Hi.
With reagrds to using equity in your home, I assume that you need an accurate indication of how much your house was "worth" when you purchased (hopefully it is worth at least what you agreed to pay for it…)
My question is, do the banks perform the valuation when you apply for the loan, and do they physically come out and inspect the property including looking at renovations etc?
Secondly, if the bank performs the valuation, how hard is it to obtain a copy of the bank valuation? Who do you need to ask in order to get this?
Lastly, if you choose to get your own valuation done, will the bank accept this third-party valuation when you get your loan? For instance if I bought a house for $300,000 and my valuer valued it at $310,000 and the bank valued it at $290,000, how much equity would there be the day after the purchase: -$10,000 , $0 , +$10,000 ?? And if the bank does not disclose this valuation to you, when you apply to use the equity will they simply tell you "no" or will they state "you have insufficient equity" and justify it with the copy of their bank valuation at that time.
I.e. I want to know if there is a way for the property purchaser (and not just the bank) to know exactly how much their property is worth before committing to purchase…
Any thoughts much appreciated!
.
Hi aaabbbccc, In response to your questions I offer the following: (1) A lender may or may not perform a valuation when you apply for a loan. Often they will work off the Contract of Sale, or if it is a refinance they may rely on a drive by or electronic valuation, depending on the location and Loan to Value Ratio. (2) The banks will vary rarely release their valuations, as they are done for mortgage purposes only. Usually the only time they do is when you are appealing a valuation. (3) The banks have a panel of valuer’s, so if you got a valuation done outside of that panel they will not accept it. A bank will never take a valuation that is higher than the purchase price – that just doesn’t happen. (4) Quite a few of the electronic valuations offered nowadays can be quite accurate. I use Residex to provide my clients complimentary reports. Cheers, Mike
1. usually valuations are conducted.
There are basically 3 types of valuations the banks do.
a) full valuation
b) short valuation
c) kerbside or drive bye valuation.to this we can probably add
d) internal valuation where they don't use a valuer, but just look at some figures for the area and see if your property is in the range.
e) no valuation at all. Some banks just go on the figure on the contract of sale. there are conditions such as must be through a real estate agent etcSome or most banks have a policy of not releasing the valuation – but sometimes individual managers will give you a copy. Best to ask the person who did your loan for you.
Banks will not accept valuations they have not ordered. Even if you use the same valuer as they eventually do, they will have to reorder it – the valuation should come in the same, but there have been many cases where it suddenly drops when a bank is instructing them.
If you buy a place for $300,000 and the bank values it at $290,000 then you only have equity of $290,000 less the loan.
There is a way to know how much the value is worth before committing. You can order you own independent valuation, then sign contract subject to bank finance and then wait for the banks valuation before deciding. or skip your own val and just use the bank's. It may cost you a bit more, but could end up saving you overpaying for a property.
eg. one of my clients recently signed a contract for $450,000 purchase, valuation come back at $370,000 (because of some structural issues). But these people actually were locked in when they came to me. wonder what happened to them…
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
Mike, Terry,
Thanks for the detailed answers, I'm still a little confused however…
"There is a way to know how much the value is worth before committing. You can order you own independent valuation, then sign contract subject to bank finance and then wait for the banks valuation before deciding. or skip your own val and just use the bank's. It may cost you a bit more, but could end up saving you overpaying for a property."
If the bank's policy is not to disclose their valuation to you, does their final valuation figure appear on your mortgage contract at the time of signing? I.e is the policy that banks have not to give out copies of the valuation, or not to disclose the valuation figure to you?
Cheers
.
Most banks will not give you a copy of the valuation, but they will usually let you know what it come in at. CBA used to not tell what the valuation figure was, but you could work it out easily enough if you wanted to borrow 90% and they said the max loan is $xxx.
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
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