Tips and Tricks for to Increase Bank Valuations

qonyx_sydney

qonyx_sydney

Hi Everyone,

I have just had a disappointing bank valuation and am interested in tips and tricks to increase bank valuations which to me seem a little conservative.

My situation as follows
- Purchased property in Ingleburn Dec-2013 - $470k (5BR,2Bath,2Car,650SQM,$520/week)
- Bank valuation Jan-2014 indicated some aspects were 'below average' valuation was $470k
- Spent $20k in minor cosmetic repairs on items indicated in valuation
- Current market indicates that similar property is now selling for $550k-600k (Oct 2014)
- Confirmation from RE that $550k would be at the low and time on market to sell would be extremely low (especially in current market)
- Recent bank valuation has valued the property at $480k (-$10k net after rennos)
- This is disappointing as i have reduced my equity position from this purchase

I am very keen to buy another investment property however am wondering what i could do differently to increase the bank valuation of the property so that i can use this equity in my next purchase.

Or is it just a case of 'suck-it-up' and that the bank valuation is in fact the market value?

What tips and tricks do the experienced members have out there to lift the bank valuations and therefore access the equity for their next purchase.
 
Agree with Rolf.

If switching lenders is a viable option than I'd get a broker to order two upfront vals with different lenders. You may have different valuers assigned - which possibly means a different result :)

Cheers

Jamie
 
If my broker doesn't like the value then if it's an 80% loan, he tries a different bank for a value, uses that value with the existing bank. If the price difference is significant, we move. It's a pain, but it means another couple of prop deposits potentially, or equity buffer
 
I'd go down the "change valuers" route that the others have suggested and also add the following comments

qonyx_sydney said:
My situation as follows
- Purchased property in Ingleburn Dec-2013 - $470k
Click to expand...
This is part of the problem possibly. In Dec-2013 the median house price was $390K(ish). You spent $470K on an, above median, type of house. You get more bang for your buck if you stick to "at or below median" purchases.

qonyx_sydney said:
- Spent $20k in minor cosmetic repairs on items indicated in valuation
Click to expand...
I'd question the quality and nature of the renos undertaken if you only managed to increase the val by 1/2 of what you spent.

Hope this may help. Cheers, Alan
 
Agree with the above advice.

I have also found that putting together your own report to give to the valuer eg comparative sales, etc etc can sometimes work miracles too. Cant hurt.
 
Keep the place clean. Not deck it out for staged furniture, they can see through that. But just a mowed lawn, plants, get rid of burnt out cars etc :)
 
I hate valuers as a passion,

the most incompetent, useless, egotistical and illogical bunch of people ever

they will consider anything thats not brand new as average condition,

the same valuer will value the same property 3 months apart, with up to 50% differnce

they will compare your property worth $X next door and yours is better, and will value it below $X

they get knarky at you if you challenge their vals, and it costs money

my only advice is to change lenders so that you get a new valuer and give the valuer a few comparables BEFORE the valuer goes on site
 
TMNT said:
I hate valuers as a passion,

the most incompetent, useless, egotistical and illogical bunch of people ever

they will consider anything thats not brand new as average condition,

the same valuer will value the same property 3 months apart, with up to 50% differnce

they will compare your property worth $X next door and yours is better, and will value it below $X

they get knarky at you if you challenge their vals, and it costs money

my only advice is to change lenders so that you get a new valuer and give the valuer a few comparables BEFORE the valuer goes on site
Click to expand...

Haha ever been to a broker function? This is the sense i get from just about everyone i talk to!
 
LeoT said:
Agree with the above advice.

I have also found that putting together your own report to give to the valuer eg comparative sales, etc etc can sometimes work miracles too. Cant hurt.
Click to expand...

This approach MAY have worked for a client of mine. I ordered a few vals for her.

Early ones came back around the 300k mark. She then put photos of her renovation on the walls for the valuer to see - and the latter ones came back at 320-330k.

It may have just been random - but as LeoT suggested - i dont think it can hurt!
 
What was your estimate when your lender sent the request through? I find if you estimate say $450k for a property that's worth $400k they may come back at $400k or $410k. If you estimate $380k it will come back at $380k or lower.
 
james55 said:
What was your estimate when your lender sent the request through? I find if you estimate say $450k for a property that's worth $400k they may come back at $400k or $410k. If you estimate $380k it will come back at $380k or lower.
Click to expand...

James, has this worked for you?

Would be keen on brokers/others views on whether this actually works. I personally havent seen this - but it would be interesting if it holds.
 
I have seen it work. Estimated mine at $550K when I knew it was worth around $520-$530K. Came back at $520. Prior to that it had come in at $500K as the valuation 6 months earlier, and that's what my broker had put as my estimate (even though I said $520K).
 
Also note that many different banks use the same valuation company, so you could very well end up with the same valuer anyway.
 
Thanks all for the replies

I have really got some handy hints from this group......

I think the main one that i will take away is to look at a broker to see if he can arrange other lenders and subsequently other valuers to take a look at the property.

In addition i also like Alan's suggestion of buying below the suburb median.

When i estimated values i used the following

PPOR - Glenfield, NSW
Jan-2014 Valuation - $640k
Estimate provided to bank Oct-2014- $720k
Valuation returned - $680k

IP1 - Ingleburn, NSW
Jan-2014 Valuation - $470k
Estimate provided to bank Oct-2014- $550k
Valuation returned - $480k

IP2 - Sandgate, QLD
Purchase price - $520k

What i'm a little miffed at is that the current market rates for PPOR and IP1 are definitely $30-50k more than valuation. I'm wondering whether they also use forward time models that suggest that the current market rates are not strong medium term values and therefore reduce the valuation accordingly.

Anyways thanks for all your help and input
 
If there is a drive-by, I heard that some people swap house numbers with 2 or three houses either side. Not only does this throw the valuer but usually gets a better val as the places either side are usually much nicer. Works a treat with villas, town houses and units ;)
 
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