Not All Valuations are Equal
- Thread starter HotRod
- Start date
They sure are
A month ago, the agent valued our house at a conservative $620 - $640k based on very similar sales in the area, the bank took $100k off that, so no <80% LVR refinance possible!
Valuation is as much an art as a science.
$495k to $480k for a kerbside is basically the same figure from a valuers perspective.
A kerbside assessment is not a valuation quite simple. Neither is an appraisal by a REA trying to ingratiate themself to you.
I cannot count the number of times I have done valuations where I come in well under the owneres estimate of value, have them complain heaps, then they end up selling later for a price that is far far closer to my valuation than their estiimate.
As mentioned market value is set by the market on a willing buyer/seller basis. Hence most sales contracts are rubber stamped by valuers as being supported by sales evidence.
With a refinance a valuer is analysing sales evidence and applying that analysis to the subject property to arrive at a valuation figure with a defensible basis of justification. It will invaribly vary at least a little bit from what the property would get if it was sold.
There are after all heaps of instances where basically identical cookie cutter properties sell at basically the same time for different prices.
$495k to $480k for a kerbside is basically the same figure from a valuers perspective.
A kerbside assessment is not a valuation quite simple. Neither is an appraisal by a REA trying to ingratiate themself to you.
I cannot count the number of times I have done valuations where I come in well under the owneres estimate of value, have them complain heaps, then they end up selling later for a price that is far far closer to my valuation than their estiimate.
As mentioned market value is set by the market on a willing buyer/seller basis. Hence most sales contracts are rubber stamped by valuers as being supported by sales evidence.
With a refinance a valuer is analysing sales evidence and applying that analysis to the subject property to arrive at a valuation figure with a defensible basis of justification. It will invaribly vary at least a little bit from what the property would get if it was sold.
There are after all heaps of instances where basically identical cookie cutter properties sell at basically the same time for different prices.
I also can't count the number of times the opposite has happended or one valuer has an opinion that is way different % wise to another. I have also had it happen to me personally with a 20% variance from val to sale in less than a 4 month period.
I know its a tought job and you guys are pros. Just wish you weren't so swayed by the macro economic stuff and the D and G.
There are always anecdotes but years of data across thousands of vals supports the proposition that valuers generally get it right and owners generally get it wrong.
I just had a valuation done on my IP and PPOR for a refinance. My PPOR came back at 70K over what I purchased it for 3 years ago, my IP came back at exactly the purchase price.
They were both done by an inspection valutaion.
So thanks to the super result on the PPOR valuation, I got my refinance.
They were both done by an inspection valutaion.
So thanks to the super result on the PPOR valuation, I got my refinance.
Oh please TF, Bollocks. I am not talking about the white picket syndrome or the optimistic owners estimation I am taklkinmg about that fact that valuers come in light when there is no contract....full stop. If you think that is wrong well lets just agree to disagree
we had a valuation on our new PPOR come in for $150K under our purchase price, and compared against clearly inferior properties (in terms of number of bedrooms/ bathrooms).. ie they compared our 6 bed, 3 bath home against a 3 bed, 1 bath home. They didnt use any homes in the same street, which had sold in previous few months... instead used homes which were over 1km away as the crow flies, 3-4 km away to drive.
2 different valuers came in at roughly the purchase price. All were full inspections.
For some reason, the first valuer seemed to have a negative attitude from when he got out of the car... We thought perhaps the garden had put him off, so we did some work on it, prior to the next 2 valuations.
2 different valuers came in at roughly the purchase price. All were full inspections.
For some reason, the first valuer seemed to have a negative attitude from when he got out of the car... We thought perhaps the garden had put him off, so we did some work on it, prior to the next 2 valuations.
The garden would not make any difference.
You just got an incompetent valuer or one from a "better" area who does not think that any place could be worth $x in your area. - It happens.
Valuers are like other professionals, some good, plenty average and uunfotunately also quite a lot not so good.
We have just hired a new valuer. I suggested to him that he should not take out a loan just yet as I pointed out the following...
