brokers - equity release

[Corey Batt]

From a legal POV you would want to transfer at market values well as under the bankruptcy laws under market value transactions get special attention - similar under succession laws. Also under tax laws you would want to be able to maximise deductions of interest on any loans.

And the SRO might get a little upset if they're undercut.

 

[Terry_w]

And the SRO might get a little upset if they're undercut.

Stamp duty would be on market value, even if the property gifted - so why gift. I have found the OSR (NSW) want to see evidence of a valuation where they know it is related party transaction (and where there is no exemption from duty).

 

[tj22]

I've seen this quite a bit. You buy for $200k and believe it to be worth $250k. A refinance shortly afterwards and the RP Data report now suggests it's worth $205k because you bought it for $200k. Bank valuer agrees.

It's worth a shot if you genuinely have compatible sales in the are for a higher value, but valuations are defined by the data available, the the most compelling indicator of value shortly after settlement is the price you bought it for.

my question is more directed at. the rp valuation is low, but i can see recent sales in the area of similar properties. could the broker just show the bank the compatible sales in the area?

 

[Brady]

my question is more directed at. the rp valuation is low, but i can see recent sales in the area of similar properties. could the broker just show the bank the compatible sales in the area?

RP valuation shouldn't matter too much if that type of valuation isn't being used.

If it's a shortform the comparable sales it the biggest factor. But the problem will be if you buy property on the open market, valuer is aware of this. Aware of what you paid and what other people could of bought the property for (asking price)... So to justify a higher figure is harder.

 

[Peter_Tersteeg]

my question is more directed at. the rp valuation is low, but i can see recent sales in the area of similar properties. could the broker just show the bank the compatible sales in the area?

The broker should definitely provide comparable sales to the valuer to have the best chance of a favourable valuation.

All I'm saying is that by purchasing the property at $200k, you've somewhat defined that the property is worth $200k and both the RP Data systems and valuers will rely heavily on your own purchase price to determine the current value of the property.

My own experience is that RP Data is more conservative than Residex, and that Residex is closer to actual sales prices at the moment. It's not always the case, but it's certainly a trend that I see in my limited scope.

Unfortunately the primary valuation company that the majority of lenders use is ValEx. ValEx then subcontracts the jobs to individual jobs to local valuers. ValEx also owns RP Data. Essentially I believe the majority of bank valuations rely on RP Data which I don't believe to be the most consistently accurate reflection of current property values.

 

[tj22]

The broker should definitely provide comparable sales to the valuer to have the best chance of a favourable valuation.

All I'm saying is that by purchasing the property at $200k, you've somewhat defined that the property is worth $200k and both the RP Data systems and valuers will rely heavily on your own purchase price to determine the current value of the property.

My own experience is that RP Data is more conservative than Residex, and that Residex is closer to actual sales prices at the moment. It's not always the case, but it's certainly a trend that I see in my limited scope.

Unfortunately the primary valuation company that the majority of lenders use is ValEx. ValEx then subcontracts the jobs to individual jobs to local valuers. ValEx also owns RP Data. Essentially I believe the majority of bank valuations rely on RP Data which I don't believe to be the most consistently accurate reflection of current property values.

i agree, my friend is a home loan specialist at nab and says generally it's very difficult for a valuer to value higher unless there has been a reno just after settlement as the purchase price states what it's worth. but i've heard of so many people being able to find "bmv" and getting equity out really quickly.

 

[Rolf Latham]

i agree, my friend is a home loan specialist at nab and says generally it's very difficult for a valuer to value higher unless there has been a reno just after settlement as the purchase price states what it's worth. but i've heard of so many people being able to find "bmv" and getting equity out really quickly.

be mindful that one can not effectively rely on one persons experience.

There have been lots of deals that "werent doable" - I have learnt to say " I cant do that", because invariably someone else will.

ta
rolf