I have been working on this property deal for a while now. It is for an IP, so I am not emotionally attached to it.
I feel that the price I offered for this property was reasonable (considering surrounding properties). But I have just had the bank valuation come in at 15% under the price I agreed upon.
Luckily I haven’t signed anything yet…which is good. But now I don’t know what you do.
I have gone back to the vendor and said I will offer them what the bank valued the property at. If they refuse this then I can’t afford the property (because the bank will only lend me 80% of their valuation). I only have enough to pay for the costs and 80% of the purchase price.
Should I try another bank or do you think the valuation will be the same?
Or do you think I should just walk away if the vendor does not lower his price?Ryan McLean | On Property
http://onproperty.com.au
Email MeWill the vendor lend you the 20% as vendor finance ?
Since the financial crisis valuers are being more conservative in their valuations.Ryan I don't mean to be rude but the property is valued at 15% under what you think its worth and you advertise a website that says you can find cashflow positive deals?
@ Duckster – This vendor isn’t interested in vendor finance unfortunately
@keiko – This is one property that is valued at 15% under. It is positive cash flow at the higher price, and I might even still be interested at the higher price (it offers 5.5% cash on cash return, and once renovated around a 12% cash on cash return.) So it is a good deal, and I think the price is fair considering what other properties in the area are selling for. But the banks obviously don’t agree.
Just because it has happened with one property doesn’t mean it always happens. Just thought I would state that.
Ryan McLean | On Property
http://onproperty.com.au
Email Medo you mind me asking the location of the property, if its in QLD and you give me the street name I will tell you what I think its worth.
dont worry I am not interested in buying this as its 15% under valuedwalk away and find something you can afford.
Ryan,
How many customer(s) do you have at this stage?
I did browse through your website briefly and I found it amazing………"Full access to Ryan McLean’s Property training resources worth over $2,000" and costing A$220/months…
Perhaps the valuer knows something you don't….to value it at 15%.
I don't know that banks and valuers are necessarilly that conservative with valuations at the moment. My valuation came back with an increase of $50k in 6 months…..
If you have done your due diligence, and you think the price is reasonable, I will get another valuation from another panel for the peace of mind before I walk away.
If one walks away without giving it a good go, we may put ourselves in ringer later on when the property turns out to have been a great buy and we didn't buy it.
Ryan,
Why would you buy a property which is over priced??
You want to be buying below market value, as we know the money is made on the way in on the deal…
It could be one of your property in Moree (Queen st or alice st)
god_of_money wrote:It could be one of your property in Moree (Queen st or alice st)LOL
try a different bank
i just bought a property. CBA valued it at $800k and NAB valued the same property for $710k. Big difference
i also work for bank (in investing not lending) and i regularly refer clients to a morgage broker. and yes banks are being more conservative (i know clients who have had valuations done by St George recently that were way below comparable sales)
Yeah the amazing things I get sometimes about valuers. There was one deal in North Bundaberg recently where a Westpac valuer came in $30k under valuation on each of 2 units that a couple were trying to buy out of a block of three. The valuer wouldn't talk to me regarding why he thought the value was so low. I finally reached him and he was arrogant and rude and cut me off saying he knows his job, then he hung up. Anyway they did another application with St George and wow, just 2 weeks later the exact same properties valued in at purchase price. A total difference of $60,000.00. Valuers can sometimes be very forthcoming and other times they are a closed shop.
It is quite amazing how they vary. The sad thing was that Westpac only had one valuer in Bundaberg and that this guy was it. Usually they have a panel of 3 valuers and you can ask who are their approved valuers and pay for another valuer yourself. If the second val is more favourable for you then you can ask that it be applied to the property.
Recently both St George and Westpac changed their valuer assignment system and the computer assigns a valuer per deal. I hope that in Bundaberg Westpac adopted the panel from St George and not hamstung us all with that one very particular individual.
Fingers crossed.
DD
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