How to get the maximum for your property valuation

[TAG]

Hi all,

I am in the process of refinancing my loans to create an offset account from the equity accumulated from my PPOR and IPs. The bank said they may need to value my portfolio. The last bank valuation they did, I believe was below the market value about 5-7%. Is there any way that we can get our own valuation done by a realestate agent to maximise the valuation of the portfolio.

Also the abnk said my next purchase I would need to tie all my PPOR and IPS as security of the next IP loan. Is there a bettwe way to structure the next loan as to not cross collaterise my loans?

Thanks in advance

TAG

 

[TAG]

abnk = bank

 

[Rolf Latham]

Hiya Tag

5 % in valuer speak isnt a lot........

Which lender(s) are u with please ?

Preventing cross coll isnt hard with most lenders either , you simply tell them NO, and then enusre the docs reflect single security only

ta
rolf

 

[knightm]

Hi all,

I am in the process of refinancing my loans to create an offset account from the equity accumulated from my PPOR and IPs. The bank said they may need to value my portfolio. The last bank valuation they did, I believe was below the market value about 5-7%. Is there any way that we can get our own valuation done by a realestate agent to maximise the valuation of the portfolio.

Also the abnk said my next purchase I would need to tie all my PPOR and IPS as security of the next IP loan. Is there a bettwe way to structure the next loan as to not cross collaterise my loans?

Thanks in advance

TAG

As RL said, re xcoll tell them no, find another way.

Re vals no a real estate appraisal will never satisfy a bank. Agents have been known to over quote to get business, banks want a sworn valuatuer to give them a worst case scenario firesale valuation, imho at this time of scrutiny re lending practice (ie sub prime) I think they are being a little more cautious than usual and probably instructing valuers to do so also. The last bit is speculation.

I have read that there are ways to improve a valuation, I have presented comparibly sales to a lender at time of val before, to be honest I dont know if it made any diff, I have always got vals that are about 5% below what I want too.

 

[JaneS]

As previous respondents have stated cross collateralisation is a definite no no. Amongst my acquaintances if we encounter lenders insisting on cross coll we move onto another lender for the next property to be financed. Some of my acquaintances have all their properties financed by different lenders to ensure there is absolutely no risk of cross coll.
I have found even in the current climate it is best to commission my own sworn valuations from bank panel valuers and to provide them with written evidence of relevant comparable sales. As recently as three weeks ago I got the high LVR loan I wanted by including the sworn val I commissioned with the app and the val was what I wanted thanks to the comparable sales info I provided to the valuer. I get the impression at the moment that whilst the banks are managing risk more cautiously than they have in the immediate past, one of the ways they perceive their risk is minimised is by them forming the impression that they are dealing with people who know what they are doing.

 

[kaf]

I get the impression at the moment that whilst the banks are managing risk more cautiously than they have in the immediate past, one of the ways they perceive their risk is minimised is by them forming the impression that they are dealing with people who know what they are doing.

Jane that's a very good point, thanks for spelling it out. I need to revalue soon so will keep that in mind.

Cheers

kaf

 

[LynnH]

Is there any way that we can get our own valuation done by a realestate agent to maximise the valuation of the portfolio.

Also the abnk said my next purchase I would need to tie all my PPOR and IPS as security of the next IP loan. Is there a bettwe way to structure the next loan as to not cross collaterise my loans?

TAG

Others have covered the cross-collateralization question, so I'll just comment on the valuation aspect.

Banks will generally not accept a valuation by an REA, since most of them are not registered and qualified valuers. In the past, I have called by Bank and asked for a list of valuers who are on their valuation panel. I then contact one of these valuers and request an assignable valuation, which I undertake at my own expense.

I then present the valuer with a folder containing as much information as I can about the property/area/etc. Further details are in one of my previous posts:
http://www.somersoft.com/forums/showthread.php?p=335107#post335107

The valuation is sent to me, I decide which lender/s I want to go with, arrange an appointment with the Loans Manager and present my loan proposal, then arrange for the valuation to be assigned to that lender/s.

I have never had a problem with valuations coming in lower than expected - or with getting Banks to accept those valuations. There's something to be said for you having control over the situation!

Good luck with your refinancing!

Cheers
LynnH

 

[StuartW]

Shameless plug: there is a chapter on maximising bank valuation in my book - www.smartborrower.com.au (as well as a few chapters on structuring).

Essentially, it comes down to doing your homework (or the valuers job!) BEFORE the bank orders its valuations.

