on a dual occ and the house next door on a full site?

Also how long ago did the house next door sell? Did you tell the valuer about this sale and give them the agents details so they can check it out?

It doesn't sound good that 119m2 was written down as I don't know any houses that small with 4 Beds.

As mentioned get the person who ordered the valuation to ring the valuer and challange it for you.

good luck

RightValue

[willair]

Vluu28,
What time frame are you talking with the saleS price
of the property next door,how long ago was the property
sold.this may be a different market in your area it is everwhere else..
good luck
willair.

[geoffw]

In addition he thinks that the property is 119m2. I rang the council and they said it was 156m2. Unbelievable.1. Is the valuer icluding only house area and not garage area? That's a definite area for discrepancy, especially if the garage is under the same roofline.

2. If you have plans, check it out on the plan. If you don't, go and measure.

[buyerforhire]

Vinh,

One sale does not nesessarilly set a market and a valuer would be loath to hang there hat on just that sale. In saying that, it does not mean that if the sale is directly comparable to your property that you should not try everything to pursude the bank to have the valuer 'relook' at his valuation. Are their any other sales in your area that may help your cause?

Geoff is right 37sqm is a standard size for a DLUG so check that with the bank as well as the ownership/purchaser of the property next door, were they from outside of the area and had little knowledge of the area?

Good luck!

bfh.

[vluu28]

Hi all,

Thanks for all your replies.

Answer to Willair:
"What time frame are you talking with the saleS price
of the property next door,how long ago was the property
sold.this may be a different market in your area it is everwhere else..
good luck"
The property is RIGHT next door. U step out of mine ..turn left and walk for 10 seconds and u r in front of the one that was just sold. It was sold EXACTLY May 26th 2004. It is identical in size and features.

To Right Value:
'Was the house next door on the same size block of land. Is yours on a dual occ and the house next door on a full site?
Also how long ago did the house next door sell? Did you tell the valuer about this sale and give them the agents details so they can check it out?"

YES i did and he didnt even want to hear it. He said "Well that property wasnt in my Database". Both properties are on full sites. No Dual occupancies in this street allowed. He used sales data that occured 7 months ago and mine was 6 weeks ago. Plus the proeprties he used are old and not even 4 bedrooms

Just frustrating because im missing out on equity i can use to finance another property.

Any other advise is much appreciated

[geoffw]

He used sales data that occured 7 months ago and mine was 6 weeks ago. Plus the proeprties he used are old and not even 4 bedrooms

Just frustrating because im missing out on equity i can use to finance another property.hen the boom was in full swing, I had exactly the same problem. I was forced to accept the bank's val of $500K when REA's appraisal was $650K.

Six months later the val I paid for put the value at $750K. (But bank policy meant that I could not use that val).

I've been waiting since March last year to get over that low val. I'm only just about to get use of the "real" increase in value.

Property is a long term thing.

As trite as it sounds, be patient.

[buyerforhire]

Vinh,

If you jump up and down enough and the valuer has been negligent in his duty, the bank will get a check valuation done.

Subsequent to that if the bank refuses to do another val, choose another valuer on the same bank panel (You may have to call a few and ask them if they are on xyz panel) and get them to do a valuation and tell them its for 'mortgage security purposes' talk to them first and sound them out about the area and sales occurring within.

Then if all that fails.........take Geoff's approach and wait! Or go to the possible expense of changing banks.

bfh.

[Corsa]

The property is RIGHT next door....It was sold EXACTLY May 26th 2004. It is identical in size and features.

YES i did and he didnt even want to hear it. He said "Well that property wasnt in my Database". Just frustrating because im missing out on equity i can use to finance another property.

Any other advise is much appreciated

Hi Vinh

I can appreciate that your situation is frustrating but effectively we are all faced with similar issues, and everyone I am sure has had there own challenges in negotiating with banks and valuers regarding the market value, and lets face it, the highest valuations always win right?

At this stage it looks like your options are:

go back to your bank and ask if they will consider another valuation and substantiate this with a one page summary of what you think the valuation is based on facts about your property and comparable sales.

ask the bank who is on there panel of valuers and approach a couple of these firms directly and commission your own valuation. Once you receive these and they vary favourably to your existing valuation, then take this back to your bank and see if they will consider the new valuation

refinance with another bank and provide the valuations you commissioned to give them an idea of value. This bank may take this into consideration in ascertaining what they will lend you

wait...wait until more than one similar sale has occurred in the area perhaps 3-6 months and then reproach your bank

Following on from buyerforhire, I just wanted to make the observation that it is unlikely that you could deem the valuer negligent in his duty as he has been commissioned by the bank to ascertain a fair market value taken into particular consideration firesale values for the property based on knowledge of the value of the other similar products in the current market and although Vinh may not like the outcome, the valuer has performed there obligations.

Good luck Vinh

Kind regards

Corsa

[Rolf Latham]

Hiya

Sale 6 weeks ago is probably the magic pill.

Wont be on the valuer generals' databse yet, so the valuer doesnt have easy access.

