Valuation came exactly as the offer ..

[vaughan]

I reckon, a property's recent sale price should be a *really* good indicator of its current market value. Arguing anything else is going to take some strong evidence to the contrary.

If the recent buyer got it "below market price" then the quoted market price was optimistic.

EDIT: posted this before RightValue's reply.

 

[Aaron_C]

I think valuing a property at purchase price is fair. I have no issue with it.

 

[tobe]

lets imagine for a moment what the world would look like if purchase price and valuation diferred......

chaos.

 

[sanj]

RV, I agree with your post and I've never had an issue with a valuation before and we mustve bought and sold close to 20 places. My point is occasionally they get it wrong and this was one of those cases.

I know the area intimately, it is the 6th property with development potential I've bought within a 5km radius.

In this case, the valuer came back with a price for the property, which had 2 units on it with rent appraisal of 550/week, on 994sqm (incidentally he got thew landsize wrong in his valuation too, at 982sqm) LOWER than if it has simply been a bare 994aqm block. Interesting that despite being out by 12sqm his land+improvements still came out to preciseley the purchase price. Coincidence or lazy work on his behalf?

 

[Peter_Tersteeg]

In one instance for a construction loan, the valuer used figures something as follows:

Land Value: $300,000
Construction Value: $200,000 (straight off the building contract)
Total Value: $550,000

Horray we thought! The valuer has recognised that the end result will be worth more than the sum of it's parts.

The bank scratched their collective heads over it, went back to the valuer for further clarification of this. The valuer stated that similar completed properties in the area were indeed selling for $550k and similar blocks were selling for $300k.

The bank was only willing to lend against a value of $500k.

 

[tobe]

there are also a lot of lenders out there that dont do valuations on purchases given certain parameters, which makes life a little simpler.

Most lenders will only accept vals higher than pruchase when its a favourable sale, or when the contract was entered into 6 or 12 months prior to settlement.

 

[sanj]

Btw RV I also agree re the risk involved, why come back 15k above etc but once again we aren't talking a small amount here. I believe he was out by 68k at the very least and that is being conservative. This was an unusual property which no doubt was harder to value but ultimately he is a professional.

Anyway I understand why it was done, I just don't agree with it. We have also had situations where we sold and buyer paid above the odds yet valuation came back ok so I guess it goes both ways

 

[Aaron_C]

Only commercial valuers take into account future development potential because that's their instructions. Fair enough too as not everyone can develop.

 

[grantwhit]

If the value comes in at purchase price but you think it's worth more why not get an independent valuer in after you buy? If you've done your research it should come in higher (if that was your plan)

 

[Peter_Tersteeg]

If the value comes in at purchase price but you think it's worth more why not get an independent valuer in after you buy? If you've done your research it should come in higher (if that was your plan)

Unfortuantely this doesn't always work either. In another case the owner bought 6 months prior for what she felt was well under market value. She explained this to the valuer, providing comparible sales to what she thought was reasonable. The valuer nodded politely.

The valuation came back at the original purchase price, noting that this is what it had been purchased for and that the market hadn't shown signs of increase during that period.