I am about to embark on the purchase of my second property through equity in my first. The only valuation I have had on my property to date is when it was purchased. The contract had been finalised and the bank valued the property at what we paid. Now, I want to know, when we go to have it re-valued will it be a fair market value, or will it be lower in order for the lenders to protect themselves?
Also, should I get the valuation done by the lender who the current mortgage is with, or through the lender I plan to use for the next mortgage or should I contact a broker?
Your thoughts are appreciated.
The banks are usually on the conservative side. I had my place done by a bank and I beleive in was under by 20%-30%.
ChrisAll post are IMHO.
hi nats
my experience is usually the banks will insist on doing the valuation. often the bank will hire a valuer. sometimes as in NAB’s case they get a local branch manager to do the valuation. a registered valuer looks at the prices similar properties are selling for. this is the only way they can justify the value they place on it. sometimes i’ve had valuers being consevative but usually they aren’t too far off the mark. i try to help the valuer (to support the value i believe) by telling him the addresses of properties that are similar and the price they went for and also how mine is different to that property.
regards westan
westanG’day Nats…
Why not talk to one of the brokers on the Forum?
Any of them will look after you, and in your interest as they can access several lenders with just the one application. Lenders pay the Brokers…so its Free to you.
Don’t get a valuation yet, as each lender has their own panel of valuers. The lender that you do biz with will nominate their own Valuer.
Historically I have found Valuations to be slightly conservative when comparing to market value. However, at the end of the day the property is worth what someone will pay for it.
I wouldn’t be too concerned with a lowball valuation. If you talk to one of the Brokers on this Forum they can organise and advise you best.
Cheers…
Bill O’Mara
Real Estate,Mortgages,Share Market Strategies.
[email protected]Valuers are tending to be conservative at present and interestingly their figures can vary considerably.
We recently completed a development of 6 townhouses in an inner Melbourne suburb for a group of clients. They each had different valuers value their properties for mortgage purposes.
Four of the townhouses are virtually identical yet different valuers put varying figures on them from $360,000 to $420,000. I think they would sell for $430 – $440,000 on the open market.
One client was unhapppy with his valuation so sought another one and got a figure $40,000 higher – 10% different and this gave him the ability to borrow $30,000 extra.
The lessons are:-
1. Get to know a valuer and give him the type of information he needs to justify his valuation such as comparable sales or valuations.
This is obviously difficult if you don’t use one often.
2. Don’t be scared to get a second valuation It’s worth paying $400 for.3. Insist on instructing the valuer yourself instead of the bank doing it. We never have any trouble with this request. You just need to choose a valuer on their panel.
Michael Yardney
Metropole Properties
http://www.metropole.com.auHi Nats,
Please e-mail me before you do anything. I have experienced as you describe and would be happy to share what I have learnt from my past week.
All of the advice in the other posts is correct to your situation. Mine is one of very recent expeience.
Kind regards, Phil
Hi Nats, as a rule of thumb I have found bank valuers to be conservativ, probably to cover their backside, but as Westan said, try to be present when the valuation is done and point out things they may overlook and let them know what similar properties in the area have sold for.
Regards
Marty
Thanks for the feedback. Luckily I watch the market in surrounding streets to that property and there has been one recent sale and another currently on the market. That should put me in good stead for the valuation to be a bit closer to market value.
just to let you know Nat the valuer is very conservative because if things turn bad and they have to sell your property they have 30 days only to sell it so they get what ever they can for it…i think you are wanting to know the value so you know where you stand get a Real Estate agent to value it and then take off 20,000 or 15,000 and you should be safe…with my place Real Estate agent 1 said 310…..next agent said 300 and the valuer said 290 so maybe get 3 Real Estate agents out and then take 10,000 off the lowest price i think its better to work with a lower price to do your 1st set of sums and then if it higher its a bonus un like me who was a little dissapointed at the end of the day Good Luck
I can’t remember the last time I didn’t have a client’s valuation come up to purchase price.
There are also some mortgage originators who will get second and third valuations where needed but I have never needed to go that far.
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Nat 12,
working in the banking indusrty the valuers have to have at least 3 propertys in order to come up with there valuved amount or generally the purchased price(but not always!!) These are listed on the valuation with the addresses so you could check up on them if you wanted.
