Valuers, ...What planet are they from?

Got a dual occupancy development up in Redbank Plains that we are looking to refinance. Bank valued it at $580,000 in 2012.

Different bank valuer went out to inspect yesterday and came back with a valuation of $420,000..... I'm dumbfounded. This is for a totally renovated 3,1,1 and a 2 year old 4,2,2 new build in what is supposed to be a rising market.

I've asked for a second valuation. Apparently the only dual occupancy comparison sale they could find in the area was from 2010. They admitted ours are really good properties.

Real estate agent did a comparison sale valuation for us last December and came back with $580,000 to $600,000.

Another indication for the valuer is that we are getting market rent of $640 per week for both properties .....

Anyway .... I needed to vent.

Mystery
 
hmmmm....this valuer does seem to be on a different planet.

That sounds quite weird.

I had one come back $100k less than purchase price and it just didn't stack up - I knew the area and couldn't work out what had gone wrong.

I wrote my long winded email with comparable sales, etc - ended up that the valuer just stuffed up the first digit when typing out his report :)

Cheers

Jamie
 
In the absence of comparable sales for dual occs, the valuer could look at it from the perspective of what each unit is worth individually, then subtract the cost of subdividing. It should be fairly easy to get comparables for this.

If you look through a mirror darkly, you'll realise that valuers are from Earth in a parallel universe where time lags behind this universe by about 12 months.
 
Thanks for the replies.

I suppose it would have made things easier if we had gone the "strata" title option the two properties or re-applied for subdivision from council, but as we are holding for at least the next 10 years we want to avoid the extra costs of double rates etc as Ipswich council rates are sky high.

Plus with Ipswich council if we were successful applying for subdivision the contribution costs are astronomical. We have already paid $17,000 contribution for the dual occ and that was a discount rate (should have been $26,000). I just know that they'd want another huge chunk for subdivision contributions.

We were looking to do the Strata or Subdivision option closer to selling the properties in 10-12 years time to maximise the capital gain. Obviously leaving the properties as dual occ on one title has affected the valuation.

Anyway .... we'll see what the second valuation comes back at.

Mystery
 
Anyway .... we'll see what the second valuation comes back at.

Mystery

Valuations don't make much sense to me. In the Sydney market the variations are crazy. Its hard to explain to clients when they see a <1m valuation from one valuer and a $1.3m+> valuation from another...for the same security. Different valuer, different day...perhaps a different mood.

As Rolf said, its not unusual to see valuation shortfalls with dual occupancies. Valuers may view it as if you have to sell it together (rather than strata titled). Instead of doing a simple cost of strata titling approach, they may do comparisons of your 4 and 3 bedder, to one 7 bedder.

Cheers,
Redom
 
Be interesting to see what the second valuation comes back at.

If there are no sales it does make the valuer's job difficult and it's not really a surprise they are conservative. There is little time or incentive for them to throw out a high number that can't be supported by easily found evidence.

It can be easy to say "we are getting this rent" or "the last valuation was this" but did the valuer know that?

In saying all that, the valuer could just be wrong as well.

As for a hypothetical subdivision approach, depending on the bank, using that method might have been out of the scope of the instructions.
 
Its hard to explain to clients when they see a <1m valuation from one valuer and a $1.3m+> valuation from another...for the same security. Different valuer, different day...perhaps a different mood.

My maths and stats mates from uni would call that a "statistical outlier".

A rare puppy that needs to be ignored, yours beats my record of 28 %

ta
rolf
 
My house was valued by a representative of a very well known company a couple of weeks ago. The mortgage broker told me that although the valuation came in as expected the valuer made "negative" comment about the proximity of the house to the railway line, necessitating the application go to the next echelon of authority at the bank and delaying the process by at least a week. (This is after months of hassle to get building approval)
I had heard another valuer from the same company say on the radio the week before that proximity to the railway added a 15% premium to property prices. I heard the Principal of the company say on a different radio station that he recommended buying close to a railway. I don't get it and I thought the broker was going to go postal.
 
My house was valued by a representative of a very well known company a couple of weeks ago. The mortgage broker told me that although the valuation came in as expected the valuer made "negative" comment about the proximity of the house to the railway line, necessitating the application go to the next echelon of authority at the bank and delaying the process by at least a week. (This is after months of hassle to get building approval)
I had heard another valuer from the same company say on the radio the week before that proximity to the railway added a 15% premium to property prices. I heard the Principal of the company say on a different radio station that he recommended buying close to a railway. I don't get it and I thought the broker was going to go postal.

I guess it depends how near 'near' is. Backing on or opposite, ie would hear trains and be impacted by passenger noise & parking dramas might be negative. A few blocks away is a different story entirely.
 
Close to the line, not bordering, close enough to walk to the station but too far away for people to bother parking, ie, I can see in many small stations on the Midland line that parking has exploded over the past ten years. For instance my youngest was in a daycare opposite a railway station, quiet, no through road, very little traffic. That same location now has cars parked everywhere. A friend lives opposite a largish railway station with parking provided on the other side to where she lives, her street is quite narrow. Now, there are cars parking on both sides with the resultant congestion, headlights straight into their house, noise, etc. thankfully, the station is over a fairly major road so there shouldn't be a time where cars will park, again, a narrow street and small enclave of houses.
 
My house was valued by a representative of a very well known company a couple of weeks ago. The mortgage broker told me that although the valuation came in as expected the valuer made "negative" comment about the proximity of the house to the railway line, necessitating the application go to the next echelon of authority at the bank and delaying the process by at least a week. (This is after months of hassle to get building approval)
I had heard another valuer from the same company say on the radio the week before that proximity to the railway added a 15% premium to property prices. I heard the Principal of the company say on a different radio station that he recommended buying close to a railway. I don't get it and I thought the broker was going to go postal.

You are talking about two different things there. One is the market value advantages of being close to a train station. The other is a risk issue where the banks want to be notified of potential issues of proximity to a train line.

Not really the valuers fault as its part of the information contained within the Standing Instructions issued to valuation firms by the banks.
 
Okay .... Update.

After the very low original $420,000 valuation (see first post), I managed to get a comparable sales report from a real estate agent up there (Qld) for dual occ's sold in the Ipswich area. Based on this info the bank agreed to arrange for a second valuation from a different firm.

Surprise, surprise ... The valuation came back at $560,000 ..... $140,000 more than the previous valuation of $420,000.

We can now move on and add to the portfolio.

Mystery ... :rolleyes:
 
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