Cheers,

Stuart

 

[Rixter]

Shameless plug: there is a chapter on maximising bank valuation in my book - www.smartborrower.com.au (as well as a few chapters on structuring).

Essentially, it comes down to doing your homework (or the valuers job!) BEFORE the bank orders its valuations.

Cheers,

Stuart

Stuart, we'll let you off this time if you're providing complimentary copies for SS members?

 

[Lukey13]

TAG

Others have covered the cross-collateralization question, so I'll just comment on the valuation aspect.

Banks will generally not accept a valuation by an REA, since most of them are not registered and qualified valuers. In the past, I have called by Bank and asked for a list of valuers who are on their valuation panel. I then contact one of these valuers and request an assignable valuation, which I undertake at my own expense.

I then present the valuer with a folder containing as much information as I can about the property/area/etc. Further details are in one of my previous posts:
http://www.somersoft.com/forums/showthread.php?p=335107#post335107

The valuation is sent to me, I decide which lender/s I want to go with, arrange an appointment with the Loans Manager and present my loan proposal, then arrange for the valuation to be assigned to that lender/s.

I have never had a problem with valuations coming in lower than expected - or with getting Banks to accept those valuations. There's something to be said for you having control over the situation!

Good luck with your refinancing!

Cheers
LynnH

Interesting method.... Lynn, how much does this usually cost you? And do you find that the valuers are interested in what your expectation of value is?

 

[LynnH]

Hi Lukey13

The last one I did was $550 (including GST) for the valuation and a further $110 (including GST) to assign it to the Bank. I have heard of valuations costing less than this - lowest figure I've heard is $375 plus GST, but maybe others can add to this.

To date, I have had no problems whatsoever with private valuations. But I do research the area concerned thoroughly, and make sure I'm up-to-date with what is happening in the particular market before I commission the valuation. My experience has been that the valuers appreciate 'having their job done for them' (as StuartW says!).

And I don't usually tell them my expectation of value - unless they ask, which they usually do!

As for valuations commissioned by the Bank ..... as I said in the link in my post, have found that they usually sent the juniors.

The cost of doing a privately-commissioned valuation could well be a deterrent to some people, but I have found that it's a small price to pay for a decent valuation - and, remember, a poor valuation could set your investment plans back considerably.

Cheers
LynnH

 

[buzzlightyear]

...To date, I have had no problems whatsoever with private valuations. But I do research the area concerned thoroughly, and make sure I'm up-to-date with what is happening in the particular market before I commission the valuation. My experience has been that the valuers appreciate 'having their job done for them' (as StuartW says!)....

Lynn, do you provide the valuer with a report/information collected based on your research?

 

[LynnH]

Buzz

I gather everything I can - HomePriceGuide settled sales for the last 1-2 years, individual property profiles, auction results from the weekend newspapers together with details of corresponding property from domain.com.au or realestate.com.au. plus anything I can scrounge from local agents (one does a regular list of properties sold with sales price, photos, etc, [to which I sometimes add info such as "renovated 6 months ago" etc] and I've even included property appraisals from REAs, especially if they come with a CMA). I also give the valuer a list of local agents and their contact details, so that they can verify information provided. And I also try to include as much local info as I can - e.g. some months ago a sale in our area was for a house on half an acre, however before the house sold it was over an acre (the vendors had cut off the back half and built a new home) - obviously the previous sale price would have been for a house on over an acre, and that's the sort of information that the valuer would probably not be aware of. It also helps if you have floor plans of the house so that the valuer doesn't have to measure everything on the spot.

I collate all the information, cull everything that is irrelevant (so the valuer doesn't have to wade through too much paperwork!), photocopy it all and present it to the agent in a folder, which he can take away for later perusal.

Hope that is of some help.

Cheers
LynnH

 

[JaneS]

Reading LynnH's comments, it would appear that we have a very similar approach which has resulted in my having very similar experiences and results. Generally I find a standard val costs around the $450 mark. For this expenditure it is not unusual to end up with a val giving and extra $30k to $50k equity in property with the resultant beneficial effect on my borrowing capacity. Not a bad return from the expenditure of $450 - $500!
I never buy a property or lodge a finance application without commissioning my own val from a bank panel valuer. It is all about ones own risk management strategies and having control of the situation.

