I sold a house recently where the valuation came in about $30k under the contract price. The broker challenged it on behalf of the purchaser with supporting evidence of 4 recent sales all showing around the contract price.
Valuer came back saying we used those 4 comparative sales already but don't believe them to be worth what they sold for either
ouch,
I feel for you.
If it was just one sale that was out of line with all the other evidence I would ignore it. But 4 well that is enough, when added to your purchase (5 sales in total).
Valuers do not make markets, they analyse and interpret them. A valuer must have a defensible basis for their valuation figure and 4 supporting sales added to the contract at hand is pretty much suitable evidence, provided they are truly comparable.
In situations like this I usually let it go through but risk rate it enough so that my liability is reduced and so long as you are not borrowing over 80% you should be fine.
What you have described is what happens when markets jump or turn around after a fall like the one we have experienced for the last 2 years (in Melbourne at least).
I would just go to another lender, chances are 95% that it will go through fine on the next valuation.
That said I often get people provide "comparable" evidence around the contract price but ignoring important factors like the 100sqm difference in land value where the land is worth $1,000/m2, or the fact that the comparable house is 5 squares larger or renovated compared to the subject.
What you highlight is the reason why in the last 5 years since I rejoined the firm we have employed many new valuers, however only one (except the two we trained as cadets) has not been let go within 6 months due to competency issues. Basically we have given up advertising for valuers as good ones are treated well and have no real reason to leave their existing firm, especially as there is little difference between employers.
And as Aaron points out our younger valuers sometimes struggle in situations like this, purely due to lack of experience. In which case they would not only discuss the valuation figure with the Manager, the manager would ask the advice of a Senior Valuer familiar with that area. Aside from the two younger ones, no one else has less than 12 years experience and most have been valuing their patches for over 10 years. If one of the experienced valuers wants to can a contract, well there is no issue nor review process, but the younger ones, as I said they get closely reviewed.