Advice please re: valuation!

Hi everyone,

A newbie first home owner here! Just wanted to firstly say thanks for all the brilliant advice and discussion on this forum. I have learned so much just in the last few weeks since I have been coming on.

My partner and I have just signed a contract of sale for our first home (so exciting!) We have had a building/pest inspection done which all came back great, now we're just waiting to receive unconditional approval. Our LVR is at 88%. The valuation is taking place in the next couple of days.

I'm feeling concerned about the possibility of a low valuation coming back, and subsequently our finance being declined.

I suspect that we may have offered an amount that is on the high end of what the property is worth. Probably because of the first home owner flurry. The asking price on the ad was $255+ but it became clear pretty quickly that this was just a low figure that the REA was using to drum up loads of interest. When we expressed interest, the REA was adamant that offers would need to be much higher, because there was such a high level of interest. I consulted with a number of friends of mine who are REAs and they agreed that the property was probably more likely to be more worth somewhere between $280K-$315K. The amount that we signed the contract for was $313,500. We love the property and were prepared to pay a bit extra to get it. There were multiple offers and the REA was adamant that we would only be able to submit one offer. The property is worth this much to us.....but I'm not sure that the valuation will come back as such...

My questions are, in the case of a low valuation...

1. Is the amount that the valuation needs to be equal to/greater than the sale price (in our case $313,500) or the loan amount (in our case $278K)?

2. If there is a 'small' discrepancy (say $5K-$10K) would the lender require you to contribute that extra amount in order to have the finance approved, or is that only when there is a major difference between the valuation amount and what you have signed the contract for?

3. Can you re-negotiate a price with the vendor to be the amount that the property is valued at, if otherwise your finance will be declined? The vendor seems very keen for our finance to be approved ASAP, as they are about to offer on another property.

4. Do you think that I am just being over-anxious, or do valuations in this price range often come back lower than expected?

Sorry about the ramble, thanks in advance!!
 
Last edited:
I'm feeling concerned about the possibility of a low valuation coming back, and subsequently our finance being declined.

I suspect that we may have offered an amount that is on the high end of what the property is worth.

The amount that we signed the contract for was $313,500. We love the property and were prepared to pay a bit extra to get it.


My questions are, in the case of a low valuation...




Sorry about the ramble, thanks in advance!!

Interesting that you are worried about a low valuation but admit you paid a HIGH price..

How come you are not concerned that you will not get a high valuation in line with your asking price???

Basically if you made the offer subject to finance and the valuation does not support you purchase price then the lender will require you to put in more money, or they will lend you the money at a higher LVR.

If you refuse to do that you will not get finance and the contract will be ended and you will get your deposit back.

Valuers do not crash purchases lightly. If they come in under purchase price then you have probablly paid way too much. Be thankful and look for something else.

You have become emotonally involved in this purchase which is not a good business practice.

Remember that the buy of the year comes around about once a month in property.

It does sound like you may have been played by the agent. A $255k plus asking price going for $313 doesn't sound right but you never know.

How's about giving us a bit more info...

What suburb, what have you bought? Is it a house or unit or townhouse, how large is it, how many bedrooms and bathrooms, what is the parking, how huch land is it on, is it on a main road, is it near transport? What would it rent for?

In answer too one of your questions... a price range is relative to the above factors.

good luck,

RightValue
 
I'm feeling concerned about the possibility of a low valuation coming back, and subsequently our finance being declined.
You should be concerned I'm sorry to say.

There were multiple offers and the REA was adamant that we would only be able to submit one offer.
Typical sales tactic BS. After you've been doing this a while you get to learn how to cope with that stuff - to your advantage.

1. Is the amount that the valuation needs to be equal to/greater than the sale price (in our case $313,500) or the loan amount (in our case $278K)?
You are only going to get 88% of what the valuer says it is worth.

2. If there is a 'small' discrepancy (say $5K-$10K) would the lender require you to contribute that extra amount in order to have the finance approved,
Yes - you can tip in the extra cash yourselves - if you have it. Or perhaps better to not do so - especially if the val is lower than your offer.

3. Can you re-negotiate a price with the vendor to be the amount that the property is valued at, if otherwise your finance will be declined?
You can try....does not always work though.:(

4. Do you think that I am just being over-anxious, or do valuations in this price range often come back lower than expected?
I'm noticing a lot of deals falling over on finance because of FHBs offering more than the property is worth just to secure the sale.

I hope you get what you want. There is no need to worry. The property will either value up or it won't. Nothing you can do by worrying. If it goes badly for you - then you learn the lesson for next time.
 
In a warm and rising market the comparative sales dont keep pace with the growth of the market, and in a slowing market the comparative sales dont hold as much value.

Id not worry just yet, wait for the val to come back and then see what the options may be.

ta
rolf
 
I was trying to figure the number of FHBs who buy a place, then inside of a year they're on a plane to somewhere for a holiday, and or a personal loan for a car, or talking about buying an IP (where most rarely do).

its gotta be heaps.
 
Thanks everyone for your replies.

Alas, I indeed become emotionally involved with this property. Very poor move!!! And being a FHB means that I am vulnerable to being milked by REA's which doesn't help my cause!!!

The main reason why my partner and I are especially keen for this property to come through is because it has a generous sized backyard. We have two dogs and have had heaps of trouble finding a unit that has anything more than concrete or decking out the back. And it meets our other requirements - 2 bedrooms, easy to maintain, in a quiet street, great location just off Eastlink (new freeway into the city), walking distance to train station, short drive to major shopping centre. And we have been looking for so long, it is so tempting to pay an inflated amount to get it.....sigh.

I hope it works out. But then again, I know in my head that it's unwise to pay more than it's worth. It will be interesting to see how the valuation goes. You're right, worrying doesn't achieve anything...and I should know the outcome of the valuation in the next few days anyhow....it's just hard waiting, I guess :)

Thanks again, everyone!
 
Hi New_to_all_this,
I would try to stress just a little less!:)
The thing is, you are competing with a whole lot of other FHB's. Most probably, these FHB's will also need to get finance, and if the val comes in low, it will come in low for them also (if they pay the same price) You can always use the finance clause to get out. You can then explain to the REA that the reason finance was rejected was because of the low val, and then ask if they would entertain the idea of a lower offer. After all, you have already gone through the process of getting finance/valuation so it would be quicker for them to sell it to you at a lower price, rather than some other FHB for a lower price who would have to wait the 97 weeks to get finance approval.
Hope it all works out for ya.

Boods:)
 
Just to let you all know, my lender contacted me today and let me know that the valuation came in at our offering price ($313,500). Awesome.

Another example of a time when I really could have just stressed less to begin with!!!

Thanks again for your replies.
 
Congratulations!!

And full credit to you - obviously you DID offer what the house was worth.

Most of us, if we are honest, admit to a few "but what if..." feelings when we buy or sell property. Buyers' remorse is well known within the real estate industry. As one agent said to us - "if the buyer feels he paid a bit too much, and the seller feels he did not get quite enough, then I know we have got it just about right.."

Well done!
Marg
 
Just to let you all know, my lender contacted me today and let me know that the valuation came in at our offering price ($313,500). Awesome.

Same here, in hindsight I reckon it's so you feel happy about the perceived value of your new house and it stops you ringing the bank back to hassle them about low valuations. I could be completely wrong though. :rolleyes:
 
the value of somthing, Anything, is priced at what one chooses to pay!
so if a two bedroom sat on the market for a million $$ and does not pay the price the value is not there, but if it gets offers around this price , the value is a million $$
So if the argument is a value figure, then its valued at what somone is prepared to pay, Comprend';)e
 
Back
Top