Urgent (slightly weird) valuation question ..

[MaggieMcT]

Hi guys,

Has anyone ever had a bank reduce the valuation given by the bank's own valuer? We are in the process of applying for construction finance, and the bank's valuer came in with one valuation, which the bank reduced by a seemingly random figure (which is a bit less than 3% of total). Our broker is waiting for answers to questions, but I wondered if anyone had had any experience of this? It leaves us in a difficult position - we would be happy to take some stuff out of the building contract/extras etc but presumably this will just reduce valuation again. Argghhhh

Thanks in advance for any info you may have ...

Maggie

 

[Mick C]

Hi guys,

Has anyone ever had a bank reduce the valuation given by the bank's own valuer? We are in the process of applying for construction finance, and the bank's valuer came in with one valuation, which the bank reduced by a seemingly random figure (which is a bit less than 3% of total). Our broker is waiting for answers to questions, but I wondered if anyone had had any experience of this? It leaves us in a difficult position - we would be happy to take some stuff out of the building contract/extras etc but presumably this will just reduce valuation again. Argghhhh

Thanks in advance for any info you may have ...

Maggie

Yes it does happen.;..rare tho.

It happens if the valuation comes back with negative comments or risk rating especially "environmental risk" , or if the property is not livable.

Example:

Property is on a 1:50 ratio flood zone- some lenders will reduce the "improvement or house value" and keep the land value only. -- how much they reduce the house value depends on the property and overall deal.

 

[MaggieMcT]

Thanks Mick. I'll be very interested to hear what the reasoning is so. There's nothing unusual about this property - 5 km from city centre, established area, reasonable amount of outdoor space. Unless the fact that it is a rear lot but that seems a bit drastic as I presume the valuer has taken it into account. Thanks again!

 

[Marty McDonald]

Hi,

Never had that one like Michaels but have had plenty where be the valuation was more than the sum of the land value and construction contract amounts. Most lenders will only take the lower figure for their LVR calculations.

 

[tobe]

Ive only seen it where the build contract includes unusual things. Stuff that wouldnt usualy be included as fixed chattels.

 

[tobe]

even then its usually the valuer that excludes that stuff, or the lender instructs the valuer to exclude them.

 

[Aaron_C]

Since it is a construction loan maybe the valuer worked out the specs were lower than anticipated?

 

[MaggieMcT]

It's all very strange and I'm hoping its a mistake. Valuer gave really high land value (they've given us 18% increase since we bought lot 12 months ago) but land has performed really well in the area. Improvements are fairly standard I think. Can't get a copy of valuer's report but apparently there are no unusual risk ratings or adverse features. Will just have to hang in there and see I guess ...