Yet another valuation issue

Bit of a quickie - our local REA is shocking for valuing stuff on opposite sides of this Very Small Town differently.

I have a block of land, normal size, flat, boring. REA says it is worth $35k because horror of horrors, its on the *gasp* north side. Yup, right, I have to suffer being a 2 min drive from the school and a 1 min drive from the supermarket, that's *so* worth the markdown. The other side of town, reverse those distances - the supermarket is now on the 'bad' side since they built it in January - brand new, enormous, and services an area radius 50km.

Sooo ...

Block of land 4 doors down, normal size, flat, boring but with a large shed on it sold last week for $55k. REA says the shed adds $20k to the block. Heaps of blocks of land all over the town are selling for $45-60k (ones over $60k tend to be in the new estate and you are expected to build a mammoth expensive house on them), but on our street the same types of block get marked down this huge amount. The two blocks on our street that have sold recently through that REA have sold amazingly fast - within weeks not months - compared to all other land sales, and I expect that is because of the markdown.

I need to get the land valued soon, is a valuer going to listen to the REA saying "oh no, that street on the north side of town is 30% cheaper than the rest of the town" or is he going to go "hrm, 750sqm block, lots of other 500-1000sqm blocks within 1km sold for $50k, that's $50k too"?
 
I need to get the land valued soon, is a valuer going to listen to the REA saying "oh no, that street on the north side of town is 30% cheaper than the rest of the town" or is he going to go "hrm, 750sqm block, lots of other 500-1000sqm blocks within 1km sold for $50k, that's $50k too"?


It is quite possible that the valuer will listen to the agent ..

However the sales evidence should speak for itself. The valuer should look at sales evidence as close to the block being valued as possible - because in many places different parts of suburbs actually do have different land value components.

If the agent sells most of the land in the area and the sales on your side are indeed lower than the other side then the fact is that the market evidence will clearly show that there is a price differential.

However if I was valuing in this area I would also look at asking prices. I cannot value your block higher than the aslking price of a similar block in your area.

If you want to change the evidence I suggest you (or your friends) go and buy a few of the blocks at higher than the asking prices ... this should provide enough evidence to support the valuation - provided the asking prices of other blocks support your purchase price..

Just good luck selling the blocks later at your purchase price if there are others on the market at lower prices.

Wether it be an artifical reason or not that the blocks ar cheaper on your side than they should be in your opinion .. it doesn't change the market - unless you are the market.

Do not tell the valuer that although a block sold for $x it should have sold for $y .. of course you did pay the same as blocks on the other side when you bought yours on your side because thats what they are really worth didn't you?

Good Luck,

RightValue
 
The same agent has just sold 15 450-600sqm blocks 1 street away in a new subdivision for $45-49k each and likes to go on about how smaller (< 1000sqm) blocks are highly sought after by retirees (our biggest market) so he's a hypocrite. The vast, vast majority of land sales in the town are $50k plus or minus $5k until they get to over an acre in size.

I was more curious as to the shed really adding $20k ... its just a shed. The REA knows the value of sheds, he has a shed business. But personally I don't see a shed adding $20k as most people get vacant land and promptly bulldoze everything on it.

http://www.realestate.com.au/cgi-bin/rsearch?id=jamestown&a=qfp&cu=fn-rea&t=lan is the full list for sale, with very few under $50k ... the cheapest one being about 500sqm on Oxford St for $35k, and that street has got to be the seediest, most horrid mess of weed infested falling down fibro houses I've ever seen (we drove through it once and went "OMG this town DOES have bad spots) and also boasts one of the cheapest house sales too, and is further from the shops than my place. So I kind of resent being told mine is worth less than that one when it is on a lovely wide street full of nice stone cottages a stone's throw from the supermarket ...

On the upside they reduced the asking price of the place I'm interested in from $160k to $135k ... I did say (to his face) it was too expensive :D

It is quite possible that the valuer will listen to the agent ..
...
Wether it be an artifical reason or not that the blocks ar cheaper on your side than they should be in your opinion .. it doesn't change the market - unless you are the market.
It is only sales on this side through that one agent - sales through the other agent seem to be more reasonable. The agent themselves is the 'artificial reason'. The other agent does more land sales, mortgagee sales and government sales than this one and their prices seem to be more consistent.
 
next time , I SAYS NEXT TIME! i will first ask the bank who is on their panel valuers, and then call and pay them to do an independent value for me, and then , take the valuation docs to the bank, because i am sure that when i get the bank to do it, the managers sey somthing???? i know they should'nt change their vals but i am not so convinced.
 
next time , I SAYS NEXT TIME! i will first ask the bank who is on their panel valuers, and then call and pay them to do an independent value for me, and then , take the valuation docs to the bank, because i am sure that when i get the bank to do it, the managers sey somthing???? i know they should'nt change their vals but i am not so convinced.

No the bank managers don't say anything.. actually they want the valuation as high as possible.. the more they lend the more they earn.

I repeat what I have said time and again.

As a valuer I have NEVER been asked by a lender to do a lowball valuation.

Also beware, some lenders will not accept any valuation not ordered by them regardless of the firm.

However what you are suggesting is that the risk managers lower the valuation figure.

That I doubt, BUT based on the comments in the report they may change the LVR they offer you.. hence it comes across as lower figure when it gets back to you.

For example yesterday I sent out a report on a property that was purchased.

I valued it at purchase price .. but I am sure that they wont lend more than 80% on that property based on my comments.

regards

RightValue
 
I was more curious as to the shed really adding $20k ... its just a shed. The REA knows the value of sheds, he has a shed business. But personally I don't see a shed adding $20k as most people get vacant land and promptly bulldoze everything on it.

So how large is this shed and what would it cost to build it new?

Rarely do improvements like this add the same value as cost .. and it would be a cold day in hell that it is worth more than what a person could buy identical vacant land and build the shed.

cheers

RightValue
 
So how large is this shed and what would it cost to build it new?
Its a really tall double garage, good for storing tall machinery. Agent said that sort of shed is worth $20k when he was telling me my block is worth $20k less.

Rarely do improvements like this add the same value as cost .. and it would be a cold day in hell that it is worth more than what a person could buy identical vacant land and build the shed.
See, that was what I was thinking too - nice to hear someone else say it. That agent and their unhealthy obsession with sheds has always stood out. They post listings of houses on the internet with 5 shots of the shed first where another agent might put the kitchen and lounge first.

Not that I want to sell my land or anything, I just need it valued at around the $40-50k mark (which seems reasonable, shed or no shed) to use it as a downpayment to build on it.

I think the issue with my street is that agent is a very old local family and my street is full of those quaint little worker's cottages - 100 years ago that would have been lower working class accommodation. Nowadays they are mostly extended and done up, are quite 'cute' and fetch a bit of a premium for the period features compared to an old 60s yellow brick house.
 
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