If you know your neigbour well, grab a copy of the contract and present to said valuer.

he/She isnt being negligent, perhaps a little slack but they can generally only use settled, registered sales

at

rolf

[buyerforhire]

jsut to clarify........I was not saying the valuer had been negligent but merely pointing out that 'if' it was viewed that he had you would have a better case.

The 'if' comes in the form of not using all available information to him and being lazy not to check out the sale you had mentioned to him.

[Corsa]

jsut to clarify........I was not saying the valuer had been negligent but merely pointing out that 'if' it was viewed that he had you would have a better case.

The 'if' comes in the form of not using all available information to him and being lazy not to check out the sale you had mentioned to him.

Hi buyerforhire,

I realise you didnt say that the valuer was negligent, but you pointed out that they might have been, I just made the observation that this would be difficult and probably not likely. More likely, if he had come in with a valuation greater than the market value and then a firesale was required and that price could not even be nearly acheived, then the valuer would have been negligent for asserting a higher valuer than what was acheivable...its a fine line

No worries :)

Kind regards

Corsa

[RightValue]

Vinh,

I agree with the others.

Although the sale was not on the valuers database, that means diddly squat. Every valuation fiirm in Melb has to maintian their own database and none is perfect. The valuer should have followed up on that sale. However it also needs to be supported by other sales evidence as well, as one piece of evidence in isolation does not necessarily a market make.

Your best bet is to hire another valuer and/or change lenders (armed with a val acceptable to another lender the bank may order another one).

goodluck

RightValue

[Peter 14.7]

Hum ok

I would avoid “going” the valuer.

WHY? You cannot win here.

If he changes that much, he is admitting his is wrong and/or incompetent.
In this case, the bank will never use him again. So he will not change equals NO WIN

If bank has instructed him to be conservative, he will cite professional this and that and market slowdown anyhow, again equals NO WIN

So provided Bank are not being conservative (and simply ask them in writing, you have to be truthful) offer Bank this.

They get a new valuation by another valuer from their panel on the basis the home next door is included (assuming it has settled and was an arms length transaction.)

If the new value is closer to your price than the first valuation price them you get new value for free. If not you pay and they go with the highest value.

Some risk but if you are very certain he has stuffed up you have nothing to loose except value fee and gain a potentially higher value.

Remember:

Art of War says “If you want to win a battle, allow your enemy an opportunity to escape or they will fight to the death” The valuer can claim data he didn’t have being too early and save face.

Regards Peter 147.

[vluu28]

I want to thank all for your input. Its been invaluable

Much appreciated

Vinh

[Les]

G'day Vinh,

Lots of good info already - from my experience, the later sales are "not yet available" (as Rolf - and others? - mentioned) creates the most common under-vals. I've had 3 "stuff-ups" in the last 18 months - two of them were low by 10% to 15% - and hadn't taken growth into account. I've heard it can take up to 3 months for settled sales to hit the databases - and, in a hot market, this leaves valuers at a disadvantage. It's then up to us to re-present comparables that we know of to plead the case.

Many on the forum say "be there when the valuer comes" - and that allows you to present your comps at the time of the inspection. I've never done that (I'm in Sydney, IP's are in Bne) so can't comment on how well it works. But some posts indicate that such comps can often be "well received" by a valuer if presented in the appropriate way (i.e. good-naturedly).

In my cases, I was successful in 2 out of the 3 occasions by presenting comps "after the fact" - yes, sometimes it was a bit of a fight, but the rewards were worth it. In the third case (18 months ago) everything came right with the latest val - but, like Geoffw, I had to wait a year when my remonstrations failed.

So, I say, go for it. Present the data re your next door neighbour, and also present data where you believe that the comps THEY used were inadequate, and why !! I think this needs to be presented via your lender (or MB) - and can be more beneficial when you get the lender "on your side".

By pressing the point that your lender may be "holding you back" by simply accepting the low val as it stands, and mentioning that you will not be "held back", this may bring them round - if they're wanting to keep you on board.... Then, again, they might just wish you luck....

2 out of 3 ain't bad ... Hope it helps, - by the way, the two successful "re-vals" were in the last few months (Jan, Mar) - but the market is turning..... Good luck.

Regards,

[qaz]

Can you threaten to pay off the loan and switch banks in protest?. That would ruffle a few feathers would it not?

[Ruby]

Can you threaten to pay off the loan and switch banks in protest?. That would ruffle a few feathers would it not?Actually, no...........it doesn't always. :(

We were in a very similar situation with some vals recently. They were actually ridiculous to a certain extent and we were less than happy.

We tried to argue the fact, threatened to walk but nothing would change their mind.

So we did walk.............they lost 5 of our loans, with not much chance of us giving them another go for awhile and we gained an extra 247K difference between the two valuations.

Sometimes it does pay to take your bat and ball and go elsewhere.




Ruby

[qaz]

So Ruby I take it by gaining $247 000 in equity for a few loan establishment charges was good business?. Do you think you got a more favourable valuation from the second bank based on the fact you were changing over because of it?. Did you ask the bank to value the properties and tell you their values before agreeing to switch?.