I realised that in the 5 years since I rejoined the firm, we only have 1 new valuer that has joined that is still with us - that had not worked with us before or we trained as a cadet - out of about 8 + that we have employed.
The others proved to be pretty useless and were encouraged to get jobs elsewhere and are still valuing elsewhere. Mind you a fair few of them were rubber stampers, which is what you often want in a valuer when you are borrowing.
cheers
RightValue
You just got an incompetent valuer or one from a "better" area who does not think that any place could be worth $x in your area. - It happens.
Valuers are like other professionals, some good, plenty average and uunfotunately also quite a lot not so good.
We have just hired a new valuer. I suggested to him that he should not take out a loan just yet as I pointed out the following...
I realised that in the 5 years since I rejoined the firm, we only have 1 new valuer that has joined that is still with us - that had not worked with us before or we trained as a cadet - out of about 8 + that we have employed.
The others proved to be pretty useless and were encouraged to get jobs elsewhere and are still valuing elsewhere. Mind you a fair few of them were rubber stampers, which is what you often want in a valuer when you are borrowing.
cheers
RightValue
Valuers....they aren't my favourite people at present.
Talk about suck up to whatever the Bank wants.....they are **** scared of getting sued by Bank lawyers.
We got a valuation done on our office block in May '09 by a valuation firm for a Bank - first mortgage purposes. Came up with a certain figure.
Roll on 3 years.
Another valuation required....
Same valuation company
Same Bank
Same Owner
Same Tenant
Same Building
Same Lease
Only difference was the nett rent had gone up by 10% over that 3 years.
Valuation figure came back 700K less than what it did 3 years ago.
Fortunately, the Bank has already approved the loan and the funds already gone through the system.
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Had another property valued in June 2007. Big land based, with a couple of sheds on it....improvements not worth 10c. Good Tenants, stable income.
This has just been valued in June 2012. Same everything, except the rents have doubled. Valuation came in a cool 1m less than back in '07. Land has not gone backwards in 5 years in Perth...no way.
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Valuers - lots of Art - zero science, zero respect. They are better than Credit and risk people in Banks, but only just.
Talk about suck up to whatever the Bank wants.....they are **** scared of getting sued by Bank lawyers.
We got a valuation done on our office block in May '09 by a valuation firm for a Bank - first mortgage purposes. Came up with a certain figure.
Roll on 3 years.
Another valuation required....
Same valuation company
Same Bank
Same Owner
Same Tenant
Same Building
Same Lease
Only difference was the nett rent had gone up by 10% over that 3 years.
Valuation figure came back 700K less than what it did 3 years ago.
Fortunately, the Bank has already approved the loan and the funds already gone through the system.
------
Had another property valued in June 2007. Big land based, with a couple of sheds on it....improvements not worth 10c. Good Tenants, stable income.
This has just been valued in June 2012. Same everything, except the rents have doubled. Valuation came in a cool 1m less than back in '07. Land has not gone backwards in 5 years in Perth...no way.
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Valuers - lots of Art - zero science, zero respect. They are better than Credit and risk people in Banks, but only just.
just reading case, lender against Valuer in a development land purchase gone bad. First Val $12 mil. Second Val when **** had hit the fan with the borrower.....$7mil. Same valuer. No changes to site or DA considerations...
Valuer used sensitivity / cash flow analysis method for the $12 mil figure based solely on pre sale amounts with no comparables sales evidence used...WTF?
Turns out pre sales were bogus and using other valuation methods came up with very different figures.
My point... $22k valuation fee and a rookie error? And you tell me they don't get it wrong on resi deals for 200 clams, please you're killing me.
Valuer used sensitivity / cash flow analysis method for the $12 mil figure based solely on pre sale amounts with no comparables sales evidence used...WTF?
Turns out pre sales were bogus and using other valuation methods came up with very different figures.
My point... $22k valuation fee and a rookie error? And you tell me they don't get it wrong on resi deals for 200 clams, please you're killing me.
