I just thought I would mention that I have recently got 4 of my properties valued by a registered valuer requested by the bank when I was obtaining finance to buy another property. Even the local bank manager said that the values are too low but we haven't got enough time to disagree with them so I would have to put up another property's equity to pass the required equity test they have. Anyway, this has got me thinking that if the bank borrows 80% of the value the valuer puts on the properties and the valuer values about 80% of the real value, then 80% of 80% is 65%. This means that you effectively can only have 65% loan compared with the value of your property.
I would appreciate some comment on this. This doesn't seem fair to me. But, it is a safe way of buying property, I guess.
Kind Regards,
deanboy
Hi Dean,
Unfortunately the valuers don't always get it right, but this is all the bank has to go by.
Generally the bank valuers are more conservative than the professional valuers, but in your case it sounds like they are in the same boat.
The bank may consider revaluation at a later stage if you are keen to remove one of the properties from the mix. This may work as the valuers are sometimes working off older sales data, and it is possible that the revaluation in a few months might show a higher price value. Bare in mind that you would need to pay the valuer again though, so weigh up your options.
Regards,
YIThanks, I think this forum is great. I have 7 properties and have felt alone whilst building up my portfolio. There are so many negative people around so I haven't been able to talk about my interest in property before. I am a qualified CPA accountant and registered tax agent, so I hope to also help other people if I can.
Kind Regards
deanboyNice work Dean – 7 properties is certainly well above average!
Which state do you work in? And which states do you have property in?
Regards,
YIDean had you thought about taking one or two away to someone else.
Not every valuer is the same.
Have a couple of deals on my desk at the mo where one lender has valued the property at purchase price – XYZ so we took the deal to another lender inisting on another valuer and they have come back bang on the purchase price.
As YI said not every valuer is the same and they are not always right.
Thankfully my LVR is extremely low across my portfolio but i would never be afraid to look at moving a property away to another lender if i thought the low valuation from my current lender would hinder me going forward.
Richard Taylor | Australia's leading private lender
Dear Yl,
Thanks. I work in south east Queensland and have my properties in south east Queensland. Each time I go to purchase property, I don't have enough confidence (or courage) to invest elsewhere yet. I seem to always go back to an area that I think I know pretty well and it feels safer for me that way. I am aware that I need to start buying elsewhere.
Kind regards,
DeanDean i am with you.
i have 40 properties in SE Qld (well Brissie if the truth be known) but over the last 3-6 months have started to become more adventurous and started looking inter state.
Dont have to go that far but can look outside your own Bank.
Richard Taylor | Australia's leading private lender
I'm the typical case too I'm afraid, 3 properties in the same postcode.
Luckily it has had above average growth in values and rental so can't complain.
I am a little better educated now than I used to be and don't want all eggs in one basket, so my next one will be outside of the suburb at the very least (and hopefully interstate!)
Regards,
YISorry Qld007. What does the last sentence mean. (look outside your own Bank)
Kind Regards,
DeanSorry Dean my point was if your own Banks appointed valuer is not giving you the sort of Bank valuation you think you should be getting then an alternative lender may use another valuer that will give you a different figure.
Nothing to say you cant refinance a couple of properties away from your Bank if terms and conditions elsewhere are more favourable and this would include the valuation.
Richard Taylor | Australia's leading private lender
Thanks very much for the advice Qlds007. I have managed to get the finance for my newest addition. I will take your advice next time if needed. I have about 55% debt with about $1,000,000 in equity. It just doesn't seem to be getting any easier. when lending money. I guess nothing worthwhile is easy. I think I probably need to get away from the average loans officer that really appears to want to lend me money as if it is my first property and PPOR.
Kind Regards,
DeanDon’t you get hammered with a huge land tax bill Richard, with so many properties in Queensland?
Yes but well worth it……
Richard Taylor | Australia's leading private lender
Yes the average loans officer or even Bank manager (glorified senior teller as non of them actually make lending decisions) probably doesnt even own his own PPOR let alone IP.
Considering most loans are credit scored in some form or shape these days you need to keep the total exposure under the lenders maximum loan radar or big enough to make your business be something they dont want to loose.
Midway in between you are a pawn in a bigger bowl.
Richard Taylor | Australia's leading private lender
It is an area that I need to study up on, but in some states land tax is charged from $0 value if owned by a family trust. In Queensland this is not the case. Is this correct?
Kind Regards,
DeanPeople have been complaining about low values for as long as there have been valuations. Firstly most people over estimate the worth of a property and secondly valuers need to be conservative to avoid getting sued. So before you get a valuation ordered it would be a good idea to do the research yourself and collect details of recently sold properties in the area that have sold for more than you want. Must be completed sales, not just rumours. Then meet the valuer on site and hand it over (stick a $100 bill inside too!). As long as they can justify the value they should be able to give you what you want.
ps I was joking about the $100 – $50 is enough.
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
I guess I should leave some of my questions about other topics to put in other places in the forum. Thanks for the help everybody.
Kind Regards,
DeanBahaha nice one Terry.
In seriousness though, I have had values improved by calling a local agent and asking for some sales data.
As long as the valuer has some evidence to justify what was quoted, then they will usually try to assist.
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