Will a valuer put a value on planning permission?

[MaggieMcT]

Hi guys,

My husband and I bought a lot at the beginning of the year (offer accepted in Jan 13, settled in Apr 13) for our PPR, and we intend to apply for construction finance in Feb 14. We will be relying on a strong valuation for the lot. I'm finding it hard to assess land values in the area as sale prices seem to bounce around a fair bit.

So I had two questions if you guys have a minute!

First, will a valuer value a lot with planning more than one without? We bought a relatively small rear lot and have just had planning approved for a nicely designed 4 bed 2 bath, 2 living area etc.

Second, I am thinking about getting a private valuation before we apply for planning. This is probably a silly theory, but I thought that with a private valuation we could ensure that the valuer will at least get all the information we would like him to get (e.g. comparison sales we have identified, planning permission information etc) - whether or not he considers this relevant will of course not be something we can control but we felt we coud present the lot in best light. Is there any possibility that the bank's valuer (will prob be Westpac) be influenced (positively!) by this valuation? I suppose the other side of this would be that if the valuation is not as strong as we hope we would not bother applying for finance (and possibly end up with a credit refusal on our record) but would wait for val to improve ...

Would really appreciate any advice. Thanks guys!

 

[Aaron_C]

Short answer is if it's a commercial valuation, then yes. If not, then no.

 

[Colin Rice]

If the private val comes in as you expect then it may influence the val via the bank positvely.

Conversley if it comes in less it will likely have the opposite effect and would be better to with hold it.

 

[RightValue]

Copied from the "Valuations Again" Thread

For a development site you need to get a commercial valuation done and probably borrow on commercial terms.

Valuation standing instructions for residential mortgage valuations are to IGNORE all development potential and value as a single dwelling site only.

This includes sites with development permits.


Only the other day I valued a place that sold at Auction. A corner site, clearly the price reflected the development potential. If I was doing a development valuation I would not have a problem with the price. Unfortunately I was doing a residential mortgage valuation so I had to ignore the fact that it is a 3 unit corner site and easy to cut up.

In such cases I always mention this in my reports. Often when valuing a property that has development potential for refinance purposes I state that the property would in all likelihood sell for a figure in excess of my valuation figure due to the development potential that must be ignored.

BTW this is a requirement of the banks. It is no good saying that it should be valued at it's highest and best use (as the market price does/would reflect this) as if you want to borrow and you borrow on their terms not yours.

I trust this helps clarify things.

Also.. as to your second question.

Possibly they will be influenced.

I myself ignore other valuations unless I know the other valuer and have some regard for their work. This is especially so if it is a private valuation ordered by the owner.

 

[westminster]

Hi guys,

My husband and I bought a lot at the beginning of the year (offer accepted in Jan 13, settled in Apr 13) for our PPR, and we intend to apply for construction finance in Feb 14. We will be relying on a strong valuation for the lot. I'm finding it hard to assess land values in the area as sale prices seem to bounce around a fair bit.

So I had two questions if you guys have a minute!

First, will a valuer value a lot with planning more than one without? We bought a relatively small rear lot and have just had planning approved for a nicely designed 4 bed 2 bath, 2 living area etc.

Second, I am thinking about getting a private valuation before we apply for planning. This is probably a silly theory, but I thought that with a private valuation we could ensure that the valuer will at least get all the information we would like him to get (e.g. comparison sales we have identified, planning permission information etc) - whether or not he considers this relevant will of course not be something we can control but we felt we coud present the lot in best light. Is there any possibility that the bank's valuer (will prob be Westpac) be influenced (positively!) by this valuation? I suppose the other side of this would be that if the valuation is not as strong as we hope we would not bother applying for finance (and possibly end up with a credit refusal on our record) but would wait for val to improve ...

Would really appreciate any advice. Thanks guys!

By planning do you mean building license?
If you have a building contract with a builder then the bank will assess based on the whole deal.

 

[Shahin_Afarin]

Actually the opposite happens - usually (under resi terms) when the valuer sees that the property has a DA for multi unit development - the valuation comes back lower.

 

[westminster]

Actually the opposite happens - usually (under resi terms) when the valuer sees that the property has a DA for multi unit development - the valuation comes back lower.

I think maggie is not talking about DA - I think she just has approval for a single dwelling - I could be mistaken though - but that is the way I read her post.

 

[Colin Rice]

Land value + Fixed Price Building Contract = what the bank will lend against

Reading beween the lines I think the OP is hoping for some equity in the land in order to get the loan for the building contract?

 

[Rolf Latham]

Land value + Fixed Price Building Contract = what the bank will lend against

Balanced against recent sales, and there can be some hurt there,with many burbs providing resale value 50 to 100k below current replacement

ta
rolf

 

[MaggieMcT]

Thanks very much everyone for taking the time to respond. Yes this is to be our home, rather than an IP. We are hoping to have up to 10% improvement in the value of the lot in the final valuation - we will be looking for valuation about 13 months after our offer was accepted on the lot. We did have an upfront valuation carried out by one of the banks a few months ago and that came back 5% up just 5 months after our offer was accepted so we think that there is a reasonable chance ...

Based on everyone's comments I think we will go for a private valuation first in Jan/Feb next year and see how it looks before applying for finance. Can anyone recommend a valuer? Not sure if it is relevant but we will likely apply to Westpac for construction finance ...

Thanks again everyone.