Bank Valuations?

Hi

Does anybody have extensive knowledge as to how bank valuations work for properties?

The reason I ask is I recently put down a deposit for a property for X amount of dollars and when the bank valuation came in, it matched the exact amount I offered. I've asked a few friends and they've said the same thing happened to them.

I find it strange that the figures are an exact match. Was expecting it to be off by a few hundred/thousand either way.

Thanks in advance.
 
I think basically a lot of the valuers do a 'drive by' and just see if the property (at a glance, ) will get them there money back should you get into trouble with your loan....
And then just put that figure (whatever the contact price is) on their paperwork. I would guess it's a conservative figure, on their part...

Just my assumption anway...
 
I think basically a lot of the valuers do a 'drive by' and just see if the property (at a glance, ) will get them there money back should you get into trouble with your loan....
And then just put that figure (whatever the contact price is) on their paperwork. I would guess it's a conservative figure, on their part...

Just my assumption anway...

I would be extremely happy if the valuers out my way did that. Too often, it seems to me, they come in from another area, are not familar with current local prices, hazard a guess and present a lower valuation than contract price .. subsequent result, tumble and crash, tumble and crash!!! :(
 
That's fairly common if the valuation has been ordered by a lender.

More than likely the valuation will be cursory ("desktop" or "drive by") and conservative.

Bank's don't pay valuers much for their efforts and will sue them if things become pear shaped.

Consequently, a valuer will compare the property you are buying with the sale of comparable properties in the same area in the preceding three months. If the price is in the same ballpark the valuer will go with that.
 
More than likely the valuation will be cursory ("desktop" or "drive by") and conservative.

In this case, they actually arrived onsite and were let in by the real estate agent as I was getting carpet and floorboard quotes done at the same time.
 
My 2 properties where both valued at what was offered/contracted. Someone did tell me why that is the case but I can't remember what the reasoning was now :(
 
Normally the banks I have dealt with in Sydney will send a professional valuer to the existing property (the one you are trying to refinance) to get an updated value if you are trying to bring across a loan from another bank. This is to protect themselves and to determine how much money they will lend you towards the property you are about to purchase.

They normally don't send a professional valuer to value the property you are purchasing as the listing price is generally sufficient for them to determine the market value.
 
Hi Jiggly

The difference in val policy does really vary a lot between lenders

At purchase 80 % lvr sub 500 k non specialised security a few will go by contract and/or still do a desktop.

Above 80 an/or a refi they generally want a full val which a licensed valuer will conduct.

at
rolf
 
....and if you do a fantastic job, and negotiate your little sox off, and in some rare cases, manage to get it on contract for millions less than what it is worth, due to a desperate seller, a cashed up unconditional buyer or a combo of both.....the Bank will apply about zero effort in finding out the true value of the property.....and simply assign the contract value or less. Joy.

If you are looking for a "win" against the Banks, no such thing.
 
Above 80 an/or a refi they generally want a full val which a licensed valuer will conduct.

at
rolf

Hi Rolf,
Is it possible to refinance your LVR back up above 80% when sttting up a LOC, I am currently in the process of doing this, my valuation came back at $620,000 after completing a full renovation. I have had 3 agents give me selling appraisals for 700,000- 750,000 if I were to place it on the market.
Keeping in mind that they might be a bit inflated to get my buisness I still feel the bank has come in a bit undervalue, In which this makes it hard to keep the current property and move onto the next project.
Cheers
 
Hi OC

yes, subject to lender criteria and serviceability you can even go as far as 90 %.

Thats a big gap between the vals and the estimates. That spread is worth a good property deposit as you say, AND can make a huge difference long term

Might be time to speak with an independent broker to see if you can have a go with a diff lender and/or valuer

ta
rolf
 
help please urgent

hi everyone, sorry its my first post not sure how this works... looking for a valuer that will be of the mindset that the contract DOES equal the val. We are talking about a real deal here and need the job doene correctly. Before i antagonise anyone i am not interested in anyone saying the valuers know what they are doing and their word is final. Would like a genuine contact who will do the right thing given have now had 3 contracts at similar price. cheers, george
 
Thanks Rolf,

Yes you are right it could make a big difference down the track as it could meaning off loading a great IP to acess more cash.
My bank is currently finding out some details for me on what my chances are of upping the Lvr on the loc... Bit of a kick in the guts thats they have to charge you LMI on it beacuse they have a low val in the first place.

