Valuations Spreads - new players to IP take note

[Rolf Latham]

Following on from my other vals thread, and my view that I believe the industry is perhaps being "dumbed" down..........


been a good week, got some good results


300 k ( according to RP and Residex) one bed unit in a nice part of Brisbane

3 valuations from 3 different valuers and lenders


230 270 and 294


same property, same week, same condition.

10 % variation I accept as normalish, but 28% at this sort of $ range and cookie cutter product is just plain silly


My previous best was 25 %

1200 1325 and 1500


For new players, what this means, is that the difference between the high and low val, and taking the middle point, the capacity to extend your portfolio can vary hugelysimply based on the extent of the valuations.

That 50 k valuation sneeze can be worth 400 k cold pre tax cash one full cycle away.

So I guess the take away is, if you arent happy with the val, and you have some evidence of same, choose and move

ta
rolf

 

[Aaron_C]

+1. Rolf do you find it is the new, young valuers who tend to do the bad vals? That's been my experience so far.

 

[Rolf Latham]

+1. Rolf do you find it is the new, young valuers who tend to do the bad vals? That's been my experience so far.

Cant really comment, havent analysed it to that sort of depth - I dont fight this stuff, just try and work within the "rules".



ta
rolf

 

[Colin Rice]

Was listening to a valuer chat at a PD day and he did state that many of the older more experienced valuers are leaving the industry due to retirement. The younger less experienced valuers will obviously be taking there place naturally.

I sometimes picture in my mind a fresh faced uni graduate conducting a valuation not realising that families, marriages, businesses and of course property investors futures are in the balance based on the figure he or she decides to place on the property.

 

[D.T.]

Begs the question - how viable is it to 'shop around' for vals?

 

[Aaron_C]

Begs the question - how viable is it to 'shop around' for vals?

Very viable. Obviously if you are already with one lender and their val is crap, and you have already paid substantial LMI, then you are more limited...

 

[MTR]

I just think its pot luck, I got a recent value that was crapola the guy seemed pretty experienced, I had a great chat to him asked him lots of questions, thought oh yes, he understands this market, got it in the bag.... came in the lowest value over the last year he absolutely got it wrong/too low.

Then again, all my vals are coming in too low, even in West Syd where the market is booming, I think I own the cheapest house in the area val at $330,000, I know I could sell it tomorrow for $400,000

 

[Colin Rice]

Works both ways as I have done modelled estimates that came in way higher than expected and bank accepted the val with no concerns.

 

[MTR]

Works both ways as I have done modelled estimates that came in way higher than expected and bank accepted the val with no concerns.

Oh, its about time you MBs started a list with the banks that provide the best valuations,.... if only it were that simple

 

[Aaron_C]

Oh, its about time you MBs started a list with the banks that provide the best valuations,.... if only it were that simple

I've found that the worst valuations come from Macquarie thus far. Pretty much every single refinance pre-app val has been lousy.

 

[Colin Rice]

Its essentially a duopoly between Valex and VMS. Its common to get a val done by a different bank and the same valuer turns up as MBs have little control over the choice of valuer in most instances.

 

[MTR]

I've found that the worst valuations come from Macquarie thus far. Pretty much every single refinance pre-app val has been lousy.

That's interesting to know, we stay away from this one.

Macquarie B were also the bank that screwed many of their clients in the good old days with their lo doc/no doc product, I know a few who got burnt with this group.

 

[Colin Rice]

I've found that the worst valuations come from Macquarie thus far. Pretty much every single refinance pre-app val has been lousy.

Same property 1 week apart;

St George Val: $560,000
Mac Bank Val: $550,000

 

[Rolf Latham]

Begs the question - how viable is it to 'shop around' for vals?

you can see from the spread above it can be very rewarding

Fixed rate loans, loans >80 %, specific policy issues and security types may preclude one from jumping ship in need

Vals management is one of the basic priorities of a well structured portfolio IF you are equity bound.

If you have heaps of equity and cant service the debt, then vals are just a moot point to a large extent

ta
rolf

 

[Rolf Latham]

I've found that the worst valuations come from Macquarie thus far. Pretty much every single refinance pre-app val has been lousy.

Refinance

nuff said


ta
rolf

 

[Rolf Latham]

Its essentially a duopoly between Valex and VMS. Its common to get a val done by a different bank and the same valuer turns up as MBs have little control over the choice of valuer in most instances.

worse than that : )

the agency wont even do the second val.................. they will preclude you from doing a second while there is a primary on the system and will usually ask the "new" lender if they are ok to assign the val for a fee of around $ 110.

Having said all that, depending on the transaction there are ways to work the system a little so you can get 3 vals from diff sources

ta
rolf

 

[Colin Rice]

Having said all that, depending on the transaction there are ways to work the system a little so you can get 3 vals from diff sources

Font of knowledge as always Rolf.

Care to share your strategy for those playing at home?

 

[Aaron_C]

Refinance

nuff said


ta
rolf

True but not when vals with other lenders come out 100k higher all the time!

 

[Rolf Latham]

Font of knowledge as always Rolf.

Care to share your strategy for those playing at home?

Do not try this at home................

Obviously a combination of AVMs, desktops, kerbsides and fulls combined with RP /Residex and some knowledge if your subject is below or above median for the turf, AND is it a significantly better or worse property than those around it.

A classic is the AVM on a place that's on rail or busy road in a posh burb.

Many times too though, you need to know when to quit before you even start...... the white picket fence syndrome can cost new brokers and heap of time and effort


ta

rolf

 

[tambourineman]

Its essentially a duopoly between Valex and VMS. Its common to get a val done by a different bank and the same valuer turns up as MBs have little control over the choice of valuer in most instances.

Valex don't do the valuations aren't they more like a middle man