Leah
Hi Nat 21
I had my rural property valued by the bank for refinancing. Sat in their office and the loan officer told me she had the valuation. I expected 20% less than my own market research of the area knowing banks are on the conservative side. But this was 40% below. She then had to leave the room and turned all my paperwork face down, on her leaving the room I flipped it over for a look and the valuation was stated at 20% more than she had said, being 20% under my own research!!!Needless to say I will never use this bank again and although more costly to us to refinance did so, due to their total conservatism.
Which bank???!!!
Sunshine,
Rural properties are a whole different kettle of fish. I am no expert in this area but I do know that the banks apply a shading figure to the valuation to allow for the higher risk exposure.
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
We have had the totally opposite experience with our bank (BOM/Westpac). When we used the equity in an existing property to purchase another IP the bank valued the property at $210,000. We also had 4 real estate agents in around the same time who all told us that we could expect to sell for between $180,000 and $195,000. In our case the bank’s valuation made things better for us.[
]Okay, in doing the revluation do I need to go through who my existing mortgage is with??
Or can I go to another lender, which is really what I would prefer to do as I don’t want to have both with the same lender?
The property in question is in the eastern suburbs of Melbourne and I know of one other property in the street that has sold and another on the market now, noth of which are smaller in size, similar vintage and have sold for a price that I would be happy to take valuation at 10% or so less than. Your responses have been great.
If you want to cross collaterise then you need to go through the same lender.
However I would consider another lender unless your current one is very competitive.
The way to do this is to draw 20% deposit plus costs from the current loan – may need a reval.
You then approach another lender for an 80% loan on the new property.
What are you looking for in a loan?
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi,
Yes I have found even inner city valuations a bit on the conservative side at the moment. The valuers do have to be careful as the Lender Mortgage Insurers can actually sue them if a borrower defaults and the property cannot be sold for the valuation price within 3 months (not 30 days) which naturally makes valuers cautious especially if they see auction clearance rate slow and no. of sales slow.
Presentation plays a big part as well, even though they tell you it doesn’t, starting with a nice green yard, and minimal DIY reno’s in progress inside, again because of the ‘sell within 3 months’ policy they work to – and yes it is definitely the new lenders valuers that you need to use, although as Simon says you appear to have a few loan options to consider first.
Good luck!
[
]
Mel
[email protected]not all valuations come in low. One of my clients purchased a unit and the valuation came in at 20% more than purchase price. The bank ended up giving him a 95% loan with no mortgage insurance.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
results of 2 recent valuations –
16 plus 9 spent – valuation 19
19 plus 11 spent – valuation at 25.But…valuer said ‘you’ll be able to sell them at value plus 10K’.
*jumps up and down with frustration!*
why didn’t he add 10K onto his figures then?
I asked for current market valuation…. I know there are no houses that good for that price in that area. not even close, actually. They’re all dumps needing alot of work up to 15k more. I know he is right about being able to sell now for those figures plus 10k. But i don’t want to test the theory by selling – I want to use them as collateral!!I’m actually not that worried really because it’s taught me something. A couple of things. One: don’t bother getting properties valued….and two: fixing the roof, plumbing, etc – invisible things – won’t show up on the valuation, even though it increases the ‘value’ of the property as an investment.
cheers-
miniHi Nat.
I only just had my rural property valued by an inderpendent valuer. And I was disapointed with the figure that he came up with. I asked why he had only valued my property at $###### when surrounding land values seemed to be selling for a lot more. He said that he will not be caught up in the unrealalistic prices that are being paid for properties at this point in time. Although this was a bit of a shock to the system I can understand where he is comming from. HE did say that it would no dought get at least $###### more on the market today. As this did not affect my loan I was not to concerned, & I had no intention of spending another $550.00 on someone else to value it. While on the subject, is $550.00 a normal type of price to pay for a valuation. As far as who do you use for the loan, I have to say that I always shop arround for my best deal first, and then I take that back to the bank manager who I have been ussing for many years, For him to either match or better. I find that ussing the same bank manager makes life a little easier as he knows my finances inside & out.
Craigc
]
]
You must be logged in to reply to this topic. If you don't have an account, you can register here.
