desktop val vs. full inspection

[PHF]

Hi there,
I was curious as to how the bank decides whether to do a desktop valuation, or send a valuer to do a drive by or full inspection?
There is a loan I am looking to refinance and I'm sure if the bank did a desktop val based on the rental return and the suburban average, they would come up with a vastly different valuation than if they inspected the property.

Just curious as to how they decide how much effort to put in to the valuation. Are all the big 4 banks similar in their approach?

Cheers

PHF

 

[.toe]

Whichever way the banks decide, if you have better information you can argue your case. If you think the bank might get it wrong then do your own comparative market analisys (or ask an agent for one), and give it to the valuer.

The gold standard would be to pay for your own valuation (use one on the banks panel). The bank will say they only accept a valuation they've commissioned, but if their result is not satisfactory and you have a valuation from your bank's own valuer panel to back you, then you are justified in asking them to explain/review their valuation.

 

[softmonkey]

It also depends on whether you are using a mortgage broker. I had one that was very reluctant to have a valuation done even though I'd told him repeatedly that I had nothing to substantiate my estimated value and that I really wanted a bank valuation done. Instead he was very happy to take that figure and use it. I suspect he did not want to jeopardise his commission by having the approval fall through.

 

[RumpledElf]

We had a FULL valuation recently - took over an hour - and all they did was give us number high enough to cover our loan at 80%. This number is so much below market it isn't funny - we had a REA around who brought a huge pile of RPdata and current listings and gave us a more accurate figure (on the low end of the price range for this area, but then that's where our house sits - it is old and small)

Unfortunately noone told the valuer we had a lend considerably lower than 80% (which is of course why an 80% val was so low, a 60% one would have been just a little bit under market) so after he came around we had to tip about $10,000 into the mortgage - money that is basically gone forever, can't use it as redraw or an equity loan - just to keep our LVR the same.

The annoying thing is we went on a furious house fixing rampage beforehand as we were expecting to get a conservative market valuation not just a "enough to cover your loan" valuation. Had I known the valuation would come up so low we wouldn't have bothered.

I'm going to dispute the valuation, we might be making the house an IP for a year and I need a market valuation for tax purposes.

 

[RightValue]

We had a FULL valuation recently - took over an hour -

Sounds like you had a junior come and inspect.

I inpsect every room, inside and outside of the dweling as well, take full notes, measure the house and the land and am gone in 12 - 17 minutes, unless I am having a chat - or the house is difficult to measure. No experienced valuer I know takes longer than an half an hour to do an inspection.


cheers

RightValue

 

[RightValue]

Hi there,
I was curious as to how the bank decides whether to do a desktop valuation, or send a valuer to do a drive by or full inspection?
There is a loan I am looking to refinance and I'm sure if the bank did a desktop val based on the rental return and the suburban average, they would come up with a vastly different valuation than if they inspected the property.

Just curious as to how they decide how much effort to put in to the valuation. Are all the big 4 banks similar in their approach?

Cheers

PHF

I think it depends on a few things,

Mostly the proposed LVR based on the estimate of value.

Also is the estimate of value comfortably close to the median value the bank has for the suburb.

I do quite a few. Some I have to escalate to a drive by, due to lack of a photo but I prefer to escalate to a full val if possible. I think if the desktop comes in too short the bank sometimes orders full valuations, especially if you give them a reason to do so.

Bear in mind for the desktops I do for one of the big 4 banks, I must call the property owner and ask them about their property. However the desktop system provides the sales evidence I must consider, often this is very dated.

Banks generally do not do desktops, they mostly have Certified Practising Valuers from independent Valuation firms do them.

Rental income plays no role in the valuation process of residential property, that is a servicability issue and part of the banks lending decision.

I trust this helps a bit.

RightValue

 

[HLE]

Firstly there are several types of valuations:

• Contract of sale - the bank uses a current contract of sale on the property (or one up to 12 months old) and adopts that as the market value.
• Desktop valuation - someone in the bank uses APM or RP Data and estimates the value. Often this is automated.
• Drive by valuation - otherwise known as a Restricted Assessment (RA). The valuer doesn't go in, however they drive past and then estimate the value. Usually this gives a result as a range e.g. $250k to $270k.
• Short form valuation - this is the normal valuation that banks do for most properties. A valuer comes around and inspects your property.
• Long form valuation - this is used for very expensive properties, usually over $2m or so. The valuer does much more work however it is similar to a short form valuation.

The banks use several factors when determining what type of valuation type they will do.

• The LVR, the lower the better.
• If the customer & property are in the same state (for a purchase only).
• If there are any red flags (e.g. sale without an agent).
• Low Doc / Full Doc.
• The loan size.

If you want the bank to do a full inspection then let them know that you recently renovated the inside of the property and then they will usually just order a full report.

Desktop vals & drive bys usually come in low. Most banks have the decency to order a full valuation if the desktop or drive by comes in below your expectations.

 

[RumpledElf]

Sounds like you had a junior come and inspect.

I inpsect every room, inside and outside of the dweling as well, take full notes, measure the house and the land and am gone in 12 - 17 minutes, unless I am having a chat - or the house is difficult to measure. No experienced valuer I know takes longer than an half an hour to do an inspection.

I'll say. He even drove off reaaaaaaaaaaally slowly staring at our vacant lot on his way out. As in, it took him several minutes just to LEAVE.

He gave us market for the land at least, but now we've had the sensible local REA out who gave us a far more realistic price - slightly under median for our area - it is kinda obvious how far off he was on the house.

 

[Rolf Latham]

Desktop vals & drive bys usually come in low.

unless u have crappy property in a crappy locn in a cream suburb, in which case a desktop on refinance can be very useful.



ta
rolf