All Topics / Help Needed! / problem with valuer

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  • Profile photo of prusliprusli
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    @prusli
    Join Date: 2007
    Post Count: 31

    Hi,

    I am having problem with a valuer from Herron Todd White in Canberra.

    My IP is currently rented for $435/wk by an agent but the property is valued at $380,000 by the valuer.

    the average net rental return is about 5% which indicates my property is worth mid 400K.

    I had 3 real estate agents inspected the property and got estimates ranging from $425,000 to $450,000.

    One from LJ Hooker gave me a written appraisal and I passed this to the valuer but he just doesnt take it.

    Their ignorance is costing me time and money.  Can anyone pls suggest a way to approach this?

    thanks.

    Profile photo of v8ghiav8ghia
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    @v8ghia
    Join Date: 2005
    Post Count: 871

    Hi prusli. Unfortunately when it comes down to it, the rental income received and any market appraisels have very little if any to do with the actual property valuation, although a rental value is reported on in the val usually. Was it a full valuation – ie done inside the property? All that essentially is used is comparible sales of similar properties in that area.
     Unless you can prove yours is better in some way, or find some other comparible sales you will possibly be stuck. As a last resort, you could commission an independant val of your own for comparitive purposes.
    All the best.

    Profile photo of prusliprusli
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    @prusli
    Join Date: 2007
    Post Count: 31

    Hi V8ghia,

    this is a full valuation and I am paying for it then pass it on to Macquarie for refinance.  I asked all agents that inspected my property to tell me the comparable sale and also passed this info to the valuer.

    Profile photo of v8ghiav8ghia
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    @v8ghia
    Join Date: 2005
    Post Count: 871

    Hi Prusli……Ok. Well that measn you should have the actual copy of the val yourself, with the comparable sales and valuers comments on it. (ie it should say how the properties compare to yours, such as better street appeal, but smaller block' or something similar.) Unless you can come up with some other comparable sales, you may be in a spot of bother. That said, I have done finance for a guy a while back, where we waited another two weeks until some other properties had sold, and got the val increased a bit that way. Pain though….the process and the valuers, who can at times be a bit on the, shall we say, pompous self important side at times.
    If you really feel the val is wrong, I wonder if macquarie will accept anothe val? That said, HTW are usually pretty good I thought.
    Have you got enough equity in the property to use mainstream lender, who may be more open to some flexibility?
    Cheers

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Other alternative is to switch lenders to someone who accepts the valuer you wish to do the valuation.

    Work backwards in this case. First find the valuer and then ask him whose panel he is on for lending.

    Your broker should do this for you fairly easily.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of Scott No MatesScott No Mates
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    @scott-no-mates
    Join Date: 2005
    Post Count: 3,856

    Prusli, what were the instructions given to the valuer (if any)? Were they directed for mortgage valuation/lending purposes? Sale of Propertty/Divorce Settlement? Building insurance/Replacement Value?

    The valuation will be based on actual sales of comparable properties, unlike commercial property which will be valued on yield and the secondary methodology of comparable sales. A high rent may be more symptomatic of the low vacancy rates/high demand and a correction in yields as opposed to reflecting a higher price.

    Is there any perculiarity with the property eg: easements, restrictive covenants etc

    Is the current use the highest and best use? ie is it zoned for units/townhouses (either by itself or amalgamated with other blocks)?

    The market appraisals offered by real estate agents are only opinions and basically not worth the paper that they are written on – used by the agent as a marketing tool to get your business.

    If you are concerned with the valuation, discuss it with the valuer to determine how he has come the the conclusion that he has – there may be some scope for discussion & revision. He may be able to clarify why he has or hasn't considered a particular relevant sale.

    I am not saying that the valuer may have been conservative in this appraisal but may have taken into consideration such factors as increasing interest rates and their dampening effect on prices.

    Profile photo of prusliprusli
    Member
    @prusli
    Join Date: 2007
    Post Count: 31

    Thanks for your response.

    I had a chat with the manager he agreed the property is under valued based on rental income but he can justify the house price based on rental alone.  Rental is only derived from house price but not the other way round.

    I have just renovated this house internally all brand new such as bathrooms, kitchen and floor.  I am learning we can get higher rent from renovation but doesnt mean the house value will increase as much as rent.

    Three main factors they are using:

    1. land value
    2. house size
    3. comparable sales with property having similar land value and size

    I am now hoping to find better comparable sales in the area. 

    Profile photo of Scott No MatesScott No Mates
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    @scott-no-mates
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    An external (drive-by) valuation will not establish the condition of the house internally. For the valuer to fully appreciate the property he must undertake a thorough inspection – externals will reveal the age and assumptions will be made based on the external appearance of the property – eg 1970's b/v 3 bedroom with slg, 1 1/2 bathrooms – this will provide the basis of determining that the house is 30-35% through its life cycle, in average condition etc. If he went inside he would discover that it is a 3 bed, ens, bath, tandem garage, new kit etc so his perception of the premises would change dramatically (and he would still be able to justify his valuation).

    Renovation does lead to a much better rent, especially in a tight market – it puts you at an advantage.

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