Property Valuation

[jaymm165]

We are in the final stages of buying an IP in a south Brisbane suburb and our bank has just thrown a curly one at us. The property, a 3x1 townhouse, is selling for $312K however the banks valuers have said it's value is $280K, which has now put our LVR oveer the 80% line. I have spoken to 2 other investors and they too have had their properties valued a lot less than the purchase price. One is with the same bank, another not and all different real estate agents.

I've checked out the sold properties on realestate.com.au and one has recently sold for $309K, others in the area are around the same, some lower, some higher. I jsut don't know where the data has come from in this valuation.

Is this because the valuers are still catching up on the rising prices or are they being "very" conservative.

I'm just unsure which way to turn now as our final date for finance approval is due in a few days.

Regards

Jay

 

[BoatBoy]

Unfortunately the valuers go on previous sales over the past 3 month's , so you'll find the $309K sale will not show up on their record's for another 3 month's.

Sad but true.

Dave

 

[sailor]

Try using a couple of different banks who use different valuers. We had this happen once, and I supplied the bank with some recent sales, & data from www.realestate.com.au and eventually we got what we wanted. So don't give up...just try a different avenue.

 

[The Y-man]

I'm just unsure which way to turn now as our final date for finance approval is due in a few days.

Regards

Jay

I take it this is a conditional contract? Can you say to the vendor - "I'm pulling out - unless you want to come to the party and drop you price to $280k"

Cheers,

The Y-man

 

[sheiks]

Most banks have a panel of valuers. Find out from your bank/broker who carried out the valuation. If the bank has more than one on the panel, it maybe worth your while paying another valuer on the panel for a second opinion. If you have some very recent sales data to support your case, it would help.

 

[CairnsAgent]

I'd use the tactic suggested by "Y-man".
Use it as a negotiating tool.
"look the value has come back at this..."
If that doesn't work, as Sailor suggested, gather your own data, ask the valuer for the records they used in valueing the place, then point out any obvious oversights etc..

good luck

 

[BoatBoy]

Not sure if supplying data from RE.com'll work., but worth a try.

I know with Westpac last time we re-financed our 3 newies they would only give us a final val through HTW of 75% of the prices for similar properties that we produced from RE.com.

Our recent sales data from REA's didnt help as it was less than 3 mth's old and HTW and Westpac would not accept it.

Interestingly the REA info came from the father of the valuer at HTW.

This stopped us doing another project and forced us to look at NO-Doc, which was good, as it's opened a whole other door of opportunity.

The current val's on those 3 are way up now.

Dave

 

[sheiks]

jaymm165

I am not sure if you are dealing directly with the banks or if you are going with a broker. There are some useful suggestions eg use the low val to negotiate the price down and get more than one lender with their different valuers to have a look at it...but remember you are running out of time too. A good broker will have access to many lenders at their finger tips and could save you time and money. There are many on the forum.

Is your offer subject to satisfactory valuation? If it is, you probably have a better chance of negotiating them down and may have a bit more time to line up a different lender. I guess the risk is that if there are other offers, you may lose it altogether. But definitely worth a try. If not, you could choose to walk away altogether. There is plenty of fish in the ocean

 

[Rixter]

I would also as others have suggested.....use the low valuation as your negotiation tool to get your purchase price down to within a 80% LVR for you.

Otherwise get recent report from a sales data supplier, ie rpdata, pds, etc and have a look for yourself to approach the valuer.

Or find another valuer on the banks panel and commission them as a 2nd oppinion.

Or flick the IP and find another......the deal of a lifetime comes along every few weeks.

 

[steveadl]

I was under the impression valuers had the sale prices of houses as soon as they have settled, not 3 months later? ie. if it settled on 1st of July, then it will be available very soon there after. I know the last RP Data report I bought, the most recent sale was only 2 days before. Surely the valuers must have the same info.?!

 

[Kevin Hockey]

I was under the impression valuers had the sale prices of houses as soon as they have settled, not 3 months later? ie. if it settled on 1st of July, then it will be available very soon there after. I know the last RP Data report I bought, the most recent sale was only 2 days before. Surely the valuers must have the same info.?!

