Bank Valuation

M

MANNYT

Hi Guys

After some "words of wisdom", so to speak.

I am looking to suck equity out of my exsisting property that is located in Ringwood East. I have had it nearly two and a bit years. The C.B.A is the financial lender that I am with. I have asked them to valuate the 700 sq ft property with a 2 bedroom weatherboard house on it. They have come back to me with a fire sale price that is not much more than I purchased it for some time ago. Purchase price low to mid 300,000 . Valuation price not much higher.

Where do I go from here?
What other ways do I go about trying to get more out of the C.B.A?
Do I hit them with some figures that I have of my own. I.e RPDATA, 6 month back log of newspaper sales similar size and area?

Eagerly awaiting feedback

Thanks

Manny :)
 
I did all this and more {i feel your pain } with my 700m2 sized property, thats why i am building for others, now:(
I hope to hear the answer?
 
MANNYT said:
I have asked them to valuate the 700 sq ft property with a 2 bedroom weatherboard house on it.
Click to expand...
I hope you mean 700m2 not sq ft:confused: otherwsie $300K sounds like a lot to have paid for so little land with an old house 2.5 yrs ago.

MANNYT said:
They have come back to me with a fire sale price that is not much more than I purchased it for some time ago. Purchase price low to mid 300,000 . Valuation price not much higher.
Click to expand...
Valuers can be very conservative in the current environment. HOWEVER, if you paid market value for it 2.5 years ago, then you'd expect all other things being equal, that in 2006 if it was worth $303K, in 2007 it would have been worth $371K and end of 2008 it would be $385K. (I picked those figures because they are the actual median prices for Ringwood East).
What kind of valuation did they do:
1. A desktop (where it is done on a PC on a desk)
2. A driveby or kerbside (where they do exactly that)
3. A walk through

MANNYT said:
Where do I go from here?
Click to expand...
Well I think you've learnt a valuable lesson. NEVER let a lender do their own valuation. Ring the lender, get a list of their panel valuers, commission your own val. from one of them, that way you get the val and can discuss it with the valuer long before the lender sees it. If you are happy with it, then assign it to the lender. They will accept it as it is done by one of their panel.

MANNYT said:
What other ways do I go about trying to get more out of the C.B.A?
Click to expand...
You can dispute it - yes. I have before and lost - most who do also get the same result. But there have been some wins.

MANNYT said:
Do I hit them with some figures that I have of my own. I.e RPDATA, 6 month back log of newspaper sales similar size and area?
Click to expand...
No - waste of time. You need verifiable comparable sales data - yes you could get that from RPData.
 
Hey MannyT, you're doing better than us. We purchased our PPOR in November 2003 for $247,000 and had it valued by Westpac last week. Valuation came in at $227,000 -- OUCH, that hurts!
Fortunately we still have adequate equity to go ahead with our first IP purchase, however, to think our property has gone down in value is a real kick in the teeth. I understand their estimations are conservative but $20,000below purchase cost... that is hard to bear.
Hopefully the market will take off again and it will continue to increase in value as I can't contemplate the thought of it decreasing further - even if only on paper.
 
newlywed1311 said:
Hey MannyT, you're doing better than us. We purchased our PPOR in November 2003 for $247,000 and had it valued by Westpac last week. Valuation came in at $227,000 -- OUCH, that hurts!
Fortunately we still have adequate equity to go ahead with our first IP purchase,
Click to expand...

have you got more properties? I'm just trying to understand when you said "adequate equity"
 
Hey newlywed -

if you dont mind disclosing ; what sort of property is your PPOR & what suburb?

negative growth for the past 5 and a bit years seems really odd to me, things have only been "gloomy-ish" for the last 12 mths max..
 
aegcp, we don't have any more properties. We have just purchased our first IP. We have adequate equity because our mortgage on our PPOR is just above $150,000, so we are drawing on the equity up to the $227,000 or thereabouts. First IP is only $205,000. Does that make sense?
Gigantor, we live in regional Vic. Maybe that explains it better? Still, I certainly didn't expect such a huge drop.
 
