Bank Valuation came way less than expected

[allsuccess]

Hi all,
I wanted to re-finance my PPOR to release some equity but the bank valuation came way less (it was actually less than when it was valued 2 years ago ). Going by the sales around the area, it's clear (IMHO) that the valuer got it wrong. Valuation was done via a site visit as well, which is even more disappointing.

Has anyone challenged the bank valuations? (Reason to go with this lender is that I already have loans with them and they have competitive rates).

The other option is go elsewhere (e.g. Broker done a desk valuation with another lender and that came higher).

 

[Peter_Tersteeg]

Take the desktop valuation and go elsewhere. Long hard experience tells me that challenging the valuation is unlikely to give you a result that's much better.

Every broker will tell you the same story. Valuations are coming back conservative, despite plenty of evidence that the local market is increasing. Most of Melbourne has shown significant increases in the last 2 years but getting a valuer to recognize this is can be very difficult.

 

[depreciator]

I suspect the reason it's hard to challenge a val is that to do it successfully i.e. get the property value increased dramatically, the valuer would need to effectively say, 'Oops, sorry, I got that completely wrong. I'm such a dill. Here's a better one.'

 

[allsuccess]

Thanks for the replies. I guess it's how much the lender wants to keep the customer. e.g. Because the valuer under valued the property, the lender is going to loose the business. The loan amount is not that huge (< 500K) so lender probably wound't care.

 

[Jamie M]

I agree with PT.

Take the higher val and head off to the other lender.

Keep in mind that there are costs involved - discharge fee with current lender, state govt. charges (usually a couple of hundred) and possible application fees with new lender.

I assume there's no LMI involved? If so - then you'd be up for a new LMI charge which could make the option less appealing.

If you have paid LMI previously - any future equity release above 80% with your current lender would incur a small adjustment to the LMI fee you'd paid previously (so it isn't normally too expensive). By refinancing to another lender, you forego this.

All in all, if there's no LMI involved (now or later) than an external refi could be a good option.

Cheers

Jamie

 

[Evachange]

I had one client have a valuation come back at $361k and the following week using a different lender came back at $420k.

Challenging a valuation in theory is possible but I agree with the other posts that it's extremely unlikely you will have it changed.

Cheers,

 

[RetireRich101]

I was wondering if anyone had success in the scenario
ie, get a bank valuation from other lender that is higher, but able to negotiate current/existing lender to use the higher valuation that was order by another potential lender?

 

[Aaron_C]

I suspect the reason it's hard to challenge a val is that to do it successfully i.e. get the property value increased dramatically, the valuer would need to effectively say, 'Oops, sorry, I got that completely wrong. I'm such a dill. Here's a better one.'

^^ You can always count on human nature.

 

[Peter_Tersteeg]

I was wondering if anyone had success in the scenario
ie, get a bank valuation from other lender that is higher, but able to negotiate current/existing lender to use the higher valuation that was order by another potential lender?

I'm not aware of any lender who will accept another banks valuation.

In a lot of instances even if you successfully challenge a valuation and get a better result, the banks policy will only allow them to take the first result.

I could go on all day about the strange policies of banks and valuations...

 

[Jamie M]

I could go on all day about the strange policies of banks and valuations...

and scuba diving

Cheers

Jamie

 

[tobe]

I was wondering if anyone had success in the scenario
ie, get a bank valuation from other lender that is higher, but able to negotiate current/existing lender to use the higher valuation that was order by another potential lender?

a couple of times, pre GFC.

 

[Aaron_C]

I was wondering if anyone had success in the scenario
ie, get a bank valuation from other lender that is higher, but able to negotiate current/existing lender to use the higher valuation that was order by another potential lender?

The best thing you can do is just get the valuation that suits, and then choose that same valuer again with a lender that allows you to choose the valuer (assuming they are on the panel). Then it's a done deal.

 

[Marty McDonald]

The best thing you can do is just get the valuation that suits, and then choose that same valuer again with a lender that allows you to choose the valuer (assuming they are on the panel). Then it's a done deal.

you could wait 3 months if you have time and hopefully get a different valuer ...unless its one of the rare lenders who use the same valuer every time

 

[Aaron_C]

you could wait 3 months if you have time and hopefully get a different valuer ...unless its one of the rare lenders who use the same valuer every time

Not uncommon in that situation to cancel the valuation and start again and hope the russian roulette of Valex/VMS chooses a different person.

 

[Spectre]

You should be able to use another banks valuer with macq and they'll get it redone with the same valuer or reassigned..... IF as they are on the macq panel. Which is usually valex. A copy of the report is required not just heresay.

Never tried it though - last val we had macq valer came in 40k higher than anz on a full.

 

[allsuccess]

Thanks, checking few things. I'll let you know how I go.

 

[jimlenno]

This happened to me before, since I didn't want to change lenders, I commissioned one of the banks other valuers, they were on their approved panel. As I was paying for the val I was able to get a realistic result. When I went back to the bank manager, they not only agreed to take the new much higher val, but also paid for the new valuation report.

jim

 

[rabidz]

you could wait 3 months if you have time and hopefully get a different valuer ...unless its one of the rare lenders who use the same valuer every time

My last valuation (with this Bank) is in May-13 (loan settled in July-13).
I plan to refinance using the same bank at the end of this (probably Nov-14).

Is that long enough to increase the valuation (perhaps due to significant increase from last year to this year)?
Any thought would be much appreciated.

Thanks.

 

[allsuccess]

Given my experience and feedback from others, be prepared to shop around.

Also, when I bought a property couple of years ago, at the time of purchase, the bank valued the property more than the purchase price . Then I thought, oh great, I'm going to get some equity out and started a re-finance process. Then the bank (same bank) valued it to the original purchase price. Re-finance didn't go through.

 

[allsuccess]

This happened to me before, since I didn't want to change lenders, I commissioned one of the banks other valuers, they were on their approved panel. As I was paying for the val I was able to get a realistic result. When I went back to the bank manager, they not only agreed to take the new much higher val, but also paid for the new valuation report.

jim

Good stuff Jim !