Valuers set market property prices and standards are low

[RightValue]

My point is this:

If there is not an acceptable valuation there is no deal and no sale.
Even in a rising market, flat market or falling market an unacceptable valuation = no sale.
Valuers are the deal breakers, as they have the responsibility and accountability to provide a satisfactory valuation.
A sale subject to finance cannot be approved without a valuation. No valuation and no deal.
The sale is 'dependant' on a valuation.
What ever value they approve, that sets the market price for that property.
Therefore Valuers set property market prices, not buyers and sellers!
Think about it...

cheers

I will say this .

I have never bought a property in this country subject to finance.

I have never sold a property that has been subject to finance.


Valuers have never had in input on any of my property deals in this country in the manner in which you suggest.

Valuations rarely ever get done on purchases unless the LVR is greater than 80%.

Most of a valuers work is refinance work, not valuing sales.

 

[j]

Valuations rarely ever get done on purchases unless the LVR is greater than 80%. Most of a valuers work is refinance work, not valuing sales.

Come on...

If a contract for sale of land offer is subject to finance, the standard lender process requires a bank valuation. That is routine thank you very much.

Come on...

First home owners do not purchase property with cash. The vast majority will be subject to finance.

Do you think investors would purchase property with cash? Come on the vast majority of investors purchase property subject to finance. It's called leverage.

Not many other buyers/home owners would use cash to purchase property these days. Come on that would be the exception.

Here's some ABS stats on

Housing Loan Approvals – indicates non FHB owner occupiers activity, first home buyer, and investor activity. RBA Graph 68:

The November 2010 Financial Aggregates
Download the lending and credit aggregates xls sheet and see
■Owner occupier housing (including securitisations)
■Investor housing (including securitisations)


I understand as a valuer that you would not be biased in your opinion?

 

[DEC]

We have a contract for sale on a block with existing Demo Precinct house on it in good condition, but crying out for a major renovation.

Ultimately, we had two developers look at it, but the highest of the verbal offers was $45K under the price we accepted from the family looking for a nice big yard.

Why would developers be interested if it was DCP?

 

[wylie]

Why would developers be interested if it was DCP?

Firstly, they keep the house at the front, and build another in the back or two townhouses, whatever the block will support. The front house is raised and built under. Therefore, two houses and only had to build one, and renovate another.

Secondly, DCP seems to be able to be got round. We live in a DCP street and a 1930s house was removed. Our IPs are in DCP areas and just last year a 1930s house was removed. I think rules are made to be broken, and I believe devlopers can get things done that I could not.

I know with our double block with two DCP houses, a town planner told me he felt confident that one house would be able to be removed, which would make the block more attractive and allow a "vacant" block.

 

[Bargain Hunter]

My point is this:

If there is not an acceptable valuation there is no deal and no sale.
Even in a rising market, flat market or falling market an unacceptable valuation = no sale.
Valuers are the deal breakers, as they have the responsibility and accountability to provide a satisfactory valuation.
A sale subject to finance cannot be approved without a valuation. No valuation and no deal.
The sale is 'dependant' on a valuation.
What ever value they approve, that sets the market price for that property.
Therefore Valuers set property market prices, not buyers and sellers!
Think about it...

I've thought about it... if it wasn't for those nasty valuers I'd have a house on the water at Rose Bay. What a load of bollocks.

Valuers set the price for those who can't afford to buy.

A property doesn't suddenly drop in value because of a valuation and you can't get the loan to buy it. It only drops when people who can afford to buy decide it is not worth having. If you want a property and the valuation is lower than expected then you just have to have more skin in the deal.

On the other side of a coin a property does not sell for more then it's worth simply because the valuer added too many zero's. If the valuation comes in high the banks won't magically lend you more than you can afford to repay, and buyers won't suddenly decide to pay more than they believe it is worth to them personally.

Lenders only care about their exposure to risk and determine this by two main factors, your ability to repay the loan, and their ability to recoup costs should you default. This is the only purpose the lender has for a valuation there is no secret squirrel business about setting the market price.

Regards

Andrew

 

[alexlee]

Valuers in bank loans work for the banks. Therefore, when banks are more willing to lend money, they likely value higher. A valuer who consistently values below the contract price, leading to loans to fall through, might not get as much work from a bank who wants to lend. When markets were hot, there were fewer incidents of vals being low (my own experience, anyway). Valuation is an art. In a rising market, who can really tell?

Besides, as we know, just because the property is 'realistically' valued at 500k, doesn't mean someone can't afford to buy it for 550k, say.

 

[j]

Fair Market Bank Valuations Are Easily Manipulated in Australia

Call it slight of hand or smoke and mirrors, Australian property valuation standards are low and can be manipulated to benefit the commercial interest of valuers and the banks.

