Bank Valuation - how often high or low?

[ps0104]

Hi all

I apologise for what may seem like a pretty basic question to some, but I am pretty new to this game.

I'm in the process of buying a PPOR. The bank has ordered their valuation and it has come back spot on what we are paying - to the dollar.

Is this a fairly standard outcome? How often do valuations come back higher or lower than the sale amount? Should I be taking this as comfort that we are paying a fair price?

I find it a little strange that it has come back to the dollar. When they do the valuation are they saying "this is my opinion of what the property is worth, regardless of what your contract says" or are they saying "we've looked at what you are paying and we think it is about right"?

Thanks

 

[Singo]

Standard outcome. Even if the valuer thinks it is worth more, they will not go above purchase price. But valuations do come less than the purchase price.

 

[Richard Feynman]

Yeah, they're basically saying "Yep, they're not paying more than its worth".

I'd be surprised if anyone had had a valuation come back which suggested the purchaser has snagged a place well below its value. Thought it could happen. Anyone heard of this?

 

[D.T.]

Understand the difference between a purchase and a refinance?

For a purchase, unless there's something really wrong with it, valuation will be what ever figure is on the contract. Ie, if thats what someone is prepared to pay thats what it must be worth.

For refinance, val has to compare against similar properties and as such you may be (un)pleasantly surprised

 

[Shahin_Afarin]

There are a lot of valuations that have come back under the COS price. Places like Ipswich, Sydney Metro, Perth, etc. Be very careful with this.

Some lenders like ME Bank (if under a mil) and ANZ (on some occasions) will not order a valuation and just take the COS price.

A valuation will never come back higher than the COS price. The only time this can happen is with an OTP.

 

[Jamie M]

I've had the odd val come back higher than purchase price - the last was for an auction purchase.

However, the vast majority of the time they'll come back at purchase price.

Cheers

Jamie

 

[Richard Feynman]

I've had the odd val come back higher than purchase price - the last was for an auction purchase.

However, the vast majority of the time they'll come back at purchase price.

Cheers

Jamie

Were you able to borrow the difference, or just the purchase price?

 

[HD_ACE]

On one property I have had the valuation come back at 20k odd above contract price. I dont know why. Not otp. Not a favourable sale. Just a normal sale.

The rest have come in at contract price.

Cheers

 

[Terry_w]

Is this a fairly standard outcome? How often do valuations come back higher or lower than the sale amount? Should I be taking this as comfort that we are paying a fair price?

Very rare for a property to come in over purchase price. I had one last week, but first time in about 3 years (as a broker).

However, this doesn't necessarily mean you are paying the right price. If you had agreed on a much lower price the valuation would probably had come in at this amount too.

 

[Jamie M]

Were you able to borrow the difference, or just the purchase price?

Hi Richard

They went off purchase price for the auction property.

Had an off the plan valuation come in a bit higher recently too and were able to go off the valuation since the contract for the property was signed 12+ months ago. This reduced the LVR and subsequent LMI by quite a bit.

Cheers

Jamie

 

[jrc77]

Is it possible to get the valuation done without the contract price being revealed to the valued? I know normally the valuer would be instructed by the bank, but would there be a way through the customer ordered valuation process?

If there was a way to do it might be away to extract some equity upfront if you got a particularly good purchase price.

Jason

 

[Brady]

Also can have a valuation come back higher then the COS if the purchase was made 'not at arms length', which is when a property is sold without the involvement of a third party where the property likely wasnt shown to the open market.

 

[Rolf Latham]

Also can have a valuation come back higher then the COS if the purchase was made 'not at arms length', which is when a property is sold without the involvement of a third party where the property likely wasnt shown to the open market.

Most often on favourable sale from a relo we have found.

ta
rolf

 

[Richard Feynman]

Hi Richard

They went off purchase price for the auction property.

Had an off the plan valuation come in a bit higher recently too and were able to go off the valuation since the contract for the property was signed 12+ months ago. This reduced the LVR and subsequent LMI by quite a bit.

Cheers

Jamie

Cheers for the info Jamie.

 

[Terry_w]

Is it possible to get the valuation done without the contract price being revealed to the valued? I know normally the valuer would be instructed by the bank, but would there be a way through the customer ordered valuation process?

If there was a way to do it might be away to extract some equity upfront if you got a particularly good purchase price.

Jason

Yes it is. but they often ask for the contract and/or speak to the agent. Doesn't mean you cannot renegotiate price though.

 

[Colin Rice]

Had an off the plan valuation come in a bit higher recently too and were able to go off the valuation since the contract for the property was signed 12+ months ago. This reduced the LVR and subsequent LMI by quite a bit.

Also had a recent win for a client with a similar scenario. Glad I asked the question though or it wouldn't have happened!