Bad valuation house $ land 12km from BrisbaneCBD

[aramz]

Hey guys,

I have been sorting out a house and land package in Oxley Brisbane which is 12km from the Brisbane GPO. It is in a new estate of 130 blocks in an established suburb. Good transport links, right near Oxley train station and schools etc. A suburb with some good growth potential IMO. Although it did suffer quite a bit during the floods this new estate is raised well above the 100 year and 2011 flood levels as per council requirements with all new estates.

http://www.parkvueatoxley.com.au/location

I purchased a house and land package for 492k (375sqm 4x2) which is due to start in July (note: I originally purchased the last lot in stage 3 but due to bad soil I had to forgo this lot as the builder didn't want to touch it, in the next release I found a block in a slightly different locatiaon in the estate but unfortunately all lots were jacked up 12.5k+ !). Last stage of finance came through and a valuation from CBA came back at 470k! This definitely throws a spanner in the works. I will now decide to shop around for another lender and a better valuation or fork out extra to cover the bad val or move on to something different.

Any advice on what I should do in this situation. Do you think it is wise shopping around for another valuation considering I have just received a CBA bank valuation of over 20k below purchase price? I don't have much experience with bank val's so not sure if any others will come in on the mark or if various banks valuate differently and end values differ a lot?

I wanted this property because I am looking for Brisbane exposure. The fact it was a new property only 12km out from the CBD and I could get some good tax benefits with my mining wage appealed too me. I already have 2 development blocks (in perth where I am from) - one a future duplex (my owner occupied) and one a future triplex block which is negatively geared, both corner blocks.

Any advice or comments regarding similar experiences would be greatly appreciated.

Cheers

 

[Rolf Latham]

cant hurt to try some different valuers / lenders

20 k isnt a lot and is very much within standard spread

if your serviceabiity is ok, get your broker to try ANZ or WBC or STG, all of whm use the VMS network so your chances of getting the same valuer are slim

ta

rolf

 

[aramz]

Note: The bad valuation came from comparable sales where most comparable properties were older and there are also no completed houses in this new estate (ParkVue at Oxley) so nothing to truly compare the end value with.

I wonder if this valuer took this into consideration at all or just based his val on older properties nearby which wouldn't be in as nicer streets surrounded by totally new builds and park lands etc.

http://www.parkvueatoxley.com.au/masterplan

 

[Rolf Latham]

Note: The bad valuation came from comparable sales where most comparable properties were older and there are also no completed houses in this new estate (ParkVue at Oxley) so nothing to truly compare the end value with.

I wonder if this valuer took this into consideration at all or just based his val on older properties nearby which wouldn't be in as nicer streets surrounded by totally new builds and park lands etc.

http://www.parkvueatoxley.com.au/masterplan

a prudent valuer will look for comparable sales OUTSIDE the current development, and typically resales of 8 to 15 yr old stock is regarded as quite comparable.

I assume you have a copy of the val so you can see what comps were used ?

ta
rolf

 

[allsuccess]

I was in a similar situation with a re-finance with a certain lender. A different lender gave a higher (expected) valuation.

 

[Deltaberry]

If the valuer was so smart, he wouldn't be valuing.

 

[Trippy]

If the valuer was so smart, he wouldn't be valuing.

That's a ridiculous statement...the guy is obviously competent or he wouldn't hold the position.

If your doctor was so smart he wouldn't be a doctor?
If your local rocket scientist was so smart he wouldn't be a rocket scientist?

I would think intelligence (read smarts) would be a perquisite for most professions??

 

[perthguy]

If the valuer was so smart, he wouldn't be valuing.

That's a ridiculous statement...the guy is obviously competent or he wouldn't hold the position.
...
I would think intelligence (read smarts) would be a perquisite for most professions??

Having had many valuations done over the years for loans or re-financing, I certainly can't agree with your claim that a valuer is competent or would not hold their position.

In WA particularly, I have had trouble getting proper valations for a free standing house on a small block. The house is part of a development of 8 similar houses. The valuers keep comparing this free standing house to smaller units in strata developments, which are worth much less in this area. Last time I had it valued and the valuation came in quite low, the house behind in the same development sold for much more (even though it is smaller) and the house next door in the same development sold for more than that, even though it is much smaller too. There are plenty of incompetent valuers around.

 

[allsuccess]

I only had one bad experience with a valuer. I think he was very incompetent. He rang me and asked why I thought the property was expected that much. I gave 4/5 properties that are currently for sale (one is on the same street!). Then he sent his ridiculous valuation, about 25% less than what was expected.

 

[marg4000]

I only had one bad experience with a valuer. I think he was very incompetent. He rang me and asked why I thought the property was expected that much. I gave 4/5 properties that are currently for sale (one is on the same street!). Then he sent his ridiculous valuation, about 25% less than what was expected.

Anyone can list a property for sale for any price they like. I would think valuers would only take notice of actual sale prices.
Marg

 

[RyanMcHarg]

Is it possible for you to get the agent of the developer to provide sales prices for properties in the development that have sold that are of the same value as yours. If they haven't settled yet as it is a new estate, than the valuer would not be privy to the sales for these homes in the estate? If there is enough evidence to support the sales price than that would help the valuation to stack at the contract price for you......

