Valuation over Contract price - Possible?

[the_captain]

Hello,

I'm wondering if anyone has managed to achieve a valuation in excess of what they paid for the property. Personally I have managed to achieve this once, and it is what I go for in every purchase that I make.

But I am wondering, is this a totally unattainable goal that I should just give up on?

The reason that I ask is that it will minimise the amount of cash I have to outlay and leave me with a nice chunk of equity from day 1.

It's certainly a good strategy (in theory)............but is it achievable? I am getting more and more discouraged.

[Aceyducey]

I wouldn't count on this as an ongoing wealth strategy, just as an occasional bonus.

The truest market value for a property is the price you just paid for it.

And banks & valuers are generally not comfortable valuing a property above a recent sales price unless there is a significant variance from the market.

There are techniques taught by some gurus to artificially inflate the valuer's valuation - however these generally involve fraud and deception & frankly put you at legal risk asides from ethical considerations.

Cheers,

Aceyducey

[the_captain]

I am aware of "contract stacking" and the like and I agree - let's not even go there.

I am also time poor so cannot add value by renno'ing in the short term, plus given the current market I doubt the return on investment is going to be much.

So the kinds of property I am after are ones that are below market with large land content and the scope to add value.

I CAN find properties that are below market in the area I am currently concentrating on...........I just can't get decent vals :-), due to the valuers "comfort factor".

[see_change]

Have had it happen once , but we had negotiated the price several months prior to arranging the finance , and even then the price was value was still probably 15 k under the market value at the time the valuation was done.

See Change

[the_captain]

It would be interesting to hear from some of the mortgage brokers on this phenominon. Is it something that happens rarely/never, occaisionally or frequently? Pretty obvious it's going to be rarely/never.........but I may be proven incorrect.

[juzz]

I just can't get decent vals :-), due to the valuers "comfort factor".

The Captain,

I think you've highlighted the problem here.
Its not just the Valuers comfort factor its the the lender's more importantly the market and many other influences are effecting the sentiment on values.

If you cant get a decent val, then buy at a better price, & if you buy at a better price, then the val will be less & the whole market is effected, then we go back round in the never ending circle and we dont do anything........

My opinion is to obtain better vendor terms in a softening market.
Whether its a fantistic price or 12-36 Month Settlement terms on an option.
You must be able to negotiate something better even if it isn't a better price.
And make sure you have backup capital to actually do the deal.

Below market or Valuation deals exist in nearly every market if you look long enough and hard enough, and structure & plan it well enough.

I see below Valuation & market deals all the time and the reason I see them is because they are dealing in multiples. Discount's are possible when your dealing in Volume. As always this is not for everyone.

Justin

[harrywyborn]

Dear Captain,

I have purchased a property in Jan this year For $150K and which the valuation came in at $230K. Only problem in QLD is that you have to pay stamp duty on the full valuation price of $230K, not what the contract has on it. But at the end of the day the extra few thousand in stamp duty was only a small hicup compared to the extra $80K in instant equity i purchased. Mind you i knew when i purchased it was a bargain, but was still surprised when the valuation came in, as we aasked the valuer to value the property down as much as he could, so we wouldnt have to pay as much on stamp duty. The Valuer told us that $230K was as low as he could go.....

So it will be interesting later this year once we renovate it and refinance it how much the valuer will value it at!!!! $300K++ I am hoping

These bargains are out there you just have to be patient and always looking and ready to pounce.