No bank val required - good indicator?

[Paul j F]

Just purchased a property and apart from the 10% deposit we had to borrow the lot as a stand alone mortgage. We had been preapproved for the amount but thought the bank would still want/have to do a valuation. They didn't.

We believe we did get a good buy. Despite needing a lot of work its a liveable 4x2 that we got 50k below Bayside council (vic) unimproved land value.

Of course time will tell but do you think the fact the bank did not require a valuation supports our belief we got a good buy.

 

[Aaron_C]

Banks don't do valuations for many reasons. Particularly if the loan is 80% or less, then a val may not be required. If it is a mortgage insured loan then a full valuation must usually always be done.

 

[Terry_w]

Just purchased a property and apart from the 10% deposit we had to borrow the lot as a stand alone mortgage. We had been preapproved for the amount but thought the bank would still want/have to do a valuation. They didn't.

We believe we did get a good buy. Despite needing a lot of work its a liveable 4x2 that we got 50k below Bayside council (vic) unimproved land value.

Of course time will tell but do you think the fact the bank did not require a valuation supports our belief we got a good buy.

Some banks have a policy of not getting valuations if the sale is through a registered agent and under a certain amount. This means you could have paid above market value and still not require a valuation. Take care.

 

[Rolf Latham]

It basically means that the lender is happy tocarry the risk, vs the small cost of the val.

Depending on the property, the sophistication of the borrower and the lending circumstances, we may still force a full val for various reasons

ta
rolf

 

[Shahin_Afarin]

Most likely that it has slipped through to the wicketkeeper.

 

[Ausprop]

lending without vals - I find this incredible

 

[Peter_Tersteeg]

Happens all the time. As Rolf said, the lenders assess that the risk is minimal and they simply rely on the contract of sale or the equivalent of an RP Data or Residex report.

There's all sorts of ways that this can be used to your advantage, but most commonly is that it simply speeds up the process.

 

[Ausprop]

Happens all the time. As Rolf said, the lenders assess that the risk is minimal and they simply rely on the contract of sale or the equivalent of an RP Data or Residex report.

There's all sorts of ways that this can be used to your advantage, but most commonly is that it simply speeds up the process.

may happen all the time and be simple but is far from low risk (particularly if relying on an rpdata report - omg they can be wildly out!). Their money tho, good luck to em.

 

[Rolf Latham]

may happen all the time and be simple but is far from low risk (particularly if relying on an rpdata report - omg they can be wildly out!). Their money tho, good luck to em.

isnt just that simple, and it aint the RP report that you and I get : )

Some underlying safeguards include

Same state borrower as property, arms length contract with agency, no 2 tier Post codes, generally no inner city stuff etc

ta
rolf

 

[Qlds007]

Yes can sometimes get away without a valuation on a refi as well.

Can work well especially if the property has fallen and value and the properties are cross collateralised and the borrower wants to keep on investing.

Just before I left Brisbane had one where a registered valuation came in at $80K less than an online report so rather than argue with the valuer we took the online report.

 

[Rolf Latham]

Yes can sometimes get away without a valuation on a refi as well.

Can work well especially if the property has fallen and value and the properties are cross collateralised and the borrower wants to keep on investing.
.

works really well where the median is quite high and the subject property is somehow not flash, eg located next to busy traffic, powerlines etc

ta
rolf

 

[Propertunity]

On the flip side, I was talking to a client recently who had a Valuer do a 1 hour full walk-thru val, opening every cupboard, measuring everything and taking dozens of photos for the purpose of a $60K loan on a fully paid off property. The land value alone was over $200K - so the val seemed a bit excessive.

 

[Tillie]

This has now happened to us 3 times in the last 18 months. The bank has not been bothered to order valuation. However LVR for all loans were not more than 80 per cent and the purchase prices were under the council rates notice valuations. The Bank just asked the copy of rates notice and that was it.

 

[Aaron_C]

This has now happened to us 3 times in the last 18 months. The bank has not been bothered to order valuation. However LVR for all loans were not more than 80 per cent and the purchase prices were under the council rates notice valuations. The Bank just asked the copy of rates notice and that was it.

It's got nothing to do with the rates notice. If it is a low value purchase they will just take that as the price for valuation.

 

[Tillie]

Aaron,

You might be right. None of our purchases were over $300k, so the bank was happy to take a risk.

 

[Aaron_C]

You might be right. None of our purchases were over $300k, so the bank was happy to take a risk.

Heh. After going to 3 auctions today which were all hot and went over $1.3m - I think that the policy is stupid. A good property will sell in good, bad or indifferent markets with lots of competition.

 

[Paul j F]

Wow. A lot of good points from a lender's perspective.

The property in question was purchased for $762k, council unimproved valuation $805k, capital improved $910k. A liveable but renovation required 4x2 in Brighton east on 700sqm potentially sub div block.We'd done our dd and were confident we'd got a good buy.

We've borrowed 90%, only paying the deposit. We do have three other IPs that are pretty much neutrally geared but this purchase is a standalone loan. We're only on a moderate income so expected a valuation from the bank. When it was not required it reinforced our belief we'd bought we'll.

Wouldn't a lender, if they had any doubt, require a valuation?

 

[Peter_Tersteeg]

The property in question was purchased for $762k, council unimproved valuation $805k, capital improved $910k. A liveable but renovation required 4x2 in Brighton east on 700sqm potentially sub div block.We'd done our dd and were confident we'd got a good buy.

We've borrowed 90%, only paying the deposit. We do have three other IPs that are pretty much neutrally geared but this purchase is a standalone loan. We're only on a moderate income so expected a valuation from the bank. When it was not required it reinforced our belief we'd bought we'll.

Wouldn't a lender, if they had any doubt, require a valuation?

On those figures I would have expected that the bank would have definitely wanted a valuation, especially with a 90% loan.

Are you paying LMI on the new purchase? Are you sure they're not cross-collateralised with the IPs?

 

[Paul j F]

On those figures I would have expected that the bank would have definitely wanted a valuation, especially with a 90% loan.

Are you paying LMI on the new purchase? Are you sure they're not cross-collateralised with the IPs?

That's a question I did not actually want raise or bring to the attention of the lender, 90% borrowings, no LMI and yes def standalone.

 

[Peter_Tersteeg]

That's a question I did not actually want raise or bring to the attention of the lender, 90% borrowings, no LMI and yes def standalone.

Are you absolutely sure it's standalone? About the only two scenarios I can think of where there's no LMI on a 90% loan are:

1. You're a doctor or equivalent medical profession and you've gotten a LMI waiver (very few lenders actually do this these days).
2. It's been cross-collateralised to another existing property with the same lender.

Add in the absence of a valuation and I've really got to question that it is truly standalone. Would you mind disclosing the lender and the product?