Hi all,
I just thought that I would share some experiences of the days valuation experience. There was a recent post about OTP purchases of apartments so "the bad" might be a salutory reminder that the gospel according to HK is not always right. My last job was a "good" story so I thought that I would throw that in to show that I am not overly negative. The "ugly" story will illustrate why banks need valuers and why more and more, banks are following the trend of the non-bank lenders and getting a valuation done on sales.
The Good.
I was in a 1 brm 1960’s flat in Richmond. The owner/occupier paid $64k for it 8 years ago. It was valued today at $185k, with aprox only $5k having been spent in renovations over that period. $8k is being borrowed so the body corporate can renovate the exterior will add aprox $15k to the value.
The Bad
An apt in Hawthorn in a renovated/converted building with character (great selling feature), sold off the plan in 2000 or early 2001 (probably on a deposit bond) for $330k. Settlement was in August 2002. The owner defaulted at settlement. It just sold at Auction (not a mortgagee auction) by the developer for $280k in June 2003. A recision notice had been served. Note that the purchaser lost the deposit (bet that the deposit bond people will be after them) and will probably be liable for sale costs plus the difference in sale price (less defaulted deposit). By the way they had bought 2 units in the development.
The Ugly
A colleague rang me this afternoon. He had just valued a 1 year old unit in a middle northern suburb. Two units had just sold at mortgagee auction for $425k (in total), only slightly below market levels (about $10k discount to a normal market transaction each). The bank (a big 4 bank) had lent 80% of the “contract price” of $850k for both. The lend was $680k. The just took contract price and didn’t get a valuation. The real mkt value at the time of the len/contract would have been around $450k max apparently.
Cheers,
RightValue
I just thought that I would share some experiences of the days valuation experience. There was a recent post about OTP purchases of apartments so "the bad" might be a salutory reminder that the gospel according to HK is not always right. My last job was a "good" story so I thought that I would throw that in to show that I am not overly negative. The "ugly" story will illustrate why banks need valuers and why more and more, banks are following the trend of the non-bank lenders and getting a valuation done on sales.
The Good.
I was in a 1 brm 1960’s flat in Richmond. The owner/occupier paid $64k for it 8 years ago. It was valued today at $185k, with aprox only $5k having been spent in renovations over that period. $8k is being borrowed so the body corporate can renovate the exterior will add aprox $15k to the value.
The Bad
An apt in Hawthorn in a renovated/converted building with character (great selling feature), sold off the plan in 2000 or early 2001 (probably on a deposit bond) for $330k. Settlement was in August 2002. The owner defaulted at settlement. It just sold at Auction (not a mortgagee auction) by the developer for $280k in June 2003. A recision notice had been served. Note that the purchaser lost the deposit (bet that the deposit bond people will be after them) and will probably be liable for sale costs plus the difference in sale price (less defaulted deposit). By the way they had bought 2 units in the development.
The Ugly
A colleague rang me this afternoon. He had just valued a 1 year old unit in a middle northern suburb. Two units had just sold at mortgagee auction for $425k (in total), only slightly below market levels (about $10k discount to a normal market transaction each). The bank (a big 4 bank) had lent 80% of the “contract price” of $850k for both. The lend was $680k. The just took contract price and didn’t get a valuation. The real mkt value at the time of the len/contract would have been around $450k max apparently.
Cheers,
RightValue