Where did my valuation go sooo wrong ??

B

BradW82

Just a quick question regarding a recent valuation I just received from Suncorp .
We paid $152k for a block of land in Arnolds creek , Melton West in July 2010 , it is 640sqm block and was valued at $185k by 2 real estate agents at the end of last year . Our valuation just came back at $130k :confused:

Thats around a 30% drop from last valuation and I know real estate valuations are not official but a nearly 20% drop on purchase price ? The same blocks sold for $195k 6 months after we bought ours . This has pushed our final LVR from 78% to around 90% . Is this worth disputing for the sake of not paying the NOW required LMI ?

Thanks ,
Brad
 
Why did you do the revaluation? Were you refinancing to extract equity? You won't get far trying to dispute the valuation they never move on it.
 
BradW82 said:
Just a quick question regarding a recent valuation I just received from Suncorp .
We paid $152k for a block of land in Arnolds creek , Melton West in July 2010 , it is 640sqm block and was valued at $185k by 2 real estate agents at the end of last year . Our valuation just came back at $130k :confused:

Thats around a 30% drop from last valuation and I know real estate valuations are not official but a nearly 20% drop on purchase price ? The same blocks sold for $195k 6 months after we bought ours . This has pushed our final LVR from 78% to around 90% . Is this worth disputing for the sake of not paying the NOW required LMI ?

Thanks ,
Brad
Click to expand...

Id try another lender that doesnt use the same valuer

ta

rolf
 
and use a bank where you can get the valuation prior to applying for a loan, so that you know that its where you need it to be.
We had the same situation when valuing our PPOR purchase... ANZ's valuation was $100K below where every other valuation came in.
 
No they did not give me a copy . After re reading the email sent from Suncorp they say my LVR would now be 95.14% ! I just feel like they have done comparables on different size blocks or something to that extent. Is it heard of for a bank to val a block that far below its purchase price ??

Well now i'm just whinging about it :(
 
BradW82 said:
No they did not give me a copy . After re reading the email sent from Suncorp they say my LVR would now be 95.14% ! I just feel like they have done comparables on different size blocks or something to that extent. Is it heard of for a bank to val a block that far below its purchase price ??

Well now i'm just whinging about it :(
Click to expand...

Hiya

New devs in Melbourne have been hit quite hard with the market softening, esp house and land packs, since you can buy established stock for 15 % below the new "replacement" price.

You need to approach this in a way that gives you back some control.

As has already been suggested, another lender with another valuer, upfront.

if you get a similar result with the other valuer then its very likley the market is what it is

ta

rolf
 
I think the pproblem is you put to much credibility on the high 'valuation' (appraisal) from the RE agents. The market has gone south, get used to it mate.

And how do you know You didn't pay over the odds a bit in the first place? Investing and delusion do not usually make for success.
 
Valuations across the country are a problem at the moment and as Rolf said especially in new estates. I was recently talking to the head of sales at one of the large national builders asking me about what they could do about low vals because they were being effected by it.

So you're not on your own with this problem. We had a valuation done for a client on a land and construction property in Melton and the val came in lower than the contract price. I complained to the valuer that you couldn't build a new house for the value he put on it. His response was that he understood this but if the completed house was put in the market in today's market it wouldn't sell for what it cost to build.

You've got to take into account the lenders instructions for valuers is that they need recent historical sales to support a value for what the lender would get if they had to sell it. This is very different from the value a real estate agent might get for a private owner who is prepared to wait for the right price.

The problem is no matter how much evidence to the contrary you give to a valuer once they put a value on it you're stuck with it. We're tried too many times without success on this one.

I agree with the advice above. All you're left with is another lender and do your val before you start the application process.

Regards
Paul
 
I probably state the plain obvious here, but Brad's experience is a warning for all of us. If you require refinancing it is prudent to get valuation completed first before lodging the refinance application especially with the existing lender. Otherwise the existing lender might insist that you have to coff up difference between new valuation and LVI, if the valuation is significately lower than LVI :eek:


Question for all mortage brokers: Which banks allow you to get valuation prior to loan application?
 
Tillie said:
Otherwise the existing lender might insist that you have to coff up difference between new valuation and LVI, if the valuation is significately lower than LVI :eek:
Click to expand...

rare in the resi space, but a major major risk in commercial space, if you have an LOC with some lenders, and if you havent got clean lender history

ta

rolf
 
I am a valuer.

"I complained to the valuer that you couldn't build a new house for the value he put on it. His response was that he understood this but if the completed house was put in the market in today's market it wouldn't sell for what it cost to build."

We have a duty of care for the instructing party.

Market value is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion.”

Subject to the instructions, market value is current for 90 days from the date of valuation only.

A valuer has to consider, if the mortgagee entered into possession, are they guaranteed of selling the property for that price within 90 days?

Some further considerations:

* - Post GFC, the majority of lenders would not require a valuation for a property like your own. The figure arrived at would be an in house desktop assessment which utilises regional, sector data. This of course prevents assessments occurring which consider the individual property's specific pros/cons. And would be the reason it cannot be produced.

I share Tillies opine.

If you decide on refinancing, purchase and you are doubtful about the probability of a lenders desktop assessment being close to your own - Instruct a valuer to provide a market valuation that can be relied upon for first mortgage purposes. This valuation then can be used for financing provided the valuer is one of the banks panel valuers.

Aforementioned, a valuation is current for 90 days. Speed is the key or you will forfeit another val fee.

Hope this helps.
 
Doesn't always go that way. We tried to dispute a low valuation with CBA to no effect at all, they refused point blank to budge.

House ended up selling within a week of being listed for more than their valuation, because we set the asking price so low. Cue a flurry of other older, small houses in the town selling for 30-40% off their asking (wishing) price.

There goes the market.
 
Agree with the above responses, try a different bank. I work on one of the projects nearby and can say $130k seems a little low for 600sqm; however I would be very surprised if any bank valued it at more than $150k-$155k.

Developers in the Melton corridor are fighting it very tough at the moment with most dropping their prices by 10%-20% in the last 9 month. Also be careful, most developers are offering $10k-20k rebates on advertised prices for June settlements, so even though it may seem a lot sold for $195k, this may not be the case.
 
I recently got a val done for an existing property in Melton and was really suprised by the valuation as it came out pretty much as I was expecting. I knocked 10% off what I thought was fair market price and pretty much got it spot on. The place was purchased May '11 and after a fairly decent reno valuation came in $40k higher than purchase price. Not as much as I was originally hoping for but fair for the current climate.

My PPOR on the other hand (Brookfield) had a desktop val done 2.5 years ago and was what I thought to be over valued at the time. No way in the near future will I be going back for a valuation as I don't think it will be pretty.
 
There is talk here of ordering a Val, and if comfortable, going to the bank. I thought the vals had to be ordered thru the bank?

Also how do you find out the Valuer panel for a particular bank?
 
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