- Who owns the valuation report undertaken on your property (existing PPOR) when the valuation inspection/report was sourced through the financial institution you are seeking funds from?Most banks when you are seeking additional funds request a valuation report to be done on your property and they use one of there valuers from there prequalified list. However, when I request a copy of the report they say no it belongs to them.Now, if I pay for this report surly I'm entitled to a copy of this report? Is there some legal issue here or am I just been taken for a ride?CheersGeoffB
Geoff, although you are paying for this 'service', like all other services provided by the bank (at your cost), you do not own this information – eg you pay the banks legal fees but are not entitled to their lawyers opinion.
The type of valuation provided to the banks is generally the 'short form' valuation, which is not a valuation which would resemble one which you would request if you were instructing the valuer ie you would be generaly requiring a) market value, b) insurance/replacement purposes, c) transfer or d) securitisation. There was much discussion at the Aust Property Institute with regard to the compliance of these short form valuations with the principles of valuation for general property and the rules of the institute. In the end, there is an approved short form valuation which is API compliant.
Geoff, there is a legal issue here. As correctly pointed out by SNM, the valuation ordered by the bank is for a specific purpose and therefore the valuers' concern is that if the owner has access to it, they may rely on it incorrectly – not understanding that it is not a market valuation, for example – to the owner's detriment, eg by selling a property whose market value is $600K for $500K because that's what the lender's valuation was. The owner may later try and sue the valuer for the $100K undersell, and even though the valuer has put in all the appropriate disclaimers, the valuers are concerned that it's possible that a Court may find that if the valuer allows anyone other than the lender to have access to the information, they're accountable to those other parties to whom the information is provided. There's also the possibility that you'll take the valuation to secure another loan – eg with another lender – and that that lender didn't understand the nature of the valuation, and then when your loan goes into default, that lender comes after the valuer… So whilst I'm unsure whether that's a real concern (ie whether this has ever stood up in court), I think the valuers take the line of "why risk our professional indemnity insurance by allowing third parties access to our information"?
All in all, it's because of this litigous society that we live in! But even so, I think I've gained access to every valuation report on my properties – it's something to negotiate with the valuer via the lender, BEFORE you proceed with an application and payment for the report, if having it is important to you.
Best wishes, Tracey in Brisbane
Tracey, thanks for response.I'm still of the opinion that if I pay for something I should get it. If I go down to the shop and buy an apple if should get the apple, even is if it has a worm in it.Regarding negotiating for a copy of the valuation before you proceed is valuable advise. I have tried to get a copy of the banks prequalified valuers list, therefore I could get a valuation under my own steam and cost (detailed report) and then present it to the bank for further use. However, the bank has a policy of not releasing prequalified valuers lists.Cheers GeoffBHave you asked the lender the process for diputing the valuation? Some lenders then have a seperate policy…where you sign a form acknowledging that you will not contact the valuer etc and then the will release it.
Another avenue is via your broker who can often access the report via their Business Development Manager.
Trentc
Then find a new lender! There are certainly lenders out there who will give lists of valuers, enabling you to take exactly the course of action that you outline.
I know it's annoying, I'm with you…. but to extend your analogy – you're not buying an apple, you're paying for the bank to have an apple, because the bank having an apple is one of the things that they require in order to enter a contract with you to provide finance.
Imagine you had a non-working spouse whose life you wanted to insure. Part of getting the insurance requires that she have a medical exam, and you pay for the exam. Would you then think you were entitled to see her medical records?
LIke I say, I'm with you – I want to see the valuation – just trying to give you an analogy that might make you see the principles that the lenders say are involved. In fairness, if I were a valuer, I wouldn't want anybody else but the lender to see the report
Best wishes,
Tracey in Brisbane
Tracey, as you pointed out, valuers do put a note on the valuation with regards to the document being for the person/company that commissioned the valuation and the purpose for which the val was made. nor is it be used for any other purpose or by anyone else who is going to rely on that document without first consulting the valuer.
Geoff, all valuers are registered, have completed tertiary qualifications and should be practising valuation members of the API (and licensed by the dept of fair trading/VCAT etc). It does not matter which valuer you choose to use however they should specialise in the field that you require with at least five years experience eg retail, commercial, residential, plant & machinery etc.
It will come down to the instructions that you provide to the valuer which will assist in the preparation of the valuation. I have market rent reviews coming up & due to the variety of the leases the instructions to the valuer will be different on each site although they are on the same parcel of land.
Hi Geoff. These bank vals are much cheaper than if you had to order and pay for them too, and are usually included in the application. EG. A full internal val may cost you $350-400. A bank would not pay that, and usually only do 'drive buy' or short form vals as mentioned – which essentially are based purely on comparable sales (or contract price if seen as 'acceptable) and make sure the building is therer. On higher lend amounts more is often done though. I believe the CBA were stung badl $$$ in a court case a few years back for doing this, when taken to court with the client claiming the val was too high and that made him make a bad decision. I have seen clients too, when they realise they cannot 'afford' their loans all of a sudden blame the lender for 'valuing their property too high so they borrowed too much'.
Ther is nothing to stop you buying / your own valuations – tax deductable on an IP, and a lender would certainly look at it and advise their panel valuer if you requested – may even use the same one as you!
Remember too, if you request to borrwo 80% or a certain LVR % of your val, it is not too hard to work out when your loan is approved how much the val was. Some lenders will 'accidently' let it slip too, but as mentioned, the valuation is only for use by who is shown on it, and for the purpose stated on it.
Hope that helps along with the other excellent coments. Cheers
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