Property Valuers Horror Story Award Nominations

[lucky_phil]

Recently had the experience of a valuer submitting one report to a lender, then again, 3 months later, for a different lender, with the same valuer, same property, (prime beachside) which is suddenly now worth according to the valuer 20% less (they had "forgotten" they had already valued it).
Even the lender joked, "didn't think the bum had fallen out of the market just yet".
Add to that a major city valuer, for another of our projects, taking three whole weeks to complete a simple dual occupancy valuation. The firm did actually terminate the valuer concerned as a result, but it left us up the proverbial creek waiting.
Then there was the valuer back in 1999 who told our lender that beach property was risky, could go down badly in value, and he wouldn't recommend buying anything located near water.
It does make you think, are there any standards in the industry? Looks like valuers need to be micro-managed through the entire process, currently they seem to hold all the power in the relationship, and one is dependent on their perhaps flawed findings. Anyone else have horror stories or warnings to share?

 

[keithj]

Anyone else have horror stories or warnings to share?

I had a 20 acre block valued recently. It was a v. foggy day. I drove the valuer to the front gate - he got out the car, took a photo of the fog & that was it. And there was no way he could have known if that was the right block or anything else apart from the fact there was 5m of grass, then lots of fog.... and then he gave a crap val.

 

[Mark C]

Lucky_Phil,

Where do I start, I could fill the memory banks of the forum with valuer stories (as I'm sure many could). But I wont, I'll just sigh... close my eye's, and go to a happy place instead.

Mark C

 

[depreciator]

I've got a story. But before I relate it, I should say that the valuation industry to extent brought itself undone. Valuers some years ago kept undercutting eachother to get contracts with lenders. The price of a val in many cases is so low that they can't afford to offer a decent service.
(It's similar to why Depreciation Schedule suppliers who use QSs to carry out inspections are often more expensive than those who don't - but I digress.)
There are some good valuers out there, though. It's just that as investors we're often at the mercy of the one the lender appoints.

Now, my story (which I think I've written about once before):

I was sorting out the finance to settle on a unit in July 04. The bank needed to get it valued and the val came back much lower than I expected.

I said to the bank guy: 'That's way too low.' And he would have thought: 'That's what they all say'.

I said: 'Can you read the description of the unit?'

He sighed, and said: 'Okay........ 2 bedroom, one bathroom etc etc'

I thanked him when he'd finished and asked him whether the valuer had visited the property. He sighed again and assured me he had because they pay a higher rate for a visit as opposed to a drive by val.

I then asked him whether the valuer wore glasses. He asked my why. And I said: 'Because if he does wear glasses, he may not have had them on that day given he seemed not to notice the third bedroom and the second bathroom with the spa bath.'

I wish I could have heard the subsequent conversation between the bank and the valuer. The val was revised and I think the valuer over compensated.

Scott

 

[Kiwi Investor]

There is recourse if you don't agree with your Val, depending on who gave the instruction and what purpose the report is for.

After all most Vals are not a cheap exercise.

You will need to be careful, if the Val is part of a bank instruction then you are not actually supposed to have access to the Val report, as it's between the bank and valuer, ie the bank gives the instruction to the valuer, who is supposed to assure confidentiality.

I would also consider some kind of action if a val was not done correctly, and it cost money or opportunity cost, eg not actually doing a physical inspection, which is normally a requirement.

I also believe that most valuers have PI insurance these days to combat the litigation from poor val reports.

 

[flatout]

The bank had our PPOR valued last year when we were seeking finance for IP. Valuation came in about $80K under what we expected even allowing for a conservative valuation. Needless to say after picking myself up off the floor, I jumped up and down and eventually was asked to submit evidence that property was worth more. With the help of a REA I know, I put together a list of recently sold properties in our area but valuer stuck to her guns and refused to budge. We had no choice but to wear the mortgage insurance. 2 months later for another finance exercise, the bank sent a valuer back. Different bloke but same company. He walked in the door and said "Hmm looks like we were light on last time". Thanks a bunch I said, that cost us $XXX. He increased the valuation by $50K which even then was way too low.

Flatout

 

[robo]

We have had our PPOR valued by bank going off other sales in the area at 400k, we have it for sale at 379k for 3 mths, no offers and would probably sell for 350k - 360k. Go figure?
Robo

 

[goddessk]

When I did my refinance my credit union came and valued my one bedder at $30K under what they had valued it two years earlier. My apartment has a courtyard almost as big as the apartment and has a garage, in a small intimate block walking distance from shops and rail. I know it would sell for around $400K, esp. as the two bedder (balcony the side of a pea) upstairs just went for $440K. Quit the credit union, went to a bank and voila, valued at $370K. Co-incidentally exactly what I needed it to be.

 

[Mark C]

I met a property investor a few weeks ago who told me that after getting a particularly low valuation on one of his houses he put the property up for sale.

He got an offer some what higher than the valuation that was just completed, he took this around to the valuers office and exchanged idea's.

He subsequently took the property off the market and managed to get the valuation revised.

Seems to me like a huge effort to go through.

 

[Les]

G'day MarkC,

Seems to me like a huge effort to go through

Depends what was riding on the outcome, though, doesn't it? He might've been able to buy an almost guaranteed $100k profit (developing, whatever..) which might've fallen over without the loan.

So, if he spent 4 weeks making this happen, that's not such a bad use of his time is it? (and then, it's always good to win!! )

Regards,

 

[thedude]

I met a property investor a few weeks ago who told me that after getting a particularly low valuation on one of his houses he put the property up for sale.

He got an offer some what higher than the valuation that was just completed, he took this around to the valuers office and exchanged idea's.

He subsequently took the property off the market and managed to get the valuation revised.

Seems to me like a huge effort to go through.

I don't envy the REA trying to sell that property for him...