Can anyone offer some advice on what to do if you are not happy with the bank’s valuation?
I have applied for a LOC using the equity in our PPOR. We had a local real estate give us a market appraisal of $560K. I told the bank $550K when applying. The bank has had their valuer come and has advised me that he valued it at $480K. This is therefore going to reduce the amount of my LOC. I told the bank I wasn’t happy with this and got a letter from the real estate and the bank is going to talk to the valuer but can anyone offer any other suggestions?
Thanks in advance
ShelleyHi Shelley,
This is not unusual at all. Real estate agents tend to overquote to attract business, then pressure sellers to lower their price once an exclusive deal is done.
The banks usually take valuations from more reputable sources, after all it is in their interest to ensure their money is secured. It is interesting to note that in some areas, valuations have been lowered recently.
As an alternative to a REA’s estimate, you could pay for a qualified valuer’s opinion and pass that on to the bank, but it might be a waste of money if the bank still won’t lend you your desired amount.
F.[cowboy2]Choose a lender that does not do valuations themselves, get a valuer from their panel to value it for you and then refinance with them, if you are happy with the valuation. If you employ the valuer yourself you will get the chance to come up with arguments for a higher valuation.
Have you asked the bank to do another valuation with someone else? Or have you provided them with evidence of other comparable sales in your area? A real estate agents letter will not be considered, unless it lists sales.
As a last resort, just tell the bank, in writing, that you are refinancing with X Bank due to a higher valuation. Most banks wish to keep customers from leaving, so that may convince them to order another valuation from a different valuer.
If that doens’t work, you may have to actually refinance.
Terryw
Discover Home Loans
Mortgage Broker
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
In Support of Terryw’s point about comparable sales, I had the same trouble recently with a low valuation. I sourced about 6 recent sales in my area (including my street) and contacted the bank. The most important point was that the properties I referenced were of similar age, size and location and the result was I got a higher valuation.
I also used the line about competitors valuation and moving on, but on the whole was happy to stay with them in the end!
I am just bouncing some thoughts here.
I think, in any case, that a bank lends at around 80% LVR.
So this is what the banks valuation is coming in at.
My $0.02.
LizardKing
I’ve recently had a bad experience with a valuation.
Just had a valuation done on my PPOR which was $50k less than 12 months prior. I fell off my chair when told. Within that 12 month period I had $30k worth of renos done to 3 rooms.
I asked the bank if I could speak to the valuers to found out there method on valuation. Seems the valuer who did the inspection was from out of town, spent 5 minutes looking through the house, and rang a local RE to find out the property values in the area.
I proceeded to do my own valuation research by visiting every open inspection in a half km, ring every RE for there spin, payed $40.00 for an online valuation (came in what I expected), got comparative sold properties from the last 2 months and presented it to the valuers. To cut the story short I embarrassed them to a point they refused to talk to me, so I forward all the evidence to the bank, and told them to act.
In the mean time the bank got another valuation done from another valuer, all payed by the bank…….
My recommendation, do your own research and present it to the bank, make them fight the issue or change banks. Remember, the bank wants your business, your the client…
Good luck.
Cheers
GeoffBSimilarly to GeoffB, my beach shack was revalued last month at around 20% less than late last year. However I agree with the valuation – other houses in the area still at ’03 prices aren’t moving (whereas in ’03 anything and everything sold as soon as it was on), so if I was to put mine on the market, I’d expect to need a lower price to move it. But I don’t want to sell, so I don’t care…
Cheers, F.[cowboy2]Hi Shelley
You have to understand that valuers are very cautious by nature they have to be careful. If they overprice a property and the owner defaults and the bank forecloses especially if the loan is not that old say with a 95% or 97% loan. When the bank analyses the figures and finds out the valuation was 10%+ over priced they are well and truly exposed. Of course the banks have mortgage insurance so they are covered, but the insurance company is going to spit the dummy. The valuer is then liable for the mistake and the insurance company will hit them for the shortfall. The valuer is then going to have to access their indemnity insurance or pay out of their pocket, either way they lose big time: hence extreme caution.
Kerwyn
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