Valuation?

So I've had my IP revalued after a spruce up and new lease etc.

My house is a tidy partially renovated 3bed fibro. Reno was new paint + polished floorboards. My house has 2 advantages its DA approved for a duplex + its got a fully self contained detached granny flat in the rear of the property. My land size is on par or slightly larger than the three comparables.

It came in at $500k - Not a bad little rise in 12 months.

My issue is that just 5 houses up the road an unrenovated 1970's 2 bed brick veneer just sold for $509k, + 2 other recent sales that I gave the valuer that we're $528k and $549k. These two we're a 3bed and a 4bed with LUG.

All sold within 4 weeks of my valuation and I offered the valuer the details from RPdata + the agent details for them to confirm if needed.

My house can be used in many different forms and the agent who sold the three examples I offered the valuer, believes he'd sell it for $530k no problems and if all good as much as $550k

I've questioned the bank re the valuation and the valuers have responded by saying they are sticking by there valuation.

Whats the point of getting comparable properties if the valuers make the figures up as they go along?
 
More often than not, banks and valuers won't allow the valuation to be challenged if it's within 10% of the comparable figures you're showing them.
They are quite inflexible on this, in my experience.
 
You got a pretty good result for a refinance IMO. Yes you might be able to sell it for $530k because you have time to do a marketing campaign etc etc. The valuer is valuing it on the basis of a quick mortgagee sale by the bank, which is a diferent story. I dont want to stick up for valuers, but....
I'd take that val and run....
 
We have had huge variations in the value of a property we just bought. I don't understand it.

I agree - they roll a dice and then they go to lunch!
 
Low valuation

Hello can someone please offer me some advice. I have just received a valuation that has come in way under market value. In Dec 2007 the valuation from a bank came in at $ $580.000 The current value rate notice (done Jan 2008) has the value set at $590.000 Two local realesate agent valued it in the vicinity of $700-$750,000. The valuation came in at $480,000 way under a rates notice done 22mths ago. My broker has indicated that due to the severity of variance he is comfortable in disputing the val. Has anyone else experienced this? Do banks ever reconsider? Thankyou
 
I have just had a fully renovated, 2 bedroom unit with an enormous, landscaped yard/entertainement area valued at the same value as a a 1 BR, unrenovated unit with no yard (and in the same group as mine) sold for a couple of months ago.
Despite my suggestion that the bank have the valuer drug tested, I suspect they did not.
I lodged a carefully researched challenge to the valuation, supported by RP Data reports of recents sales which clearly highlight just how incorrect the valuation was.
The bank (RAMS) didn't budge.
I've asked my broker to withdraw the application from RAMS as I simply won't do business with a bank that is so blind to such a glaring error.
Good luck is all I can say, Indulgedbelle.
 
Heh. One of mine was valued at half as much again as I bought it for (slightly less than the rates notice), the other at exactly what I told the bank it was worth (more than twice the rates notice).

I don't think there's a pattern.
 
Correct me if I'm wrong, but the rates notice only says the valuer general's land value, and also may be a couple of years out of date. So the rates notice would really not apply to the valuation at all??

I have my rates notice sitting in from of me - $226k land value - but valuation $600k.
 
New rules

A number of lenders are using the Valex System now which is a computerised valuation origination system.

The lenders can pre-program their parameters (fire sale or whatever other criteria they deem suitable) and instructions to the valuers on what basis they wish the valuations to be performed. :(

Some folk in the US with NINJA loans fouled up and also the smoke and mirrors of the investment/merchant banks and other derivative products packaged as investments has affected the supply (and confidence) of credit....and now it's pay back time. ;)

Sickly valuations, tight LVR's and hoop-jumping are the flavour of the day.

The rules are changing and the banks and the morgage insurers are now doing everything they can to stack the odds in their favour. The loose times will come again however not for a while.

Shop around and be very certain about what your property is worth. Maybe even commission your own Valex report before you bother a bank/lender. If you get knocked back on the amount of funds you're seeking based upon a skinny valuation, doesn't look good to the next lender on your record and so on.

New rules.....learn the rules and play by the rules.

Rob makes a nice point about drug testing the valuer......trouble is, it's a virtual online valuer for most loans. The bigger stuff and the higher the numbers involved then perhaps more than a desktop is used.
 
Indulgedbelle and Rob Williams

Were actual valuations performed?

