I just recently put under contract a 3 b/room townhouse in Rockhampton. It’s fully furnished ($10,000 worth) and i picked it up for $130,000 and it rents for $250 per week.
All sounds ok right? I even paid $380 all up for a building and pest report which came up fine more or less.
Anyway, the contract is subject to finance and my application went in to St George Bank. The problem is that they have sent out a valuer who has valued the property at $105,000 ( I expected $120,000 cos $10,000 of furniture came in the deal).
The problem is that I think the valuation is crap from other similiar properties in the area. I spoke to the agent who sold it to me and he thinks the valuation figure is insane (of course he would). I tend to agree with him though.
The finance approval runs out next tuesday. I have applied for the valuation but I have Buckleys chance of getting it by then. They will no doubt delay it.
Of course, because I have alot of equity the bank will lend me the money but will only lend me 80% of $105,000 (not $120,000), with the rest obviously effecting my remaining equity. Whilst this is not sheep stations it bothers me cos it is that little bit more that takes up valuable LVR.
I thought market value is what a house is worth? Is this a plan by the banks to value purchases low so that their risk is even further minimalised? (They already get a 20% margin! [
!] )Anyone had any similar problems? Any advice?
Kirby
I am a ortgage broker and had this problem today with a valuation (diff bank). I rang the valuer and talked to him about it. He is going to amend the valuation because the owners had figures for comparable sales to prove he was way off (about 20% off).
This happens occaisionally. Banks are not at fault, it is the valuer that is being conservative as they can be sued if it all goes bad and bank has to sell up customer and then can’t sell the house for what the valuer said.
So you could try to find out the valuer, or get teh bank to ring him and argue the price up. Or if no time, just accept this and apply for an increase about a month later – threaten to refinance if they don’t agree. St George have a good customer retention team whose job it is to keep you there!
Terryw
[email protected]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
Hi Kirby319,
Ok this is what I would do.
If you have the equity then buy the place and try and improve on it without spending too much money.
(i.e. paint it and clean it up, or whatever ….)Then get it revalued. (Make sure your bank will allow you to revalue the property soon.) This time make sure that you are there when the valuer comes over and point out the features of the property. (The valuer will NOT care whether the place is furnished or not, since the bank can not use furniture as security.)
In any case you may want to ask the seller to sell you the furniture seperately. (Since you will pay less Stamp Duty on the property this way). You could then get a personal loan for the furniture, but you will have to pay higher interest on it, you will have more equity left for other IPs though. (Are you sure the furniture is worth $10,000 ? get a Quantity surveyor to tell you.) (Actually you could get the seller to give you a QS report as part of the deal.)
You can depreciate furniture nicely too. You may want to look into that. (You could nearly depreciate it all in a year or two. See your accountant for that.)
Also, here is another trick. The real estate agent will want you to buy theplace so you can get him to give you a hand. Most valuers do NOT have access to historical data, but your real estate agent does! so tell your agent that you will buy the place if he can give you a hand… Yep, ask him to tell you the price similar properties have sold for in your area. (Ask him to print it out.) If worse comes to worse and you really want the property get the historical data form residex or propertyguide. (it wil cost you about $50 ) Then show this data to the valuer and tell him to get his act together (nicely).
APIM
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Australian Property SoftwareAPIM: http://www.apim.com.au
APDM: http://www.apim.com.au/apdm.htm
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Hi,
When it comes to valuers, it is up to YOU to sell the property to them by using any information you can. This may be in the form of comparible sales, historical growth, anything happening in the area that would increase growth and even in the form of current land prices and building costs.
I recently had my western sydney property revalued and prepeared a 3 page report on why I thought my property was worth a certain price. Did it work? You betcha. I calculated my sums on 400k but provided evidence for 410k. He split it at 405k so I was happy.
Its funny, I had 4 agents come through for apparisels to assist me and got figures that varied from 360k to 450k…..go figure.
Cheers,
Mathew. [
]Hello, I had a similar crap valuation through St George and asked them to fax me a copy which they did. it gives you something to work with. hope this helps. cheers.
This rent seems high for Rocky – is there body corp and on site management?
Have you thought that this valuation may be a blessing in disguise? Maybe you can argue the price down – even if you think the place is worth $130k, you now have a professional opinion to say it’s not – maybe the price can come down to $120K or $125k.
If you don’t want to do this, get a property report from realestate.com showing recent sales and argue your point with the bank.
Either way, good luck….pls report the outcome.[]Thanks everyone for your replies. [
]I have taken everything on board and will see how I go. The problem is excasserbated by the fact that I dont live in Rocky so it’s always hard to make a point at long distance.
The good news is that St George sent me a copy of the valuation report by fax (which shocked me I must admit). I can now use this to either have the valuer take another look at it or have the vendor re-look at the price. We’ll see how it works out and I’ll let you all know.
Hilary, yes the rent is quite high but is due to the fact that a big company leased it for 12 months because it is fully furnished and they needed it. A more realistic long term rent is around $200 per week.
I’ll let you know how it all goes.
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