Bank valuation lower than purchase price

Hi all,

Have got alot of helpful tips from this forum while looking for our first home (yes, not an IP, but the tips are just as helpful). Looking for some words of wisdom with this issue

After a couple of months research in Quakers Hill we found a property that we thought was at a fair price only to find when we went to complete the finance that the bank valued it 5% under the purchase price

As we're borrowing 90% of the property value the bank now won't go ahead with the loan, part of the problem seems to be the lack of recent comparable sales in the area of Quakers Hill we're looking at.

Potentially we could kick in a little bit more money so the bank's risk is less and they agree, but it's got me wondering if the agreed purchase price for this property is
too much

I have another week before a final decision is needed, what would you do?

Appreciate any and all opinions :)

Thanks
 
Since its your ppor its a personal lifestyle choice. It really depends on how much money you are talking tho coupled with how much you like the property, its location, how long you intend living there and what sort of lifestyle it can provide you.
 
Hi Darth

I work in QH for clients and have had one val come in under recently. It was completely wrong but despite protests and several sales to back up the pp the bank (which bank?) refused to buckle and stuck to their guns. The trouble was they were comparing the subject property (quiet st) with houses that backed onto the freeway and houses on main roads. Very frustrating!

In the end, if you don't have the buffer to cover the difference then you will have to walk away from the deal or engage an alternative lender who uses a different valuer and hope for a better result.

If you want to PM me the address and details I may be able to give you some more recent comps than what the valuers are relying on. Always ask to see the 3 comps they use and engage your own local knowledge of the area to protest- you never know your luck. Trouble is, the valuers aren't paid enough to justify changing their valuations- even when they don't come from the area in question. Banks are getting tougher too.
 
As we're borrowing 90% of the property value the bank now won't go ahead with the loan, part of the problem seems to be the lack of recent comparable sales in the area of Quakers Hill we're looking at.

That's the bit I don't understand. Properties of every type turn over pretty fast there at the moment so I can't believe there are no comparable sales.

Long term I'm a fan of the area and have one in quakers and one in acacia gardens. Like many areas there have been decent price hikes in the last 12 months.

There was a discussion about overpaying here http://www.somersoft.com/forums/showthread.php?t=59229&highlight=overpaying
 
You guys are awesome! Thanks so much for the quick replies.

I guess from what I can gather, like anything, the value is what someone is prepared to pay.

Being that the property is not for investment and the plan is to stay there at least 5 years in what I believe to be a high growth area, even if it is 5% overpriced it's really not going to mean alot when the time comes to sell again

I may just have another chat to the bank tomorrow and see exactly how much more they feel they need from me

Anymore feedback is appreciated :)
 
Id go to another lender, perhaps one that uses and independent valuer. If you use a local broker he will know which lender is more up to date. That bank may just have too many houses under mortgage in that area, or had a bad experience recover their money in that suburb.

cheers

Regards

Brett Coombs
Chase Loans
0421323699

bcoombs@chaseloans.com.au
 
brett,

Please Enlighten Me As To Which Lending Insititutions Do Not Use Independent Valuers?

Or Put Another Way, which Lending Institutuions Employ Their Own Valuers?

I Am Afraid I Don't Know Of Any.

Regards

Rightvalue


Nab .................
 
Is the Bank in Question CBA? If it is then this is common, I know a broker in the local area who only deals with CBA and this happens to him all the time, he lost a few deals this way.

Clients went to St George.
 
Brett,

please enlighten me as to which lending insititutions do not use independent valuers?

or put another way, which lending institutuions employ their own valuers?

I am afraid I don't know of any.

regards

RightValue

ABL, Westpac on occasion, ANZ has its own valuation department. I'm not saying exclusively and I would think if the bank was using securatised funding they may have to use independent valuers. ANZ do drive by valuations and if I was a valuer with PI insurance I wouldn't do a drive by. Westpac and St George self mortgage insure and when ever I have a query on valuations I'm generally talking to a bank valuer.

If you have valuation issues and if you prove them wrong it just makes the situation worse, so its better just switching Banks.
 
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This is a bit confusing - happy for anyone to fill in the blanks (or should I say banks) where I've missed and maybe this is more just for Qld.

NAB use SIO's - security inspection officers or valuers from a panel depending on the deal
Westpac uses Australian property monitors for desktop stuff, but every other val is done by a panel valuer
ANZ - online system and/or curbside or panel
CBA, AMP, NAB Homside - use valex who outsource to panel if they cant desktop it.
Nonbanks/mortgage managers can have a spread who you can pick from
 
Hi Brett

I reckon thats what id do as well

Look at another lender if at all possible, after taking the valuer and lender to task. You can still win some of the valaution arguments, but often where LMI is involved its pointless

ta
rolf
 
ABL, Westpac on occasion, ANZ has its own valuation department. I'm not saying exclusively and I would think if the bank was using securatised funding they may have to use independent valuers. ANZ do drive by valuations and if I was a valuer with PI insurance I wouldn't do a drive by. Westpac and St George self mortgage insure and when ever I have a query on valuations I'm generally talking to a bank valuer.

If you have valuation issues and if you prove them wrong it just makes the situation worse, so its better just switching Banks.


IMHO, You are talking crap.

The "bank valuer" is an independent valuer.

Please prove to me that a valuation is actually undertaken by a certified practsing valuer that is employed directly by the bank.

I do valuations for CBA, Westpac and NAB .. I am not employed by the bank.

This includes, desktops, drive bys and mostly full valutions.

I do tell people I am undertaking the valuation for the bank.

oh yeah ... I also talk to the broker if they have a query...

You wouldn't do drive bys??? do you know how limited the recourse is to the valuer in a drive by??????

I agree they are not a good situation, but there is very very limited liability and the valuer will never stick their neck out on a drive by.

There is a reason that no valuer I have ever heard of has been sued for a drive by. can you name any valuer that has been???

mind you, you may know better than me, so I stand to be corrected on the above.

cheers

RightValue
 
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