Valuers (again)

[silverghost]

Is there something going on in the world / profession of valuers that I don't know about?

My concern is the huge variations given by valuers on the same property - in one case I know, from contract price of $360K (Jan 2002) to $470K, and it's causing real havoc all round.

Presumably they all study pretty much the same course content for their diplomas (a two year course???).
Presumably they all use the same criteria.
Presumably they all look for comparative prices in similar properties in the area (which must appear on the valuation report?).
Presumably they all work to the same industry guidelines.
Presumably they all adhere to the industry standards (monitored by the Australian Property Institute??)....

... so their ships should therefore (presumably) all be sailing in the same direction?

So why such huge differences? How exactly do valuers work? Why are the contents of valuation reports deemed to be so secret? What do they have to hide?

I'm confused.
SG

 

[retiringat40]

SG,

Exactly what I was thinking. When I moved from Brisbane to Melbourne earlier this month, my company organised two valuations on my former PPOR and I organised one for the bank.

Valuer 1. $310K
Valuer 2. $275K
Valuer 3. $350K

All valuers came into the property on the same day. So that doesn't explain the HUGE difference.

While chatting to them, we could tell which ones specialised in the area, and which ones were generalists.

I have copies of all the reports. Their valuation is based on comparable sales, after each one they write Inferior to subject property, or Superior to subject property.

How can they judge without knowing fully the comparable sales? Does the sales database only give a picture of the front, without much detail of the house?

 

[peteb]

so which valuer was the specialist in the area number 1 , 2 or 3 ?

 

[retiringat40]

Number 3.

I was peeved because #2 especially didn't seem to recognise the value of the reno done. However it was an internal reno, so later on if he had only used his digital photo of the front of the house as his reference point, and compared it to his comparable sales, he might have thought inferior properties were comparable.

However, in the end it didn't matter, as number 3 was the approved bank valuer.

It was just interesting to see the differences, that's all.

 

[Kevin Hockey]

If you guys think you've got it tough try being an agent relying on these guys coming up with the right price to earn your living.

I have made my point before in this forum that too many valuers are not up to date and are simply getting it wrong.

And..... too often the property valuation is reflected in the buyers capacity to borrow. What that has to do with the value of a property I don't know. There should also be a law against valuers and bank managers doing drive bys.

And....another one....why is the property's value never (certainly never in my experience) above the contract price.

Now here's an industry needing an overhaul if ever I saw it.

P.S. My opinions are based on my experience and the industry as a whole. I know some very good valuers and like my industry it's probably just the mugs that ruin it for everyone.

Kev

www.nundahrealestate.com.au

 

[peteb]

so is it the valuers fault kevin that realestate agents are continually underquoting the asking price of a property to interested parties ? because they tell the real estate agent that it is worth 200K but really the seller wants 250K ?

 

[Simon]

Pete,

Usually the valuation is done as negotiations finish and the finance company needs to work out the value of the security.

Cheers,

 

[Kevin Hockey]

Originally posted by peteb
so is it the valuers fault kevin that realestate agents are continually underquoting the asking price of a property to interested parties ? because they tell the real estate agent that it is worth 200K but really the seller wants 250K ?

Hi Pete,

Your point is irrelevant of this post. You will find plenty of other posts regarding unethical practices by agents, and you won't find me disagreeing with you on your point. But how an agent completes the sale of a property and it's eventual sale price has absolutely nothing to do with previous comments made here. The discussion is regarding valuers coming up with THEIR price for a property.

Kev

www.nundahrealestate.com.au

 

[Gill Bates]

Im curious why they ask what the contract price is ?

 

[abcdiamond]

Originally posted by Gill Bates
Im curious why they ask what the contract price is ?

I think they need valuable information like that to help in their valuations

My last two valuations have both co-incedentally come in at the same figure as the contract price. Funny how a different real estate agent valued it at 40k higher a few weeks later ( Sydney 2001 ).
I was sure that we had got a bargain, and we did, contrary to the valuers opinion.

 

[Les]

G'day abcd,

Call me cynical if you like, but if a valuation REACHES purchase price, I am convinced I HAVE indeed got a bargain !!!!

My last purchase came in at Purchase price - today (6 months after contract, 4 months after settlement) I believe it is worth at least 40% more than the price paid (based on similar/inferior sales in the same area).

