Hi, just wondering if anybody has successfully appealed a bank valuation, and what's involved? Had an investment property I expected to come in at $320,000 valued at $260,000 today. I'm not a crazily optomistic investor, and thought I had a really good handle on local prices (own 10 properties, go to open houses almost every weekend, trawl Real Estate sites ad property sections of newspaper.) We bought it less than 7 months ago for $247,00 and it was unlivable – spent three months and about $15,00 on reno (did most of the labour ourselves but got tradies in for the stuff that would have looked dodgy if we tackled it.) Now rents for $320 a week and seems comparable in every ways with properties that sell for around $320,000. Bank said the valuer was unduly influenced by the purchase price 7 months ago, and because the market has been flat was only willing to value it at what we'd spent on renos.
I'm feeling sick that we've actually got ourselves into a mess, because the purchase of a current property is larely riding on the $320,00 valuation which 2 agents (who are friends, and had no interest in inflating it,) individually said it they thought it would have 'no problem acheiving.' Auuugh. The problem is we got early access to the current property, and although it doesn't settle until the 3rd of September, we have gutted it and are in the process of renovating. If we can't get the loan (which seemed such a miniscule risk at the time!!) we are in deep.
The current property was about to be repossessed by the bank, had been adertised for months at $369,000, and we are buying it for $303,000. Initially our 'relationship manager' at the bank said if the other valuation failed, we could have the property we're buying valued, and hope for 20% equity before settlement. Might have worked, but the latest they can value (for the mortgage documents) is on Monday, and what he'll be valuing is a house that looks like demolition site (tradies everywhere, kitchen half installed, walls needing gyprocking.) I've asked can they value it on what will be done in the next 2 weeks (we've got hte materials there, and people obviously working on it,) but the answer is a resounding no – the valuer has to value what he sees, not what it will look like tommorow.
I know it's a mess, and I definitely know what we've done is a risk – I guess I just omplacent because the risks we've taken in the past have all payed off.
Just wondering if anyone can offer any advise, or any words of wisdom re: valuation – if it's worth appealing the first valuation, if there's anything we can do to promote a higher valuation on the current property etc.
Thanks for reading…..There are a number of ways a bank valuer does a valuation.
One method is called a drive by . They drive by and do a valuation from the road
Another method they go into the house and look at it inside and out
And another method is from a plan usually for houses under construction.
The bank use a panel of valuers. You may be able to convince the bank to do another valuation with a different valuer from their panel of valuers but it might cost you a fee. This may get you a better valuation but it might not.Due to what has happened in the Global property market and in the USA, valuers are worried or being conservative about giving high valuations as they could be held responsible by the bank if the value turns out to be over optimistic and there is a down turn in the property market values.
These things can happen. What you need to do is to gather evidence of comparable sales – actual properties that have settled, not just for sale. Maybe your realestate friends can help here. Make a list and give it to your bank to pass on to the valuer. They will sit on it for a few days and if you are lucky they may amend the valuation. If not, it is unlikely the bank will let your get another valuation from a different firm. So you may have to try another bank who uses a different valuer.
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
Was it the valuation which came back at $260k or was it the amount that the bank would lend on it. I'd push for a second opinion or a thorough val to be done not just a drive-by as well as providing recent comparables.
Thanks 4 your comments and fast replies. $260,00 was the valuation. Can't go elsewhere because loans all tied up in knots and cross callatorised (I know, I know…..) and we need to settle on the 3rd of September. Hope to untangle our loans if/when we get more equity, but until then it seems like the only way to be able to get finance. Have thought about trying another bank, but the Comm Ban provides 'relationship managers,' – ours has been brilliant, giving us pre-approval within minutes, doing the figures and being creative, letting us have his mobile to contact out of hours (which we're careful not to abuse.) It's been the most amazing help and has allowed us to move really fast on undervalued properties and buy 7 in the last 11months. Going unconditional has been instrumental in getting us across the line when 2 or 3 parties have been competing for the same property, and without our 'relationship manager' (hate the title, but love the service,) we wouldn't have been able to get answers anywhere near as fast. Does anybody know if other banks offer a similar service?
Re: the valuation – we've decided not to panic until we hear what the property we're buying has been valued at. Maybe (pipe dream???) the fact that we bought it cheaply and have started to renovate will push it up the 20% we need.We had a similar scenario with a valuation on our investment property which had been previously valued 1 year prior at $660 000 we expected the latest valuation to be around $600 000 with the downturn but they came back with $525 000. Our biggest problem is that there were no comparable properties sold in the area during the 6 months prior not because they can't sell but because they don't exist. I contacted the valuer who told us that was all he could value a single story 250sqm house for , the only thing is our house is double storey 450sqm. He told us that the valuer generals office has it listed at 250sqm and even thoough I gave him a copy of the construction plans and he walked through it he would not ammend his valuation. Obviously as this is a bank valuation he would also not give me any further info on the value.
So we waited a few months and have employed a valuer who we know is on the panal of most of the banks. He is going through today so i will let you know what he comes back with.
We have the proeprty on the market at the moment but if it doesn't sell we want to know if we have any other options.
Nat
We had a similar scenario with a valuation on our investment property which had been previously valued 1 year prior at $660 000 we expected the latest valuation to be around $600 000 with the downturn but they came back with $525 000. Our biggest problem is that there were no comparable properties sold in the area during the 6 months prior not because they can't sell but because they don't exist. I contacted the valuer who told us that was all he could value a single story 250sqm house for , the only thing is our house is double storey 450sqm. He told us that the valuer generals office has it listed at 250sqm and even thoough I gave him a copy of the construction plans and he walked through it he would not ammend his valuation. Obviously as this is a bank valuation he would also not give me any further info on the value.
So we waited a few months and have employed a valuer who we know is on the panal of most of the banks. He is going through today so i will let you know what he comes back with.
We have the proeprty on the market at the moment but if it doesn't sell we want to know if we have any other options.
Nat
Hi Morgan,
The short explanation (and panel / indepnedant valuers use this too…) is 1) Comparable sales 2) Value added improvements.
You sound like you have no2 coverd, but realistically, if a similar place to yours in the area sold for $250k last week (unless it can be proved it was not an 'arms length transaction') it is going to be a brave person that suggests yours is worth much more. Obviously outlook and land size has a bearing in the matter, but the reverse is true – if something similar not to far away sold for $350k your e on a winner. I have seen this happen both ways – some are winners, (and grinners) others not. What someone is asking for a place, is irrelevant too – only what it has sold for.
If you have evidence otherwise, I would think your lender would (they will be!) be more than happy to look at it.
All the best hey.Cheers
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