If buyers and borrowers believed they were adequately protected by valuation industry standards this could be no further from the truth.

A compelling case study, of residential real estate sales data, exposes how easy it is for Valuers to select and include specific sales data and exclude other sales data in bank valuations. The process is easily manipulated.

It is common knowledge that there is no national legislation and no national standards for licensed valuers. That licensed valuers can act at real estate agents and vice versa.

Of central importance to any bank valuation/fair market valuation is the process of gathering, selecting and including residential sales data in a property valuation report.

This is the process of comparing apples with apples and the fair market valuation should reflect a fair median price or fair average price, based on the sales data selected.

The core principle behind ” Fair Market Valuations” is that in the event of the buyer/borrower experiencing financial stress, the owner or bank could sell the dwelling for that fair market value.

The objective of ” Fair Market Valuations” is to protect both parties. However Australian valuation industry standards are low, and from an insiders perspective bank valuations can be easily manipulated..

Check out this case study that clearly illustrates what fair market value is. However the valuer selects and includes specific sales data and excludes other sales data. The valuer provides an over valuation and the bank accepts this over valuation...


What are the implications?


cheers

 

[wylie]

Must be Groundhog Day.......

Why not just add this to the thread you already started on this topic?

 

[Rolf Latham]

The objective of ” Fair Market Valuations” is to protect both parties.

ummmmmmm

no

I ask my clients to get their own val or do other dd if they have concerns about the "market value" of what they are buying.

The bank val is there for the bank and no one else.

In "most" cases the bank val comes in at or slightly below market.


ta
rolf

 

[wylie]

Am I going mad or was this a new thread that has now been moved?

 

[Rolf Latham]

M A D M O V E

 

[j]

Inflated valuations and property scandals

Certainly the standards in the property and valuation industry are questionable

It is worthwhile reflecting back on the professional standards that existed in the finance industry in Australia in the 1990's to 2000's

For instance in WA there was the finance brokers scandal and investors lost 100's of millions of dollars

Particularly there was a scandal involving some finance brokers who were raising money from retirees and lending it to property developers, often based on inflated valuations.

see the Yahoo Story about loan spruikers

and the WA Finance Industry Scandal

And the new National Consumer Credit Protection legislation... ASIC has become the national regulator for consumer credit and finance http://www.asic.gov.au/credit

 

[VYBerlinaV8]

I think there's more going on here than we have considered:

First, property valuations represent a subject assessment against whatever data is available. Different data, different results.

Second, the valuation may represent the price that could be achieved tomorrow if the property was put on the market, or the price achieved after 6 months on the market waiting for the right buyer to come along and fall in love with the property. Two very different prices.

Third, if the valuer is working for the bank, then the primary objective is for the bank to gain assurance that the property can be resold for enough $$ to recover the debt should the borrower default.

I also suspect there is a degree of professional opinion (which is fine, professionals get paid for their opinion all the time).

Valuations are a means to an end, and shouldn't be taken as gospel in all situations. More thinking needs to be applied here.

 

[j]

Valuers breach and complaints

Hi

Here is some research info

Check out the Valuers Board of QLD website http://www.valuersboard.qld.gov.au/complaints/

One of the decisions below states the valuer " failed to verify factual data that may affect the valuation and was negligent in your performance as a valuer and contravened a prescribed code of professional conduct. "

Decisions of the QLD Valuers Disciplinary Committee

Decision - File No: C119-4/09 - October 2010 (PDF, 56 kB)*

Decision - File No: C132-3/10 - October 2010 (PDF, 48 kB)*

Decision – File No: C116-3/09 – December 2009 (PDF, 76 kB)*

Decision – File No: C110-8/08 – August 2009 (PDF, 84 kB)*

Decision – File No: C111-9/08 – June 2009 (PDF, 80 kB)*

Decision - File No: C87- 8/07 - March 2008 (PDF, 10 kB)*

Decision – File No: C102-3/08 – December 2008 (PDF, 75 kB)*

Just some objective research
Not stating an opinion either way


cheers

 

[j]

Legal precedent for Valuers where they value a property negligently

............

 

[evan1875]

i have a question here:

if the property im interested to buy had been valuated 6 month prior by the bank with which the vendor was refinancing. the valuation is instructed by the bank and suitable for mortgage security purposes for that bank.

the vendor lets the buyers know that there is a bank valuation at, say 500k.

i negotiate price down to say 420k.

could i go back to the vendor's bank and ask them to lend against the valuation of 500k instead of the 420k of purchase price?

 

[Leghorn]

Short answer you can ask but the answer will be no.