That is did a valuer inspect the property, take notes and photos and measure the property or did the bank use another appraisal method such as a desktop or driveby - neither of which are valuations.

Sounds rough treatment.. best go with another lender or commission your own valuation as many suggest here.

cheers

RightValue
 
A number of lenders are using the Valex System now which is a computerised valuation origination system.

The lenders can pre-program their parameters (fire sale or whatever other criteria they deem suitable) and instructions to the valuers on what basis they wish the valuations to be performed. :(

True Valex is dominating the Valuation industry now.. they are basically a middleman that stands between the financial institution and the valuer and doels out the work.

As for the valuation parameters..

I have done 10's of thousands of valuations for lenders ranging from lenders of last resort such as Bluestone and Liberty, second tier lenders such as Aussie and Wizard, to Top tier banks such as CBA and NAB.

Never once that I can remember have I been asked to do anything other than a current market valuation.

Banks are in the business of lending money ... if they only ever wanted firesale valuations they would not do much business. .. Trust me bank lenders try to get the valuer to value as high as possible.

The only time I am asked to put a forced sale value on a property (firesale) is when I do work for the mortgagee in posession of the property - by then the bank legally has posession of the property) which they must put to Auction (used to set the reserve).

I trsust this clears up a misconception.

cheers

RightValue
 
Were actual valuations performed?

That is did a valuer inspect the property, take notes and photos and measure the property or did the bank use another appraisal method such as a desktop or driveby - neither of which are valuations.
We had a desktop done when we refinanced/bought and 'actual' valuations done a bit later. Those proper valuations are very timeconsuming :eek:

And one came in lower than the council rates notice (the other was exactly what I said it would be). In their defence, you couldn't tell how bad the house was from the outside, and now the inside is done up you can't tell how *good* it is from the outside as I haven't got around to painting yet and the old paintjob is extremely below par ...
 
True Valex is dominating the Valuation industry now.. they are basically a middleman that stands between the financial institution and the valuer and doels out the work.

As for the valuation parameters..

I have done 10's of thousands of valuations for lenders ranging from lenders of last resort such as Bluestone and Liberty, second tier lenders such as Aussie and Wizard, to Top tier banks such as CBA and NAB.

Never once that I can remember have I been asked to do anything other than a current market valuation.

Banks are in the business of lending money ... if they only ever wanted firesale valuations they would not do much business. .. Trust me bank lenders try to get the valuer to value as high as possible.

The only time I am asked to put a forced sale value on a property (firesale) is when I do work for the mortgagee in posession of the property - by then the bank legally has posession of the property) which they must put to Auction (used to set the reserve).

I trsust this clears up a misconception.

cheers

RightValue

Beat me to it RV. Lenders are after fair market value and we don't instruct on any basis other than in MIP situations and that is largely for the purpose of provisioning..
 
RV,
Something I've always been curious about is the conservative nature of professional valuers' "Market Valuation".
Whenever I have commissioned one, it has always been on the low side of my expectation, so have used it as a bare minimum value.
I am aware that as the owner, I maybe biased and unconciously have greater expectations of the true market value, however so far this has not been the case.
My question is, when you are commisioned to do a market valuation, is the end figure that you come up with, what you genuinely believe the property would fetch on the market, or is it a minimal figure erring on the side of caution ?
 
My question is, when you are commisioned to do a market valuation, is the end figure that you come up with, what you genuinely believe the property would fetch on the market, or is it a minimal figure erring on the side of caution ?


I do a market valuation on the date of inspection based on PAST sales evidence, using the most recent evidence I can get.

Believe it or not often recent evidence is not accepted by the mortgage insurers .. sometimes they only want settled sales ... so I throw in both the most recent and a bit of older stuff to support my figure.

Owners tend to look at asking prices rather than sale prices. They don't, necessiarly make the allowances for differences in size, quality and land size, or wether most of the value is in the land or the dwelling.

Agents usually give a value range with the bottom end where the market actually is or was last week and the top being what they hoope they can get especially in a moving market ... or what they think you want to hear.

Most of the time my valuation will be close to the bottom end of the agents range.

Remember we cannot value for the sunniest day, for an auction that goes way over what evidence would suggest a property is worth due to three bidders falling in love with the property or a current shortage of properties on the market this month.