Hey guys,

I have been sorting out a house and land package in Oxley Brisbane which is 12km from the Brisbane GPO. It is in a new estate of 130 blocks in an established suburb. Good transport links, right near Oxley train station and schools etc. A suburb with some good growth potential IMO. Although it did suffer quite a bit during the floods this new estate is raised well above the 100 year and 2011 flood levels as per council requirements with all new estates.

http://www.parkvueatoxley.com.au/location

I purchased a house and land package for 492k (375sqm 4x2) which is due to start in July (note: I originally purchased the last lot in stage 3 but due to bad soil I had to forgo this lot as the builder didn't want to touch it, in the next release I found a block in a slightly different locatiaon in the estate but unfortunately all lots were jacked up 12.5k+ !). Last stage of finance came through and a valuation from CBA came back at 470k! This definitely throws a spanner in the works. I will now decide to shop around for another lender and a better valuation or fork out extra to cover the bad val or move on to something different.

Any advice on what I should do in this situation. Do you think it is wise shopping around for another valuation considering I have just received a CBA bank valuation of over 20k below purchase price? I don't have much experience with bank val's so not sure if any others will come in on the mark or if various banks valuate differently and end values differ a lot?

I wanted this property because I am looking for Brisbane exposure. The fact it was a new property only 12km out from the CBD and I could get some good tax benefits with my mining wage appealed too me. I already have 2 development blocks (in perth where I am from) - one a future duplex (my owner occupied) and one a future triplex block which is negatively geared, both corner blocks.

Any advice or comments regarding similar experiences would be greatly appreciated.

Cheers

 

[Deltaberry]

I would think intelligence (read smarts) would be a perquisite for most professions??

Really? Haha

 

[aramz]

Thanks for the feedback guys.

Had a look at the valuation sheet and there are house similar that are valued at 479, 487, 495 and 509. They do have slightly larger land components and slightly larger houses. Majority are older and none are in the new estate.

Hey RyanMcHarg; have you heard of that being done before? Land agents passing on sales prices of similar houses in the estate to confirm the adequacy of the sale price?

 

[RyanMcHarg]

Hey RyanMcHarg; have you heard of that being done before? Land agents passing on sales prices of similar houses in the estate to confirm the adequacy of the sale price?

Valuers normally use RP Data or similar to ascertain values for a particular house. I have sold 7 or 8 development sites in an area which has just been rezoned in brisbane and the sales data that was in the system was for previously zoned Residential A properties as opposed to LMR. The majority of the development sites that I have sold were on a 6 month settlement, so when it comes time for valuations, the data isn't public knowledge as it hasn't gone through the titles office yet. In instances I have had to provide valuers with sales data for some of the other properties that are unconditional but not settled to show that the market is in fact at the higher value that a home has been contracted for. If there is evidence to contradict the publicly available information, it can be said that there is enough proof that the market is in fact at that value you contracted the home at.

 

[perthguy]

Valuers normally use RP Data or similar to ascertain values for a particular house.

But they have to know what they are doing and compare like with like. When I sold my unit last year, which was on almost 400sqm of land, a local agent (not valuer), used RPData to value my unit at $70k under market because he compared my unit (with land) to similar units with no land component. I know this because he provided the data extract from RPData, so I could see exactly where he went wrong. IMO it is wrong to compare a unit with a decent land component to units with no land component. I have seen valuers do this too.

 

[Holmes2012]

There is the concept of value for mortgage purpose; which is usually lower than real market value.

The maximum value when purchasing is the amount you purchase at, even where you pick up a very good bargain.

And the value is lower where you are seen as paying a premium above market value coz you want something too bad and are scared someone else will buy it.

Oxley - 375sqm land for 492k house and land package - i would think twice before signing off.

 

[MatC]

Think valuers can get a bad wrap, their is a set of standards that valuers have to follow, one of these is not being able to use developer sales. IE anything else in the estate that has not been resold after the initial purchase, which can make it very hard to find comparable sales evidence

The valuer needs to be able to back up the value, and unfortunately this can be a problem with new estates. I live down Oxley road towards town from this estate, and recently had a client with the same low val issue. Was easily fixed with another lender though. As valuations are always subjective... that house is better / worse the same and unfortunately valuers all have personal preferences like the rest of us.

 

[aramz]

There is the concept of value for mortgage purpose; which is usually lower than real market value.

The maximum value when purchasing is the amount you purchase at, even where you pick up a very good bargain.

And the value is lower where you are seen as paying a premium above market value coz you want something too bad and are scared someone else will buy it.

Oxley - 375sqm land for 492k house and land package - i would think twice before signing off.

So do you think 277k for a 375sqm block at the new ParkVue estate in Oxley isn't the best deal? The block price was raised 12.5k from the stage release beforehand as there was heaps of interest and land developer got a bit greedy imo.

In your opinion is $214,900 a fairly decent price for a small 4x2 turnkey package in Brisbane? I am from Perth so not as familiar with Brisbane house prices.

 

[Holmes2012]

So do you think 277k for a 375sqm block at the new ParkVue estate in Oxley isn't the best deal? The block price was raised 12.5k from the stage release beforehand as there was heaps of interest and land developer got a bit greedy imo.

In your opinion is $214,900 a fairly decent price for a small 4x2 turnkey package in Brisbane? I am from Perth so not as familiar with Brisbane house prices.

What does the cash flow look like on a likely rent?

$214k for construction sounds fair, depending on furnishing. It is the land value I am not sure about for a 375sqm.

 

[aramz]

Rent appraisal for $510 per week. I wonder how much insurance premiums for flood cover will be as a bit of Oxley was under water during the floods.

Probably slightly inflated land price due to being a new estate and having all the land agent advertising costs and other stuff built in to the price, purchasing in the final stage doesn't help either.

Not much available land to build on within this radius to the CBD.