Bank valuation low, what do i Do?

[Mrman]

I have been told by the bank that the property I want to purchase for $200,000 is only valued at $180,000. They will lend me 95% which is $171,000which means I need to come up with the difference plus costs which is 29k plus costs. I have 30k at the moment but I wasn't expecting the valuation to be that low. Stamp duty will be about 10k (SA) so I'm about 10k short.

Settlement is in under 3 weeks.

What are my options?


George

 

[JIT]

I have been told by the bank that the property I want to purchase for $200,000 is only valued at $180,000. They will lend me 95% which is $171,000which means I need to come up with the difference plus costs which is 29k plus costs. I have 30k at the moment but I wasn't expecting the valuation to be that low. Stamp duty will be about 10k (SA) so I'm about 10k short.

Settlement is in under 3 weeks.

What are my options?


George

Credit card cash advance 10k?

No-doc/lo-doc loan for the 10k?

Move in and get a FHOG?

 

[want2bewealthy]

I personally wouldnt buy a property for 200k if its only valued at 180k, maybe thats just me though..

 

[JIT]

If you used a subject to finance clause or some other clause, you might be able to exit the contract or even re-negotiate the purchase price based on the bank valuation, but if the contract has gone unconditional you will need to find that 10k from somewhere I would think.

 

[Mrman]

Yes I know what you mean w2w but the reason the valuation is low is because it is in an ex housing trust area.
It's a solid brick 3br house on a 940m2 corner block and most of the houses around it which were mainly maisonettes) have already been knocked down and are being sold as 450m2 blocks with H&L packages.
A renovated maisonette down the street went for 185k.

This house was bought by the current owner 5 yrs ago and basically just rented out. No renovations. Not even a coat of paint and tennants are paying very low rent. I'm sure with only a few days work on it it would easily be valued at 200k

I'm sure it will be worth a lot more in a couple of years time when 90% of the houses around it will be brand new.

 

[JIT]

Talk to the valuer and explain to them why you think the valuation should be higher by using examples of comparable sales, or get another bank panel valuer to do another valuation ASAP.

Ask the current owner if you can spruce it up in a couple of days THEN get the valuer to go in.

 

[twobobsworth]

Cash advance on the credit card until you can establish an LOC or personal loan with a lower interest rate for the longer term.

 

[steveadl]

I have been told by the bank that the property I want to purchase for $200,000 is only valued at $180,000. They will lend me 95% which is $171,000which means I need to come up with the difference plus costs which is 29k plus costs. I have 30k at the moment but I wasn't expecting the valuation to be that low. Stamp duty will be about 10k (SA) so I'm about 10k short.

Settlement is in under 3 weeks.

What are my options?


George

George, the problem is the market up there is moving quite fast at the moment. So whilst your price of $200k is about right, the recent sales that the valuers would be looking at would still be around the $180-190k level, hence the value they gave you.

I'm actually surprised they didn't value it a bit lower to be honest.

It sounds like a good one to me, especially as on a corner and you can hopefully get three on the block?

Can you get another smaller loan to cover the shortfall, eg. from family, or small personal loan?

 

[JustALearner]

Sorry to take this a little off topic, but i was told by my broker some time ago it isnt usual for a bank to release its valuation on a house.

Is this only true if the house is valued >= purchase price? But if its valued lower than the proposed purchase price they tell you what it is valued at?

From what I've heard, a bank valuation from some banks simply involves them driving past the house to check it is there and is in a solid state. Is this true?

 

[Mrman]

Well I do have a credit card with a $5000 limit plus a friend of mine owes me some money. I will speak to him tonight.


I can't really borrow from parents as they don't have much more room to move with their LOC. Maybe a couple of thousand from them at most.

Conveyancer has just told me costs should be about $7000 so I need to come up with 6000. I just never thought of using the credit card.

Thanks
George

 

[steveadl]

Using credit card would'nt be ideal, but if you can pay it off fast then I think it's still worth it when the other alternative is losing a good deal. With $5k available on card and the few other sources you mentioned, you should be able to pull it off.

 

[JIT]

Conveyancer has just told me costs should be about $7000 so I need to come up with 6000. I just never thought of using the credit card.

Thanks
George

I actually had to use 3 credit cards for up to about 7-8k total to get me across the line on my very first property, which needed some renovation (cost more than I thought!) before being put on the market for rent. I paid it down pretty quickly though over about 4 months or so (bit of a struggle at the time, but I got through it eventually), so didn't incurr very much interest on that amount. Have since reaped the rewards on that purchase with huge rental increases and capital growth .

