Hello,
If you buy a house I know the bank takes the lower value of the purchase price or the valuation, but I was just wondering does the valuer know the purchase price (ie. does the bank ask him if its worth that much) or is he just doing a unbiased valuation.If the valuation is higher whats to stop you the day after it settles going back to the same bank and increasing the loan up to 80%?
Or do banks specify a certain time period you have to wait before they consider the higher value?Thanks
GrantDepends what the bank tells the valuer. Often they will forward the contract of sale with the price. Maybe you could put a higher price on the COS and then say you negotiated it down from the valuation came back in.
If under 80% LVR, you can apply for an increase easily as there are no mortgage insurers invloved usually – unless a low doc. If they won’t, you can always refinance with a different bank.
Terryw
Discover Home Loans
Parramatta
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hi grant, if its a sale the valuer will walk on broken glass to find the contract of sale, either from the bank or from the agent, solicitor, broker and anyone else if they can.
as Terry said, there is some scope if the lvr is sub 80, and v little scope above with mainstream lenders.
cheers
brahms
Purveyor of Fine Finances
aka Mortgage Broker BrisbaneHi Grant7
In my experience, it is rare that that a valuation amount will come in higher than contract price (If the sale is arm’s length of course) – maybe 1 out of 10. Everyone thinks they have bought the bargain of the century!
Any Valuer worth their salt will hunt down the contract. This is a sale, which they can compare to other properties in the future. The Bank also use the valuation in some cases as a safety net, especially if the clients are not from the area that is in question.
Banks as a rule would not rejig things straight away. The smallest window is 3 months after, which is the life of valuation normally. Could be longer in a static market.
Regards
Investor1313Sometimes miracles do happen. I remember a few years ago a client purchased a unit under market value. The valuer had the COS and went out and looked at the unit and valued it about 20% above the purchase price. Bankwest ended up lending the client 95% of contract without LMI.
Bankwest have also redone a valuation on a reno before settlement and lent on valuation, not purcahse price. This was a 3 month settlement.
Terryw
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Good on them. That must have been the 1 out of 10!!!![biggrin]
Regards
Investor1313Thanks everyone for your input, very helpful.
I suppose another way to do it is for me to get a valuation done direct by a panel valuer. The valuer wouldnt even need to know that its a sale or that there is a COS would he? (Do they title search owner name?)
I’m especially thinking of sites where Ive achieved DA before settlement, or even just giving the valuer the plans will often reflect a higher value.
Is there lenders who will take the higher value and not the COS price. Terry mentioned Bankwest may sometimes, are they the only ones?
Thanks
GrantThe trouble is if you order your own valuation from a valuer on the lenders panel, the lender will often not accept that. They must ‘instruct’ the valuer themselves.
But once you have one done, then the valuer would look silly valuing it down a few days later – but it does happen.
Terryw
Discover Home Loans
Parramatta
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Yes, the Bank give the valuer the copy of the purchase contract in most cases and usually also contact the real estate agent selling the property to check the purchase price.
Anita Marshall
Advanced Finance Solutions
http://www.advancefinance.com.au
[email protected]It may also be harder than you think employing a Valuer yourself. With Bank valuations, the Bank paying the valuation fee is guaranteed. With private situations, payments are not always forthcoming.
Private situations like you are proposing, most always turn out to be messier and more time consuming for the Valuer. Any smart Valuer is committed to servicing their best clients first i.e. Banks.
And yes, Valuers do search titles. Any discrepancies could shoot down credibility very quickly!!
Regards
Investor1313Hi all,
Just a bit of input on a few issues here. Im a business banker with one of the top 4 banks.
1. When requesting a valuation to be done for a security (property), we ALWAYS attach a copy of the title search, and 90% of the time a copy of the COS is provided too.
2. Our valuers tend to value conservatively, but they won’t just reduce the value arbitrarily to be safe. Reason being that we use an 80% shading for lending anyway most of the time. If the valuer is out by more than 20% then he probably shouldn’t be a valuer.
3. We will almost always do a bank valuation even when an independant one is done, therefore probably better off not to pay your own valuer unless you smell a rat.
4. These apply to Commercial, Residential, Industrial etc properties in the way.
Regards,
Steve (YI)“Knowledge is Power”
How often does your bank do valuations on residential properties? Once or twice a year?
Banks only do valuations when you request more money.
Terryw
Discover Home Loans
Parramatta
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Yup, bank will do a valuation when there is an application for more lending. Reason being that if the bank is going to use the same property as security, we need to make sure the value hasn’t dropped so far that it wont cover the losses in the event of a realisation.
Steve (YI)
“Knowledge is Power”
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