RP Data gets their info from Dept of Natural Resources, hence the reason it is covered by the Privacy Act. Highly unlikely it is up to date within 2 days, as no Govt dept works that fast RP Data is around 3 months behind with its data. Valuers source their info in the same way we do, using RP Data and agent info plus adding up land, building and fixtures value.

If you can find info of properties which have settled or gone unconditional that the valuer doesn't know of they will in most cases use it to assist them. Sometimes they will increase their valuation with additional info. At the moment I'd imagine they are trying to predict the peak of the market and allow for a correction.

Kev
www.gogecko.com.au

 

[Peter_Tersteeg]

There are lenders out there who may not require a valuation if the LVR (against the purchase price) is below 80% and the deal meets a few other criteria (which yours sounds like it does).

If you can't renegotiate, talk to your broker about lenders with lighter valuation policies.

 

[steveadl]

RP Data gets their info from Dept of Natural Resources, hence the reason it is covered by the Privacy Act. Highly unlikely it is up to date within 2 days, as no Govt dept works that fast RP Data is around 3 months behind with its data. Valuers source their info in the same way we do, using RP Data and agent info plus adding up land, building and fixtures value.

If you can find info of properties which have settled or gone unconditional that the valuer doesn't know of they will in most cases use it to assist them. Sometimes they will increase their valuation with additional info. At the moment I'd imagine they are trying to predict the peak of the market and allow for a correction.

Kev
www.gogecko.com.au

Then I've got to ask, how did I get the info. on a house (in fact a number of houses) that settled within the 3 month time frame of when I ordered the report? ie. I bought the report on 16th June, and it had a settlement price of a property from 13th of June (from memory).

I'm asking as this is very interesting to me, as I believed the settlement dates as listed on the properties at RP Data were correct. They warn you before the report that it could be up to 3 months for a house to come up (as you said), but in my experience, the houses have always been there soon after?

 

[steveadl]

One example that comes to mind is the house across the road from me sold a while back. The "sold" sign was stuck on 1st March, so I figured settlement would probably be about a month, so I waited 2 months just to be safe, and it turns out, it had (according to RP Data) settled on 27th April (or there abouts) - I bought the report in the first couple days of May.

 

[Rixter]

Then I've got to ask, how did I get the info. on a house (in fact a number of houses) that settled within the 3 month time frame of when I ordered the report?

No idea Steve. You will need to ask your data supplier the question how often they source their info. They are the only ones who can answer it.

 

[jaymm165]

Extending Finance

Hi everyone,

Many thanks for all the responses to my query. As the contract states that we can extend for another 14 days, this is what we are going to do and I will be seeing my broker on Monday and have them send some sales data from the RE website and hopefully ask for another valuation. To be so far out.... $32K.... just doesn't sit right and if need be, we can pull out and look elsewhere. However I'm not sure of the costs to us to pull out.... certainly not $32K which we could save in the long run.

We've had a look at SmartMaps and received their report on the latest sales and that doesn't even have the Stage 3 of the development listed, yet it is finished, registered, complete with tenants moving in as we speak!?

Jay

 

[The Y-man]

We've had a look at SmartMaps and received their report on the latest sales and that doesn't even have the Stage 3 of the development listed, yet it is finished, registered, complete with tenants moving in as we speak!?

Jay

Is this property a brand new thingy?

Cheers,

The Y-man

 

[jaymm165]

Is this property a brand new thingy?

Cheers,

The Y-man

Yes it is. But not off the plan as it has been completed.

Jay

 

[sheiks]

A question for the more experienced...

Assuming:

1. There haven't been many recent sales in the same street or similar props in nearby streets
2. Market is fairly flat or slow

I'd imagine in a slow market the banks would be eager to do business and as such would "make" the valuation match up provided the risk is not too high.

As a potential buyer you could:

Make an offer subject to independent val. Then go to an independent valuer...tell them you want a really conseravative valuation (ie tell them it's not for finance but for your own satisfaction). Give them a really crappy estimate of your own valuation.

I'd imagine with not much data to go with, your independent valuer may come to an estimate closer to yours than the panel valuer of the bank. You could then use this as a negotiating tool with the vendor to bring the price down.

Is this a tactic that some of you have used before and what have the results been?