Working with valuers

[Mush]

It has occurred to me that most people set out to add value to a given property using various amounts of research/due diligence to arrive at their perceived profit margin.
Valuation firms advertise feasibility studies as part of their services,so why not involve a valuer from project conception to advise on exactly what he would require you to do to the given property to allow him to value the finished product at the maximum/pre-agreed amount?
This is undertaken on small developments so why not renovations?
Appears to me that it would remove a lot of the guess work from a project and the fee charged by the valuer would be money well spent.
Am I missing something?

 

[Rolf Latham]

The valuer you seek advice from will prob not be the valuer the lender will use

With up to 28 % spreads on Val for the same property in the same week across 3 diff valuers it's a strategy with a higher than obvious risk of failure

Ta

Rolf

 

[Mush]

Rolf,could this problem be overcome by only approaching lenders that have our valuer on their panel?
A sort of reversal of the current process,why would the banks not accept our valuers appraisal?

 

[Scott No Mates]

the purpose of the valuation is different. You are seeking mv due to the refurbishment whereas the bank is looking for mv based on a distressed sale. and their own criteria.

 

[Mush]

Scott,surely a valuation by an independent,professional valuer should merely be based on what the valuer deduces based on comparible sales,size,condition etc.....

 

[Scott No Mates]

Scott,surely a valuation by an independent,professional valuer should merely be based on what the valuer deduces based on comparible sales,size,condition etc.....

Yes, but it is very dependent upon the instructions. Each set of circumstances is different.

You would have recieved your land values from the OSR recently, these would differ greatly from a valuation used for insurance purposes.

 

[Mush]

I hear what you are saying Scott,however in theory a property should be worth 'x' amount on a given day following valuation by a professional and any "instructions"should not affect this.

 

[Rolf Latham]

Rolf,could this problem be overcome by only approaching lenders that have our valuer on their panel?
A sort of reversal of the current process,why would the banks not accept our valuers appraisal?

Very few lenders have a sole Val company on their panel. Most use valex or Vms ,means you are playing a 1 in 10 or so game with most of them.

Ta

Rolf

 

[Mush]

Why would the bank not accept a professional valuation from a valuation firm that they regularly do business with just because it has been carried out at our instruction and not their's?

 

[SOP]

I'm sure they would accept the valuation if it was from their panel of valuer and if the instructions clearly stated that the valuation was for mortgage purposes.

The wouldn't accept a valuation you had done for other purposes.

I think of bank valuations as the figure that the bank MUST accept at auction if they were to sell due to an owner defaulting. It may be lower than a true market value but it takes into consideration a certain discount for a forced sale.

 

[Rolf Latham]

Why would the bank not accept a professional valuation from a valuation firm that they regularly do business with just because it has been carried out at our instruction and not their's?

Because for many of the lenders thats part of their rules to manage risk.im not saying it can't be done in isolated cases, I'm saying ask your funder first

Ta

Rolf

 

[Mush]

Any product,property or otherwise,should be able to be correctly valued by a professional on a given day with a small margin of error accepted.
To accept a lower price is the right of the seller dependant on their circumstances but the true value of the product should remain the same.

 

[Mush]

Because for many of the lenders thats part of their rules to manage risk.im not saying it can't be done in isolated cases, I'm saying ask your funder first

Ta

Rolf

Rolf,how are they managing risk by not accepting a valuation that we have instructed to be undertaken by a professional valuer which they regularly deal with?
It sounds to me as if they are worried that we may be able to forge a relationship with the valuer to produce a more favourable outcome rather than them.
That said I suppose it is their money that we are trying to borrow so I suppose that puts them in the driving seat.......

 

[SOP]

This is true. But you have to understand that a mortgage value and market value are not necessarily the same thing. If you ask your valuer for a market valuation, don't expect to be able to use it for mortgage purposes.

 

[Mush]

This is true. But you have to understand that a mortgage value and market value are not necessarily the same thing. If you ask your valuer for a market valuation, don't expect to be able to use it for mortgage purposes.

Sop,how can this be?
Surely a property is worth what it is worth and should be valued accordingly.

 

[Robbo2621]

I would think you can't get your own valuation and then take it to the bank and say here you go, here's a valuation, lend me some money. The banks would always want to do their own instructed valuation even if it has come from someone they deal with regularly? Just my thoughts

 

[SOP]

Check out this article Mush.

It explains it better than I can.

http://www.yourmortgage.com.au/arti...-market-value-whats-the-difference-83556.aspx

 

[Mush]

Check out this article Mush.

It explains it better than I can.

http://www.yourmortgage.com.au/arti...-market-value-whats-the-difference-83556.aspx

Thanks for that sop,that explains the process very well.
Back to my original point though which was; why should we not employ the services of a professional valuer to conduct a feasibility study on the value of a proposed renovation advising on how to achieve top dollar and have that accepted by the lending institution taking into account their current criteria?
Just saying that if you renovated on the advice of the valuer then much of the final profit guess work could be eliminated.

 

[INVSTOR]

Thanks for that sop,that explains the process very well.
Back to my original point though which was; why should we not employ the services of a professional valuer to conduct a feasibility study on the value of a proposed renovation advising on how to achieve top dollar and have that accepted by the lending institution taking into account their current criteria?
Just saying that if you renovated on the advice of the valuer then much of the final profit guess work could be eliminated.

I just get real estate agents through and get their opinion on what changes to make. After all the valuers often call them to get latest sales advice.

 

[vaughan]

Back to my original point though which was; why should we not employ the services of a professional valuer to conduct a feasibility study on the value of a proposed renovation advising on how to achieve top dollar and have that accepted by the lending institution taking into account their current criteria?
Just saying that if you renovated on the advice of the valuer then much of the final profit guess work could be eliminated.

We should not employ the services of professional valuers for this because they don't do feasibility studies. They value properties.

I think you're trying to avoid the risk and uncertainty of doing feasibility studies yourself.

The calculations and assumptions used for the feasibility is your "secret sauce", you need to know exactly what those assumptions and calculations are, and you don't necessarily want your competitors to know what they are. After all, if your calculations show that there may be money in a project that nobody else sees, then that's a commercial advantage to you, and you don't want other people knowing about it.