Influencing the valuation

Discussion in 'Property Finance' started by svamin, 6th Sep, 2013.

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  1. svamin

    svamin Member

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    G'day fellow Investors and experts,

    I am seeking your opinion on how if possible the investor could influence the valuation.

    Just a case for discussion:
    The property bought 6month ago, undergone through cosmetic renovation, tenanted at rent above market average, with obtained subdivision approval.

    Is it a normal practice to prepare a business case and submit it to the bank to be considered in valuation.
    If going through the mortgage broker, does it complicate the process of finance negotiating with the bank as if done directly? Can an investor appeal on the valuation if he believes some facts were not considered?

    Or the only process available for investor is just to accept the valuation as is and if not happy obtain another from other bank and switch the lenders?

    What is your experience?
     
  2. MarkB

    MarkB Member

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    At various points in time I have been able to influence valuations on properties (both up and down, as it suited my needs).

    I have only been able to do it because I have known things about the property that were not obvious to the valuer.

    Renos are patently obvious.

    As is subdivision potential in most cases.
     
  3. RightValue

    RightValue Member

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    A cosmetic upgrade is nice but does not generally increase the figure all that much, paint and carpet etc are cheap and may not be to the taste of a new buyer. It does not add anywhere near the value of a full renovation which includes the wet areas.

    Your permit should be ignored by the valuer unless you have asked for a valuation to be done on completion of construction and then if it is two on one, the result may well be disappointing. Your permit is at his stage just potential and valuers cannot value on potential only what is there.

    The rental is immaterial to a residential property unless it is a serviced accommodation or purpose built student accommodation.

    Yes you can appeal the valuation, well the organisation who ordered the valuation with the valuer can, but you will need to produce good sales evidence, chosen for comparability not just chosen on price.

    Forget about the "business case" this is a residential dwelling and will be valued as such based on comparable sales evidence.
     
  4. quoll

    quoll Member

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    Assist the valuer by having a list of properties in the suburb or surrounding suburbs if applicable, very similar to yours with sales numbers around what YOU would like yours to be valued at.

    And be nice to the valuer, don't belittle them, don't be arrogant, try and have a reasonable negotiation style talk with them.

    Regards
    Graeme
     
  5. HLE

    HLE Mortgage Broker

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    In addition to the above suggestions, I would also show before and after photos and give the valuer a copy of them. It just makes it easier for them to justify the higher value.

    Some valuers will just add the cost of your renovations to the price you paid for the property. Others will actually give you a little credit for your work :D

    Ultimately if you don't like the valuation then get your mortgage broker to organise a valuation from another lender. We can order valuations with around six lenders these days, I expect most other mortgage brokers can do the same.

    Going through a broker shouldn't hamper the process. A good broker should make it much easier. Personally I like to get clients to pass any info directly to the valuer when they inspect as then you can be sure it is seen by the actual person inspecting the property. Otherwise it can get lost in the bureaucrasphere :)
     
  6. S.T

    S.T Member

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    You could always do what I do and have a plate of fairy bread ready for when the valuer shows up.
     
  7. svamin

    svamin Member

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    Good to see quite a big spread of opinions. A lot to think about and try out. Thank you!
     
  8. Shaneelastic

    Shaneelastic Member

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    Give the valuer a gorilla cash. What's the worst that happens reported for bribery, unlikely and there's no penalty either