 

[buzzlightyear]

Buzz

I gather everything I can - HomePriceGuide settled sales for the last 1-2 years, individual property profiles, auction results from the weekend newspapers together with details of corresponding property from domain.com.au or realestate.com.au. plus anything I can scrounge from local agents (one does a regular list of properties sold with sales price, photos, etc, [to which I sometimes add info such as "renovated 6 months ago" etc] and I've even included property appraisals from REAs, especially if they come with a CMA). I also give the valuer a list of local agents and their contact details, so that they can verify information provided. And I also try to include as much local info as I can - e.g. some months ago a sale in our area was for a house on half an acre, however before the house sold it was over an acre (the vendors had cut off the back half and built a new home) - obviously the previous sale price would have been for a house on over an acre, and that's the sort of information that the valuer would probably not be aware of. It also helps if you have floor plans of the house so that the valuer doesn't have to measure everything on the spot.

I collate all the information, cull everything that is irrelevant (so the valuer doesn't have to wade through too much paperwork!), photocopy it all and present it to the agent in a folder, which he can take away for later perusal.

Hope that is of some help.

Cheers
LynnH

Thanks Lynn. I didn't realise you could assign the valuation to a bank after you have commissioned it. (Understand that the bank may not accept it though!). Am finishing off a reno and I had intended to provide the valuer relevant information but that would have been the bank's valuation, but never thought of doing it your way! Will try that and see how I go. Thanks for sharing...

 

[LynnH]

Buzz

If you want to assign the valuation to the Bank you have to inform the valuer of this before the valuation, so that the valuer writes it up in a format which is acceptable to the Bank. I usually say that I'm going to apply for a loan, but haven't decided which lender I will use, but that when I do I will contact him and have the valuation assigned to XYZ Bank.

Cheers
Lynn

 

[POLSATOR]

Hi LynnH,

How do you know the bank will accept the valuation that you have assigned? I am thinking of paying a valuer to do valuation on my IP as the one that the bank that I am with did, they didnt even walk inside my place although they said they did. I only purchased it 3 months ago and have renovated it etc. There valuation was barely above what i paid for it in a booming market.

 

[LynnH]

POLSATOR

Before I get a valuation done, I ring the bank and find out which valuers they use. Then I commission one of the valuers on the bank's valuation panel to do the valuation, which I subsequently assign to the bank. It is important that you tell the valuer why you are getting the valuation done, as valuations can be written up differently depending upon the purpose of the valuation. (e.g. valuations for lending purposes include an estimate of the rental value of the property). If the valuation is written in the format that the bank needs and the valuation has been done by one of the valuers on the bank's valuation panel, they are unlikely to refuse to accept the valuation. There are no absolute guarantees that the bank will accept the valuation you commission, but I have never personally had the bank reject such valuations.

One of the reasons I dislike having valuations done by the banks is that the banks pay a pittance for the valuations (I believe around $150) and it has been my experience that junior valuers are sent out to do these valuations - one forumite recently posted that there was anecdotal evidence that valuation students in Victoria had been sent to do them! And, as you noted, sometimes they don't even perform an actual physical vaulation - a 'kerbside valuation' is pretty useless, particularly when you have renovated internally since purchasing the property. When you pay 'full price' for a valuation, a senior valuer with a good deal more experience is sent - at least that has been my experience.

If you have bought your property in recent times, do bear in mind that valuations are much more likely to come in on the conservative side, due to the sub-prime crisis and subsequent problems the banks have had in obtaining funds. Loans are becoming harder to obtain, no-doc lending is almost non-existent and low-doc criteria are under review.


Cheers
LynnH

 

[JaneS]

This is to provide some additional info over what I have posted previously.
In the folder I prepare for valuers, as well as comparable sales information, I include a copy of the Title and Planning Certificate. I also contact the local council to cover off any potential planning issues, such as possible rezoning and development approvals and provide the valuer with contact details of the Council Planning Officer if there are matters which will have a material effect on the valuation. I also prepare a locality map highlighting all local facilities such as public transport, schools, shopping centres, parks, sports grounds, medical centres and other notable local facilities. I prepare a list of the major features of the property to be valued as well.

Whist I am waiting for my valuation to be prepared I decide, via my broker, which loan product with which lender I want to pursue and then contact the valuer to assign the valuation to that particular lender. As part of this process I confirm with the broker that I will be providing my own valuation.
As I have stated earlier, I have so far always obtained the valuation I was seeking using this approach. By using bank panel valuers, I have never had any difficulty assigning valuations to the lender of my choice. I have also always obtained the size of loan and loan product which I have decided to apply for.

Hope this helps.

Cheers

Jane