Valuation - Am I dreaming?

Hi All,

I've read the various threads around valuations (thanks, RightValue) but none of them provide a specific answer for me, so here goes.

I have an IP "valued" at $450k, owing about $270k.

I want to refinance to 80% LVR, to fund the purchase of a second IP.

My question is around how much weight is placed on recent sales in the same block, versus comparable properties in the same street/block.

In my case my unit block has 24 units, all the same (2 bedders, LUG).

In September 2009 an unrenovated unit sold for $340k.

In December 2009 a renovated unit sold for $425k. REA tells me he feels sorry for the vendor who sold for $340k.

Another renovated unit is now under contract for $450k.

I have an RP data report that estimates the value at between $333k and $399k, showing comparable sales of 2 bedders in the area ranging from $370k to $440k.

What are my chances of getting my (renovated) unit valued at $450k – I realise the valuers/banks will be conservative but if they take $450k and reduce it by 10% (405k) it means I can't purchase the property I want to purchase…..

I'm thinking the valuer will notice the big "For Sale – Under Contract" sign at the front of the property, and I think $450k is fair value.

I would appreciate people's opinions and whether I need to lower my expectations of the value of my place….

Thanks again
Roosterman
 
It seems you have one comparable sale @ $450K and another @ $425K from Dec 2009.

You may get a val of $450K over the line as long as there are others @ $450K in the area (if not in your building) to support your argument.

One comparable sale can be considered "out of line" and therefore ignored.
 
Vakuers will generally try and source at least 2 of the 3 comps fro outside the development, unless its news development stock ( which this isnt) where they will look for all comps t be outside

ta
rolf
 
thanks guys, hopefully I will be OK.

FYI I last refinanced in Sep '08, bank valuation then was $340k.

So it seems Marrickville has had some significant capital growth in the last 18 months!
 
It seems you have one comparable sale @ $450K and another @ $425K from Dec 2009.

You may get a val of $450K over the line as long as there are others @ $450K in the area (if not in your building) to support your argument.

One comparable sale can be considered "out of line" and therefore ignored.

That's pretty much it. Plus the $450k sale has not settled and may well be conditional .. This is a refinance valuation .. if it was me and there was supporting evidence outside I would come in around $435-$440k .. if it was a sale contract for your property then I would have no problems with rubber stamping it at $450k..

When markets are moving like they are, I am not going to go out on a limb and value your property at the maximum as indicated by one sale alone. We as valuers always have to assume that the music will stop tomorrow. We have to be able to substantiate our valuation in court by reference to anaylsed sales evidence.. hanging your hat on one top sale is dangerous.

I crashed a sale a couple of days ago.. all the recent evidence of same size or larger houses on larger sites (twice the size) were quite a bit below this sale. I talked to the agent about it today (I am very friendly with this agent) he could not come up with any other evidence within a cooee of this sale .. in fact they had sold the properties I used as evidence to justify my valuation figure below the sale price. He is now looking for any evidence he can find .. - for the purchasers try to challenge the valuation -I did warn him that even if he found something, it needed to be more than one sale and that come what may if I revised my figure I would risk rate the property to such an extent than more than an 80% lend would not happen.

I know many investors believe that valuers should value their investment properties at a price justified by the highest sale in the area.. but that is just not going to happpen.

As a salutory reminder this afternoon on my way to an Agents office to put in a revised offer on a property I came to a sudden halt. The same agent had an auction board on a property .. the tell tale notice was in the window .. mortgagee in posession .. I rang my office... they confirmed that I had done the refinance valuation on the property last year.

This one will be fine, the market has moved substantially since then... but if it hadn't.... .. well I am not going to go out on a limb and put my career and income at risk, just to push your refinance valuation so you can buy another property with 90% gearing. I value using evidence that I can substantiate in court, period.

cheers,

RightValue
 
well I am not going to go out on a limb and put my career and income at risk, just to push your refinance valuation so you can buy another property with 90% gearing. I value using evidence that I can substantiate in court, period.

cheers,

RightValue


And so a valuer should. Anything else isnt really doing you, your borrower and your lender any favours.

Inceasingly, borrowers' legal people are looking for a goat, be it a broker banker valuer mooon phase etc.

Expect a lot less flexibility in the business of lending as more and more legislation removes the onus on borrowers to have responseability

ta
rolf
 
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