Auction Valuations "market value"?
- Thread starter SYDB
- Start date
I guarantee you it will. Even at your bank.
They will perform a new valuation and the valuer will value as per the contract of sale.
Ther are alot on this forum that deal with valuers every day and believe me if the purchaser goes through your bank whoever that may be, the deal will go through with no issues at all
No, it wont.
I have had it confirmed by more than one person at the bank.
So, either the bank (CBA) are telling me porkies, or you are incorrect.
I asked the specific question to a lending manager (the one who got me my pre-approval) and an unrelated branch manager. They both confirmed the valuation of the outsourced valuer is what is used. They WILL NOT consider price at hammer.
You can query the valuation, but whatever the valuation is, is what the bank will lend against. It is their new credit policy.
I don't see why it's so surprising with prices clearly in a bubble, the banks are just protecting themselves against the tomfoolery of over zealous buyers out of touch with reality who have been whipped into a frenzy by innacurate media reporting of the housing "shortage".
I have had it confirmed by more than one person at the bank.
So, either the bank (CBA) are telling me porkies, or you are incorrect.
I asked the specific question to a lending manager (the one who got me my pre-approval) and an unrelated branch manager. They both confirmed the valuation of the outsourced valuer is what is used. They WILL NOT consider price at hammer.
You can query the valuation, but whatever the valuation is, is what the bank will lend against. It is their new credit policy.
I don't see why it's so surprising with prices clearly in a bubble, the banks are just protecting themselves against the tomfoolery of over zealous buyers out of touch with reality who have been whipped into a frenzy by innacurate media reporting of the housing "shortage".
Sounds like a major case our sour grapes to me
Hi everyone, long time lurker , just wanted to clarify this one.
I think SYDB is confusing the bank's policy with the valuation process. What has been said is that the bank will commission a valuation and that valuation will now come back at auction price. The bank does not accept auction price, they look at what the vauation is, but as other posters have pointed out, the valuation will now be the hammer price. The prior valution did not have current up-to-the-minute sales data to compare to.
Thunderbolt
I think SYDB is confusing the bank's policy with the valuation process. What has been said is that the bank will commission a valuation and that valuation will now come back at auction price. The bank does not accept auction price, they look at what the vauation is, but as other posters have pointed out, the valuation will now be the hammer price. The prior valution did not have current up-to-the-minute sales data to compare to.
Thunderbolt
No sour grapes, simply conveying what I was informed by CBA.
Ask them yourselves, don't take my word for it.
I was never going to buy the thing for anywhere near the hammer price, although I do find the price, somewhat, well, concerning.......you work in the RE industry Andrew?
I was specifically informed "the hammer price is not relevant".
They value based on recent sales in the area. The value on Friday pre-Auction is the same as value Monday post auction, using recent historical data.
That is what I was told. If it was incorrect, it was incorrect. As I am not purchasing at auction in future it does not concern me, but of course you are welcome to make your own enquiries, as I made mine.
I'm just passing on information given to me by the bank, not trying to burn anyone. If they tell you different, you can proceed with comfort knowing hammer price will always be price and bid to the moon. Based on what I ws informed, I could not do that.
Cheers
SYDB
No I don't as I wont be purchasing at auction in future. If I was, I would certainly make further enquiries, but to be honest I'm very happy to have made that decision.
I think that's not a bad move.
I've bought 5 RIP's in inner city Melbourne in the last 5 years, and they have all been bought either passed in after auction, or, just before auction.
The trick with this though is to buy when D+G is at it heighest, and no-one else wants to buy!
Here, quality properties in ''auction suburbs'' may pass in, whereas in boom times they will almost certainly sell beyond expectations at auction.
Avoid the hysteria, don't buy at auction!
This isn't that hard:
(a) Banks will require a val for purchases, including auctions. The only exception is if the proposed borrowings are under a given LVR and even that is rarer than it used to be.
(b) The valuer will give their professional opinion. That opinion may match the contract/auction number or it may not.
(c) If their opinion reflects a lower number than the contact/auction price, in almost all cases, this will be the number the bank will use.
(a) Banks will require a val for purchases, including auctions. The only exception is if the proposed borrowings are under a given LVR and even that is rarer than it used to be.
(b) The valuer will give their professional opinion. That opinion may match the contract/auction number or it may not.
(c) If their opinion reflects a lower number than the contact/auction price, in almost all cases, this will be the number the bank will use.
Unfortunately this is one of the drawbacks with the auction process when you are not able to extend yourself to the 'market value' when its sold under the hammer.
1) You are right with regards to lending to the valuation.
2) Normal margins apply in this area, ie. 95% lend max, therefore if you don't have the shortfall you cannot purchase the home
3) After the auction, for lending criteria to be satisfied a valuation can be ordered - not in your case when you have one, but after the fact to confirm the value for those that know they can purchase but require some funds 80% and less.
4) Valuers now know what the market believe it is worth, and can have confidence to find the similar value.
5) If the valuer cannot bring up the valuation ie. the purchasor overpaid, it is up to the strength of the buyer whether they have the funds available to purchase the home
6) If the difference is more than 5%, the bank may ask you to sign a disclaimer which alerts you to the fact of a possible over pay.
Conclusion, 1) Pre-auction valuations will almost always not stack up to the amount paid. You have to be in a strong position to exceed this value. So you are right, the lender will only go to the valuation. However pre-auction valuations and post-auction valuations could be different - very different.
Perspective, I had a phone call from a valuer today asking me, what is the strength of the customer - I just said 'the goods' suddenly the valuation STACKS UP. Valuations are not always objective, but subjective too.
1) You are right with regards to lending to the valuation.
2) Normal margins apply in this area, ie. 95% lend max, therefore if you don't have the shortfall you cannot purchase the home
3) After the auction, for lending criteria to be satisfied a valuation can be ordered - not in your case when you have one, but after the fact to confirm the value for those that know they can purchase but require some funds 80% and less.
4) Valuers now know what the market believe it is worth, and can have confidence to find the similar value.
5) If the valuer cannot bring up the valuation ie. the purchasor overpaid, it is up to the strength of the buyer whether they have the funds available to purchase the home
6) If the difference is more than 5%, the bank may ask you to sign a disclaimer which alerts you to the fact of a possible over pay.
Conclusion, 1) Pre-auction valuations will almost always not stack up to the amount paid. You have to be in a strong position to exceed this value. So you are right, the lender will only go to the valuation. However pre-auction valuations and post-auction valuations could be different - very different.
Perspective, I had a phone call from a valuer today asking me, what is the strength of the customer - I just said 'the goods' suddenly the valuation STACKS UP. Valuations are not always objective, but subjective too.
Wow! Never heard of this before.
This used to be very common when dealing with 2nd tier lenders and brokers.
If I needed to push a figure to make the deal work, it was a question I would always ask ... as well as what is the LVR .. usually it was just a small push to get it under 80% LVR; but if the borrower wasn't solid financially I wouldn't take the risk.
Mind you a lot of this would have been avoided if the brokers wrote down a realistic estimate of market value rather than customers estimate plus $50k, so I did/do ignore this figure.
Nowadays Valex stands between us and the brokers mostly so we don't get these situations - once you submit a valuation through valex it is very very very difficult to change it without a good reason.
cheers,
RightValue