When the Bank's valuer came in at contract price, it put a huge smile on my face - today, it just gets wider

Regards,

 

[Michael Yardney]

Originally posted by Kevin Hockey
And....another one....why is the property's value never (certainly never in my experience) above the contract price.

Now here's an industry needing an overhaul if ever I saw it.

.........

Kev

www.nundahrealestate.com.au

We recently settled on a property that was purchased on an 18 month settlement. In the meantime we added considerable value by obtaining a planning permit for 20 townhouses.

We had quite some difficulty getting lenders to accept the new higher value rather than the contract price or the eventual lender's valuer to put a valuation on the property that was higher than the contract price, (what Kev is talikng about) despite the clear increase in value. In fact I had some very heated discussions with him.

We did manage to get our valuer, with whom we have a good relationship, to value it 20% above the contract price, a figure that I thought was fair.

I had much pleasure in on selling the property within 2 weeks of settlement at a figure almost 20% about this higher valuation, that is almost 50% above the valuation that the Collins St valuer for the lender would give. I had great pleasure sending him a copy of the contract of sale.

By the way I did not get a bill from this valuer (was quoted $4,00) despite him doing the work and I am not sure I would have paid it considering how far he was out from the real market value as shown by the market.

 

[Simon]

My purchase valuation came in exactly at contract price - what a coincidence

Cheers,

 

[Kevin Hockey]

And I can't for the life of me understand why.

A property is worth what it is worth and should be valued accordingly. Too many outer influences are allowed to determine what a valuer writes on their paper.

I spoke to a valuer recently, she is a friend of mine who rang and asked for assistance in coming up with a value on a local property, and as we discussed it she started talking about the future and what the price might be in the future yada yada and I stopped her and said....But what has that got to do with it. I told her she was there to value it today, not speculate what the future may have in store for it. It was obvious she was considering coming in low because in her opinion the market was going to stall or go backwards because of share prices etc.

This really irks me. I can only sell a house for what the market will pay today, and a valuer should value it likewise. And if the value is above the selling price the new owner should know it and be able to use the equity immediately to their benefit.

Kev

www.nundahrealestate.com.au

 

[Simon]

Kevin, surely the value of the property is set by the market?

I mean whatever the highest price someone is willing to pay means that is what it is worth?

How can it be worth more - especially if it is listed on the open market?

Cheers,

 

[Les]

G'day Simon,

I mean whatever the highest price someone is willing to pay means that is what it is worth

The words I heard were something like "The price paid by an un-anxious buyer to an un-anxious seller".

I may have mis-remembered the ACTUAL words, but you get the idea. Any anxiety from EITHER side can change a purchase price markedly!!!!

And, unless ALL of us got to see EVERY place for sale, EVERY day, and were in a position to buy, then the actual sale comes back to the few buyers that are AWARE of the sale of this property and want to go to contract.

Anyway, I firmly believe that properties are sold "under-value" (and even over-value, though perhaps less often) EVERY day of the week.

I firmly believe that the latest purchase I made was 15% under true value from day one!!! And we paid almost List Price !!! But it was a GOOD BUY, even at List Price....

Regards,

 

[Simon]

A convincing argument Les!

I hope mine was bought under value too....how do I find that anxious buyer?

Cheers,

 

[Les]

Hehe !!

I hope mine was bought under value too....how do I find that anxious buyer?

Look for a Home Buyer (the more emotional the better )

The only question I have is why are you selling?

Regards,

 

[silverghost]

Kevin H certainly has a point. I, too, know of valuers who try to predict the future, which they are most definitely not licensed or qualified to do. (Come to think of it, who is? Can they please let me know what next week's lottery numbers are?)

It seems there is an element of trying cover their asses in the event of any 'professional liability' cases that may arise as a result of their valuations, when in fact this should not be the case. They must value a property at today's price in today's market conditions, not what their own unqualified personal opinion thinks it might be in three or six months' time.

Afetr all, any investment of any kind is based on the impossibility of forecasting the future and only the Almighty can do that.

Anybody know how many litigations there are involving valuers per year?

SG

 

[Simon]

Les, I am not selling - that was tongue in cheek. But I guess everything is for sale at the right price.


Re predicting the future. Just looking at my valuation there is a risk analysis where the valuer has scored 1-5 on a series of criteria. 1 being best. My property has scored 2's right through except for a 3 on market volatility. I guess this is where he has covered himself.

Cheers,