Thanks to all for there input!

Propertunity said:
I hope you mean 700m2 not sq ft

Sorry about that. Yes you are correct 700m2 not sq ft.

Anyone following Ringwood East mid 2007 would know that the listing properties would not even make first inspections. They where getting snapped up like hot cakes! Corner block with huge development potential and also 1 km from Eastland hub and a train line .

Purchase price $317,000
Valuation price $335,000

1. A desktop (where it is done on a PC on a desk) and a phone conversation / interview.
Click to expand...
 
GEE! no wonder i was confussed ? you were talking land size. and iwas trying to convert 700 sq ft to meters,and i got a 2 bed house, their abouts,
I was talking house size :)
 
agree with Propertunity regarding finding who their panel lenders are. This way, the valuers are working for you, not giving the conservative estimates that their bank 'bosses' want.

Easier to do it this way than try to disprove something...
 
Propertunity said:
Well I think you've learnt a valuable lesson. NEVER let a lender do their own valuation. Ring the lender, get a list of their panel valuers, commission your own val. from one of them, that way you get the val and can discuss it with the valuer long before the lender sees it. If you are happy with it, then assign it to the lender. They will accept it as it is done by one of their panel.
Click to expand...

Not so much.
 
Propertunity said:
Ahhhh - this is how I've been doing it for some years. Has this cahnged in the present credit environment?

Please explain more :confused:
Click to expand...

Recently, QBE LMI confirmed that they won't accept vals not ordered by the insured (i.e. the lender). In due course I expect the other to follow.

For loans not requiring insurance I think you will still find an increasing degree of, shall we say, concern, about vals where an "interested party" might be attempting to influence the valuer.
 
Token Funder said:
Recently, QBE LMI confirmed that they won't accept vals not ordered by the insured (i.e. the lender).
Click to expand...
Well I'll be..........

Token Funder said:
In due course I expect the other to follow.
Click to expand...
Yes, and it is only "other" as in singular too. Not much choice.:rolleyes:

Token Funder said:
For loans not requiring insurance I think you will still find an increasing degree of, shall we say, concern, about vals where an "interested party" might be attempting to influence the valuer.
Click to expand...
I would have thought that any valuer would not allow themselves to be influenced by anything but their professional opinion - especially given their relaince on PI, yearly CPD and licencing requirements from Fair Trading just to have a business.:confused:
 
Token Funder said:
Recently, QBE LMI confirmed that they won't accept vals not ordered by the insured (i.e. the lender). In due course I expect the other to follow.

For loans not requiring insurance I think you will still find an increasing degree of, shall we say, concern, about vals where an "interested party" might be attempting to influence the valuer.
Click to expand...

That's very interesting, TF!

Like Propertunity, I've been arranging my own valuations with the valuer on the bank's panel and assigning the valuation to the bank. And when I say 'the valuer', there is only one firm on the bank's valuation panel for one of the areas in which I have property.

So how will this work in the future, TF?

I can certainly understand the lenders' concerns, but in my experience, if the bank orders a valuation (for which they pay peanuts) the firm sends a very junior valuer who comes up with a very low valuation - whereas if I pay (top dollar) one of the firm's senior and very experienced valuers does the work and a more realistic figure is achieved. (And I do keep newspaper ads, CMAs from agents, have reports from Home Price Guide etc etc etc, as well as records of any relevant local information to back up my own estimate of property values).

Cheers
LynnH
 
Propertunity said:
I would have thought that any valuer would not allow themselves to be influenced by anything but their professional opinion - especially given their relaince on PI, yearly CPD and licencing requirements from Fair Trading just to have a business.:confused:
Click to expand...

In which case, why would anyone care if it was ordered by the bank or by them :)
 
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