You wouldn't believe how many times an owner tells me that it would take the "right person" to fully appreciate their property and pay their market value. We value for joe average not someone that really loves the place because it is just what they want.. we take the emotion out of the equation.

I have done heaps of valuations of properties that have subsequently gone on the market and sold within 3 months... or in a reasonable time frame after my valuation ... only to see that the sale price supports my valuation figure. Way more often than not I get it right. - as proven by the market

One thing I generally ignore is the owners estimate of value .. and believe it or not quite often I value a property over what someone thinks its worth!

And yes I will also come in under a contract price if the price is not supported by sales evidence - though it is something I do very rarely.

Also and this is a big one ... we MUST ignore any development potential in a property. ..Why?? would you want to lend on a value based on potential? If the property has plans and permits, it's more than potential and I value it accordingly ... so you want to buy a 600sqm corner site for $100k more than the same size site down the road went for, go for it ... just be prepared to fund the potential yourself.

In saying all this I am considered a pretty decent valuer .. but there are some that are not so good out there ... I have met heaps of them .. (they usually end up working for councils) and quite a few mediocre ones .. we even have mediocre on our staff - it's just like any profession you deal with you get the good and the bad. It is a bit rough when you can't choose a decent one yourself but that is the nature of the game I'm afraid...


cheers,

RightValue
 
Indulgedbelle and Rob Williams

Were actual valuations performed?

That is did a valuer inspect the property, take notes and photos and measure the property or did the bank use another appraisal method such as a desktop or driveby - neither of which are valuations.

Sounds rough treatment.. best go with another lender or commission your own valuation as many suggest here.

cheers

RightValue

In my case, the valuer did attend the property, hence my total suprise at his use of a desktop figures.
I'm working on a strategy with my MB at the moment. If I don't commission my own valuation, I'll move to another lender for sure.
Thanks for your input.
 
Hello can someone please offer me some advice. I have just received a valuation that has come in way under market value. In Dec 2007 the valuation from a bank came in at $ $580.000 The current value rate notice (done Jan 2008) has the value set at $590.000 Two local realesate agent valued it in the vicinity of $700-$750,000. The valuation came in at $480,000 way under a rates notice done 22mths ago. My broker has indicated that due to the severity of variance he is comfortable in disputing the val. Has anyone else experienced this? Do banks ever reconsider? Thankyou

Indulgedbelle sent me some deatils of where her property is located.

It is a seaside holiday place where I do not value and have never been.

However I did a search of sales and there is only one sale on PDOL in that suburb in the past year .. selling well below what her property was valued at in December 2007 - and not as good a property from what I have been told.

Basically it is generally accepted by valuers that prices have come off quite a bit in these areas from the last market peak in December 2007 (when the property was last valued).

In the absence of any evidence that prices have risen from this peak it is a big ask to ask the valuer to value the property at that figure.. the rates valuation was done with evidence at the peak of the market as well.

Yes the Melbourne market has recovered well and is at or past the December 2007 peak .. but is there any evidence that this has occured in Holiday areas outside of the main metropolitan area or and in this area in particular?

If the agents truly believe it is worth over $700k, then get them to prove it; in doing an appraisal they should offer some basis for their appraisal figure ... comparable sales. Provide this to the bank.

But if the evidence is a year old then that won't be accepted by the bank or the valuer.

You cannot dispute a valuation by just saying that it is too low. You need to offer some recent evidence to support your assertion.

I am not saying that either the valuer or the agents are right or wrong, I am just raising issues from a valuers perspective in this particluar situation.


I have replied in this thread as I would have replied to Indulgedbelle but I thought that it may help others for me to give my thoughts on this situation.

cheers

RightValue
 
As alluded to a bit - you could order the valuation upfront with CBA, NAB, Homeside, ANZ... outside of having to come up with the $ upfront with CBA.

Noting that if I were doing it and we did that with 3 of the above and 2 came back at me for valuation restitution the client would be paying for it.
 
Also and this is a big one ... we MUST ignore any development potential in a property. ..Why?? would you want to lend on a value based on potential? If the property has plans and permits, it's more than potential and I value it accordingly ... so you want to buy a 600sqm corner site for $100k more than the same size site down the road went for, go for it ... just be prepared to fund the potential yourself.


RightValue

Thanks RV for your reply. Very insightful. Good to get inside the head of a valuer and see it from your perspective.
The quoted passage above was of particular interest, and makes perfect sense once you spell it out like that.
 
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