 

[landlubber]

Mrman,
If I was you I'd be talkng to other banks now ( they all have different valuers, they all have different rules etc etc ) or go and talk to a good broker and explain the situation.

If you have other loans (PPOR or IPs) ...you can say " I'll switch over to your bank, but I need a valuation of $200K on this new purchase".

It's ALL negotiable. Currently ANZ and Bank of Qld. and Bankwest seem to be pretty keen to do deals.

Good luck. Get on your bike !
LL

 

[jingo]

Mrman,
If I was you I'd be talkng to other banks now ( they all have different valuers, they all have different rules etc etc ) or go and talk to a good broker and explain the situation.

If you have other loans (PPOR or IPs) ...you can say " I'll switch over to your bank, but I need a valuation of $200K on this new purchase".

It's ALL negotiable. Currently ANZ and Bank of Qld. and Bankwest seem to be pretty keen to do deals.

Good luck. Get on your bike !
LL

Unfortunately I don't think it is so easy to renegotiate a valuation. The valuer sets the valuation in line with recent comparable sales in the market place, not as a result of a customer's negotiation skills!

 

[redsquash]

Can the bank prove it was valued properly.
Dont be so sure it was valued by a valuer.
I would want some detailed information or move to anopther Bank
My land was valued after an inspection, at $10,000 less than my expectation.

After I was told the value , I informed the bank, that
since the land wasn't pegged,
that access to the estate was barred
and they had not inspected the land due to heavy machinery in use
that there valuation was faulty.
The bank changed there valuation and agreed with me

 

[Peter_Tersteeg]

Negotiating with valuers is very tough, they want hard evidence that they undervalued the property.

Keep in mind they're paid regardless of the result and that if they overvalue the property they're potentially exposing themselves to liability. Whilst most valuers are very reasonable people and are willing to discuss their decision, there's almost no incentive for them to increase a valuation if they don't think it's worth that much.

I'd approach a different lender who uses a different valuer.

 

[mystery]

We recently had refinancing done to all our IP loans into a LOC structure. We had valuations done on all our properties which was fine until we hit our Elizabeth South duplex half.

I purchased just over 12 months ago for $105,000, ..... the valuer came back with $110,000 .... I was speechless, ...... the cheapest you can buy at the moment is around $150,000 and they are flying out the door.

I contacted two r/e agents and got them to email me recent sales records for like kind properties for the past couple of months and I passed them onto the valuer which showed that it should be valued around $135,000 - $140,000 at least. Well the valuer upped the valuation to ..... wait for it ... $115,000 .....

We just had to let it go as the valuer would not listen to reason. Overall we have gained so much growth in the portfolio that it wasn't worth pursuing any further. I will get another valuation done on the IP next year now.

When I told the r/e agents what they valued it at ... the agents burst out laughing, ... they both told me that they could get me $140,000 that same day ... they had buyers who would purchase sight unseen.

Very frustrating ....

Martin

 

[Darren1968]

valuation

I had a valuation come in yesterday for my PPOR in Elizabeth South and I was disappointed too.

My home is in the newest part of Elizabeth South (approx 15 years old -Tregenza Avenue) and all the homes they used for comparsion were built in the early 60's as no homes in my little section of the suburb have been sold in the previous two years.

The valuation states that all three of the comparison homes were smaller and substantially inferior in condition, appeal and fit out yet thet only valued my home at slighty more than those.

And to think I spent $4000 earlier this month completely repainting and recarpeting the interior and installing all new light fittings and window dressings for only $10,000 increase in valuation in 12 months.

So much for the latest real estate figure showing up to 30% growth in Elizabeth South.

To say I'm a bit P'ed off would be an understatement however the valuation is still enough to achieve what I want to.

 

[MissMuffitt]

We too had a low valuation on our new IP deplex.
We bought it for $275,000 and the valuation came in at $260,000.
It was sold with about $5000 worth of furniture, so the valuer discounted by this amount... and more
The biggest frustration for me was that I know that lady who bought the front dulpex, they are both the same, except I have a bigger block of land and her valuation came in at $275,000 (With the furniture in the sale too).
Again, no recent sales for similar properties was the excuss, when I tried to say "What about the front duplex?" I got told that the sales data wont be on the records for while.
I will give it 6 months and get another valuation done I think.

Still very frustrating!

 

[VYBerlinaV8]

Sort it by applying for a personal loan over the internet. We used ANZ last time to fund a 14k shortfall, due to the bank jerking around and not approving us in time.