Valuers making their own market

[Rolf Latham]

Hiya

Those that know me, would be aware that I believe most valuers get itright most of the time, despite what we as property owners may sometimes think or feel.

Sometimes though I just have to shake my head at the logic ( or lack thereof ) that pervades some valuers thinking

Recent well contested public auction for a house in Melb burbs, for around the 820 000

80 % full doc lend, standard resi property etc

Valuer comes back with

772 000 val

Contract price is considered to be high in the Current Market.

Low volatile price levels in a softened market

​

I was under the impression that a public auction in a softened market would be a good test of the "Current Market" ............alas.

3rd time in 12 years, and similar reasons presented again..........."the agent said there was a lot of interest in the property and it sold well above reserve".


ta
rolf

 

[Dazedmw]

Sounds tough. The question, as it should always be, is how were the sales?

 

[mattnz]

3rd time in 12 years, and similar reasons presented again..........."the agent said there was a lot of interest in the property and it sold well above reserve".

I guess that the valuer saw the reserve as what the seller was actually willing to sell at, rather than the overinflated price paid in a bidding war.

 

[Rolf Latham]

I guess that the valuer saw the reserve as what the seller was actually willing to sell at, rather than the overinflated price paid in a bidding war.

the converse logic then dictates if a property has a "high" reserve and is passed in and sold at 50 k below the reserve, then the val should be 50 k higher..........and we know that doesnt happen.

There is some validity in what you say, but not when you press into the fact there are no "bidding wars" in "softened" market.


ta
rolf

 

[Rolf Latham]

Sounds tough. The question, as it should always be, is how were the sales?

Comparables are often not a good guide where a valuer has "made the market" and has a pre determined opinion on something.

Case in point for this val in the same street an unrenovated dungeon sold for 700 k 2 mths ago.........didnt make the comps, but properties 2 ks away did.

I have one framed valuation in my laugh kit where a valuer decided that a property in a quiet cul de sac was so poorly valued for a refinance, the only comps they could find to support their case were 3 properties backing onto a 3 lane motorway

ta

rolf

rolf

 

[Ausprop]

takes me back to the days when a certain marketing company was in full swing. the valuers would only accept an increase over a previous val of 5%, so we had to keep incrementing the contracts. Stupidly easy to manipulate. every time one went thru there was a comparable and the market was made.

 

[DaveM]

Yes it can be a bit hit and miss.

I had a reval earlier this year where the only comps for a 2br renovated villa in a quiet street next to shops, schools and bus was an unrenovated 2br unit on the Great Western Highway and an over 55's villa complex???

 

[Aaron_C]

Comparables are often not a good guide where a valuer has "made the market" and has a pre determined opinion on something.

That's all it is. You can make anything fit with selective sales.

 

[Peter_Tersteeg]

Rolf I recall we had this very conversation in reverse about 6 months ago.

We all know the drill. Contest the valuation whilst quietly preparing an application to another lender.

 

[truong]

One of my pet hates is where the valuer gives out a lower valuation citing a declining market. Is it the role of valuers to predict how the market will go in future?

 

[rawna]

Rolf I recall we had this very conversation in reverse about 6 months ago.

We all know the drill. Contest the valuation whilst quietly preparing an application to another lender.

PT Bear,

Is that still possible to ask valuation in front? which lender still provide that services?

I remember one broker help me to do this 5 years ago, not sure now..
Since the interest are so low, temptation to use my equity - But not sure how much I have now..

 

[Peter_Tersteeg]

There's a few lenders who allow brokers to order valuations prior to lodging an application.

I wouldn't order a valuation prior to an auction however:

1) There's no guarantee that you'll be the successful bidder (statistically the chances are quite small for any specific property).
2) You don't know what the property will be sold for prior to the auction. Chances are the valuation would either be inaccurate if it's too high, or would sabotague your finance applicaiton if it's too low.

Valuations are essentially a well educated and researched opinion, but there is a margin of error involved. A valuation prior to purchasing just gives you a maximum purchase price and it's likely to actually be lower (given the current market). This would be detremental to your finance application.

 

[Rolf Latham]

Rolf I recall we had this very conversation in reverse about 6 months ago.

We all know the drill. Contest the valuation whilst quietly preparing an application to another lender.

there was reasonable arguement to yours in terms of chattels though : )

ta
rolf

 

[Peter_Tersteeg]

there was reasonable arguement to yours in terms of chattels though : )

ta
rolf

Yes, but the difference between the first val and the second val was over 20%. The second valuation put a $10k price on the chattels and even they ignored our comparibles and came up with their own (which supported the purchase price).

 

[Rolf Latham]

Yes, but the difference between the first val and the second val was over 20%. The second valuation put a $10k price on the chattels and even they ignored our comparibles and came up with their own (which supported the purchase price).

therein lies my point.

Comparables are mean to make the market.

When we get dodgy vals, we find that the comparables are selected around the $ value of the valuer wants to support.

Lucky there aint too many poor vals like that

Recently we had a spread of 300 k on a property 1200k to 1500 k within one week with 2 diff valuers. Not unique property either !

ta
rolf

 

[travelbug]

The purchaser of our PPOR was going throughj St George and got as valuation $50K under purchase price (7% under). It was pretty much market value in my opinion.

Broker was ropable, bank (apparently) agreed. They asked for 3 comparable salesd within 500 metres in the last 3 months. Agent gave 4. Valuer said no way was he changing it. Went to CBA. Valuation on the money. A pain as we extended the cooling off. Very stressful as I didn't want to start open homes again (2 was enough).

Now packing 19 years of "stuff".

 

[Rolf Latham]

Broker was ropable, bank (apparently) agreed.

Broker yes, bank being STG................nah, the lenders dont really give a hoot, otherwise they would allow a check val from a diff valuer, which we can sometimes push for.

Some lenders give their panel valuers waaaaay to much grace on both sides of the equation

ta
rolf

 

[Zerosignal]

We just had a similar result in Melbourne.

Purchase price $670k for our PPOR build, valuer came back in $570k. I was prepared for some pain but not $100k. Valuer put in the valuation that $240k is all that is needed for a 36sq house build...

One of the properties in their valuation is 6.5km away two suburbs over! Which conveniently was priced at $570k as well, let me just add that is 6.5km further away from the CBD.

On top of that they ignored a house that sold for $660k and this house is only 700m away from ours.

Needless to say we are contesting the valuation or we will be off to see another bank. Pity as I like who we bank with currently.

It won't stop us from building but I have an objection to paying LMI

 

[Aaron_C]

I have gotten a valuation overturned before (recently) with CBA. It was tough, though and I had a good BDM.

 

[RightValue]

On top of that they ignored a house that sold for $660k and this house is only 700m away from ours.

I am not defending bad valuations, they happen, especially with newer valuers.

In relation to the above.

The valuation standards (driven by the banks) changed on 1 November.

Valuers can now only use settled sales. Even if the identical house next door sold unconditionally the week before, it cannot be in the sales evidence of the report. Yes it can be noted but you need to base your valuations on the sales evidence you use.

Every residential valuer I know is pissed off with this one.

Also are you sure the $240k was the check cost of the construction contract and not the added value of the improvements? There is a difference. A 36 square build should have a construction check cost of at least $300k (depending on specs, could be well over $400k) and a replacement value considerably higher, but the added value may well be below cost.