Bank Valuation – ever value more than purch price

The rarely come in over, but i had one client who had a property come in 20% more than purchase price. In the end, I was able to get him a 95% loan without mortgage insurance.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]

Real estate agents only do ‘appraisals’. These are worth less than used toilet paper. They over estimate in an attempt to get a listing.

Robert Bou-Hamdan
Mortgage Adviser

http://www.mortgagepackaging.com.au

Investor Links

Hi Dazz, you have been spilling the beans about your great buy, now time not to be shy and tell us where in Perth Metro…. [biggrin]

Hi,

Valuers usually ring the local real estate agents to get an idea of value. I used to type up the valuations in a big bank. The valuers were always conservative – after all, they just want the bank to be able to get their money back, nothing more. So, apart from the fact that they are sometimes crucial in getting your loan, bank valuations are not worth the paper they are written on, in my opinion.

Let’s face it, if you are paying for a valuation yourself, you can ask the valuer to put whatever slant on it that suits your purposes in getting the valuation.

Six years ago, we sold an IP. Bank valued it at $150K, we sold it for $215 a matter of weeks later. They were just lazy and didn’t do any work. I also know that we had to ask our bank (when refinancing) to actually come into the house because they often just do a drive by and if the house doesn’t look any different from the records of the last valuation, they haven’t a clue about what you may have done inside.

Of course, the drive by is fine if you don’t need the value to increase, eg just a refinance, but if you want more money, you have to prise them out of their car to actually take a look.

I take the whole valuation thing with a big grain of salt.

My parents bought a house inner southside of Brisbane a couple of years ago (before the boom) for $118K with land valuation of $115K. Bank valued it at $118, surprise, surprise!!

Regards, Wylie

Ah yes. this is a problem because the banks and valuers dont want to give the impression that they are lazy or flexible with their valuations. They have to have a reason to revise the price down. When negotiating contracts after building inspection reports you could try to get a rebate on the same purchase price rather than a change to the purchase price for this reason. Once vals are ordered, loan docs submitted the train has left the station its hard to bring it back. Now for you I think you will need to provide the report or change lenders. The only risk is they see the report and worry that there is more than 20k worth of work, which may result in a smaller loan amount. Hopefully not.

kingsun wrote:

Does anyone know of situation where….. bank valuation came back at agreed purchase price. Following building and pest we renegotiated a lower purchase price by $20k to cover some issues. Mortgage company has now asked the valuer to revise the valuation to new lower purchase price and valuer has requested our building and pest reports…..is this normal??? I thought valuation based on what they see and market, land etc….any help appreciated cause i cannot find any info on similar situation..

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Yes too late now and lesson learnt…we do have ample equity to cover a low val but just if lender will accept it…def would’ve been nice to have been advised by solicitors about this….thanks for responses.