Top 10 property valuation myths
- Thread starter Peter_Tersteeg
- Start date
Having used to work in a bank - we actually stopped using some valuers because they were 'too' conservative. We could never get a deal through with them. Or at least we would 'favour' other valuers because we knew that we could nominate a value and could 'lean' on them to get us over the line if required.
The way the system works was that it was nearly impossible to get a 'second' opinion if your value came up short - the guys in credit would always take the worst case.
It would be rare I would imagine to see a valuer get sued (and lose) over a valuation which was completed months before hand and even harder years later, as long as they could provide evidence of their research.
Blacky
Great article - Thanks for sharing, Peter.
Jane
Jane
That is a surprise Blacky!
There's a difference between being 'too conservative' and just being incompetent and wrong. Banks would only drop valuers for the latter reason, due to complaints from staff/brokers.
I had a very interesting discussion with another forum member who was kind enough to pass on the attached article which appeard in the Australian Financial Review almost 12 months ago.
It's essentially about the rising costs of professional indenity insurance for valuers. Many insurers simply won't even underwrite valuers at this point in time. The net result of this is likely to be a consolidation of the larger firms and the elmination of smaller valuation firms. I guess the natural progression from there would be an increase in the cost of valuations.
No wonder valuation firms are being more and more conservative.
Another somewhat related article http://www.brokernews.com.au/article/financial-planners-face-pi-coverage-crisis-144119.aspx describes that financial planners are finding it tougher to also obtain PI insurance. In turn this will make it more expensive for people to obtain financial advice. It'll be interesting when my own insurance renewal becomes due in about 6 weeks.
It's essentially about the rising costs of professional indenity insurance for valuers. Many insurers simply won't even underwrite valuers at this point in time. The net result of this is likely to be a consolidation of the larger firms and the elmination of smaller valuation firms. I guess the natural progression from there would be an increase in the cost of valuations.
No wonder valuation firms are being more and more conservative.
Another somewhat related article http://www.brokernews.com.au/article/financial-planners-face-pi-coverage-crisis-144119.aspx describes that financial planners are finding it tougher to also obtain PI insurance. In turn this will make it more expensive for people to obtain financial advice. It'll be interesting when my own insurance renewal becomes due in about 6 weeks.
Our first buy was easy - we loved the house, it met all our requirements, was below our budget and is our PPOR/'forever' home. Now that we are looking to buying a second property (as a long term investment) I'm plagued with doubts.
Just a couple of questions for the experts here
How do you assign a value for good views (specifically overlooking a reserve) all other things being equal?
What is the ideal land to price ratio in the inner eastern suburbs of Melbourne? I have seen a property here that got sold recently (land plus small 2 bed, 2 bath house in good condition), 690m2 at $1,667 per m2. However, several well renovated 3-4 bed properties on the same road have sold for between $2000 and $2500 per m2 (One 5 bed 4 bath Mcmansion on a 620m2 sold for $ 3173 a m2 in May 2010...ouch!).
How do you assign a value for a building (well renovated, standard 4 bed 2 bath modern house) when buying?
Appreciate your inputs. Thanks.
Just a couple of questions for the experts here
How do you assign a value for good views (specifically overlooking a reserve) all other things being equal?
What is the ideal land to price ratio in the inner eastern suburbs of Melbourne? I have seen a property here that got sold recently (land plus small 2 bed, 2 bath house in good condition), 690m2 at $1,667 per m2. However, several well renovated 3-4 bed properties on the same road have sold for between $2000 and $2500 per m2 (One 5 bed 4 bath Mcmansion on a 620m2 sold for $ 3173 a m2 in May 2010...ouch!).
How do you assign a value for a building (well renovated, standard 4 bed 2 bath modern house) when buying?
Appreciate your inputs. Thanks.
No need for you to work it out, the market does this for you.
Compare two houses that differ only in their views. Is there a price difference? Can the difference in price be attributable to the view?
Yes, the view, design and plenty of other factors will contribute to the valuation result.
A valuation will list other recent sales in the area and comment on how they compare to your property. The comparison will indicate if they're inferior, comparible or superior. Things other than the size and the number of bedrooms contribute to this opinion. The valuation will also not if it's a falling, rising or flat market in the local area which is also factored in.
It's part art, part science. As to what a superior design and location is worth in terms of square metres, it's difficult to be that specific.
The consolidation process is already ongoing for resi and commercial valuation firms. Insurance costs have priced small firms out of the market and with a number of banks streamlining panels several players have gone from the Melbourne market.
And yes, it does give more pricing power to the valuation firms that survive.
i use to have a cal bungalow on 1000sqm in floreat with city views. Sold it only 10 years ago and convincing anyone at the time that the house had character and that the views were worth something was next to impossible. it also had a granny flat that allowed double rent... again there was no value seen in it. Arghh... wish I had kept that one! (btw, was resold about 6 years later for an extra $1.2m with a mid level reno)
Damn.... how much would it be worth today?
Hi all
I am the Marketing Coordinator for Propell National Valuers. The original article as you have been discussing was created as a press release and as you know, press releases tend to be somewhat limited in their capacity to elaborate on the content, so in that light, our CEO, Bart Mead was fortunate enough to be interviewed by Kevin Turner from 4BC in a two part series covering these 10 myths.
I have posted the links to the two interviews below.
We hope this helps to clarify some of the topic items (and I also hope the links work properly.
http://www.propellvaluers.com/images/stories/bartmeadkevinturner4bc.wma
http://www.propellvaluers.com/images/stories/bartmeadkevinturner4bcpart2.mp3
Cheers
Aaron Parker
I am the Marketing Coordinator for Propell National Valuers. The original article as you have been discussing was created as a press release and as you know, press releases tend to be somewhat limited in their capacity to elaborate on the content, so in that light, our CEO, Bart Mead was fortunate enough to be interviewed by Kevin Turner from 4BC in a two part series covering these 10 myths.
I have posted the links to the two interviews below.
We hope this helps to clarify some of the topic items (and I also hope the links work properly
. http://www.propellvaluers.com/images/stories/bartmeadkevinturner4bc.wma
http://www.propellvaluers.com/images/stories/bartmeadkevinturner4bcpart2.mp3
Cheers
Aaron Parker