When you say might be time to speak with a Independant broker about diff lender/val do you mean to refinance the whole house or just to set up a loc with them.
Im presuming you cant have a loc against a house that is partly under finance to another bank.
 
Hi OC

Nah, one lender on the mortgage only.

You have a choice with the LMI thing.

Often you may get a better val from an incoming than the incumbent lender.

I dont know why, its just one of those things.

Try a broker lender that will do the val upfront without an app.

NAB, CBA and ANZ are a few examples

ta

rolf
 
My experience has shown exactly what Dazz and others have already stated.
Regardless of what the valuer states, or the fact that you paid for the valuation, for some strange reason, the bank has the right to reject your request to view the sworn valuation.
Instead, even if it's valued significantly higher, they will simply say "yes, we're satisfied it is worth "X" relative to what we are lending you so can have the loan".
Specifically, you will only ever get a "yes you can have the money" or "No you cannot"..

Of course, this is very different to Commercial where tenancy and other factors come into play relative to the current state of the property.

Cheers..
BD..
 
It all comes down to who actually commissions the valuation. You can get one done yourself as a retail client but let the valuer know that you want it to be assignable. It also pays to know what valuers are on the individual lenders panel.
There are some valuers out there that are on almost all of the lenders' panel...


Boods
 
Hi

Does anybody have extensive knowledge as to how bank valuations work for properties?

The reason I ask is I recently put down a deposit for a property for X amount of dollars and when the bank valuation came in, it matched the exact amount I offered. I've asked a few friends and they've said the same thing happened to them.

I find it strange that the figures are an exact match. Was expecting it to be off by a few hundred/thousand either way.

Thanks in advance.

It is quite simple really.

Valuers determine the current market value of a property by anaylsing sales of properties in the area.

As a general rule a sale is considered to be evidence of market value.

Thereofore primaface your sales contract is deemed to be representative of market value.

The valuer will inspect the property you have brought and will look at and analyse other sales in the area. If thise sales support your purchase price the valuer will adopt the price you paid as market value and value the property at the price you yhave paid.

Markets are not perfect. The valuer may think that based on market evidence your property is worth $400k .. if you have paid $380k or $420 they will usually value it at that price. For me, much above $430 and I will usually value the property at $400k.

Last week I valued two properties sold by the same Jenman agent in one suburb. One I thought was oversold by about $30-40k but at $600k it was within reason of market value so I valued it at sale price.

The other property I felt was significantly undersold based on market evidence, especially considering the other propety I had inspected half an hour before. I valued it at about $50k over purchase price .. it was the lowest amount I could justify. I really wanted to crash the deal and then offer $20k more .. but I couldn't.

I hope this helps

RightValue
 
Last edited:
I valued it at about $50k over purchase price .. it was the lowest amount I could justify. I really wanted to crash the deal and then offer $20k more .. but I couldn't.

I hope this helps

RightValue

Hiya

Agree with all.

.

In 10 years or so of over 2000 purchases, I have had 2 come in over value.

That means either

You are a rare beast to place a value above the contract price on an arms length sale.

or

All my client purchase are just on the money

Gotta say that val over contract is rare in my limited experience

ta
rolf
 
Regardless of what the valuer states, or the fact that you paid for the valuation, for some strange reason, the bank has the right to reject your request to view the sworn valuation.
.

You do not pay for the valuation.

The bank pays for the valuation. That is the bank pays the valuer. The valuation is prepared by the valuation firm for the bank only.

The bank is not supposed to show the valuation to anyone else.

You may pay the bank, but there is no relationship between you and the valuer.

Banks get these valuations at cut price rates based on volumes. If banks gave the valuations to the borrower we would be swamped with questions such as .. you said we had laminate cupboards when we have 2 pak cupboards ... etc. .. or you said that the bathroom was in good conditon, I think it is in excellent condition (it happens) .. or that house down the road that you said is superior to ours is actually inferior to ours as we have polished timber floors (ignoring the fact that the land worth $500sqm is 50% larger).

I know it sucks, and trust me I would much rather be paid $400 per valuation and deal with a couple of queries than the $200 the bank pays, but remember you are free to order a valuation yourself.

cheers


RightValue
 
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