Is a rental appraisal binding at all?

[spludgey]

I've got a property that I purchased, partly due to the rental appraisal I received. The appraisal (as well as the rent at the time) was $380 a week.
Unfortunately the tenant broke the lease and I had to find a new one. It took me over two months and I had to drop the rent to $320 per week to find anyone.

I know that this means I didn't do my due diligence properly and I'm annoyed about that. But I was wondering whether I had any recourse in regards to the rental appraisal? After all, I did have to drop it significantly.

 

[marg4000]

I know that this means I didn't do my due diligence properly and I'm annoyed about that. But I was wondering whether I had any recourse in regards to the rental appraisal? After all, I did have to drop it significantly.

Rental price received can vary wildly due to the number of properties available at the time. Clearly the more properties available the more choice tenants have, and pricing can become competitive to attract a tenant.

It's simple maths. If the rental charged is $400 pw, every week of vacancy is equal to a $15 pw drop in weekly rent over a 6 month lease.

A rental appraisal is just that, an appraisal and therefore not binding. And don't beat yourself up, sometimes the market drops unexpectedly.
Marg

 

[Jamie M]

Was the appraisal from an REA?

Do you think they may have boosted the anticipated rent to make the yield look more attractive? It happens - I've had an REA tell me that a property I was looking to purchase would attract $70 more per week than my own DD was telling me.

Marg's right about the supply/demand at the time too.

Cheers

Jamie

 

[Scott No Mates]

An appraisal is an opinion whether it is the selling agent, the property manager's or your own DD.

Like anything, your DD may include a few opinions eg 2nd/3rd real estate agent etc or a licensed valuer (generally there is little point using a valuer for a rent appraisal for residential unless you are looking at a high end property or determining rental value for legal proceedings etc).

Unless someone has put the appraisal on letter head etc and noted the purpose of the appraisal (as a qualified & registered valuer), it will be difficult to hold them to it for any loss believed to be incurred. If it were for the purpose of the agent saying that they would like to take over the management and here is my rate, a different story & purpose.

 

[Terry_w]

Generally no.

THe appraisal must have been correct too if you had rented it out initially at the price indicated. Markets change.

 

[travelbug]

No but what was the time difference between the appraisal and when you needed to advertise? Things change. Some times of the year are worse than others for getting tenants. And there has been a lot of FHO buying so if it's in that type of area maybe vacancy rates have increased.

 

[Dazedmw]

My guess would be there is no come back for a dodgy appraisal.

If you want something with liability attached, talk to a registered valuer otherwise it's just a guess.

 

[greedy2000]

Wasn't there a thread recently from some dodgy guy, wanting to know ways to trick prospective buyers into thinking his place was renting for more than it was worth prior to sale?

i.e artificially upping the rent, and then giving cash back to the renter....


looks like this strategy could work....

 

[esh]

Rental market

I've got a property that I purchased, partly due to the rental appraisal I received. The appraisal (as well as the rent at the time) was $380 a week.
Unfortunately the tenant broke the lease and I had to find a new one. It took me over two months and I had to drop the rent to $320 per week to find anyone.

I know that this means I didn't do my due diligence properly and I'm annoyed about that. But I was wondering whether I had any recourse in regards to the rental appraisal? After all, I did have to drop it significantly.

The rental market has its trends as does the sales market. It is generally slower in these times. Start of the year is the best time to find tenants and play around with rental increases but demand tends to later soften. Im in Inner West and I could see the changes occuring maybe mid-late April. Have a look at what properties you are competing againgst on the market. It's okay, these things happen- just a lesson for you I guess to double check these things before finalising sale.

 

[spludgey]

Thanks for all the responses guys. While I now realise that I perhaps shouldn't have bought this property, it's not a terrible buy either. Good to learn from mistakes while they're still manageable, I guess! It's still a neutrally geared property, so things aren't too bad.