Hi all,
can someone give me an opinion about the following situation.We have agreed on a purchase price of a terrace house of $290. It was originally up for $299 and the contract has a date of May 2008 on it. I was a bit nervous about the purchase and employed a valuer in the area (who works for the bank I am going with) to do a valuation today. They came back with a valuation of $275 and a market rent of $270. I also had a rental apraisal of $275 – $285 with a specialist rental agency.
So now I'm wondering if I'm being ripped off.
I am also purchasing another unit off a relative for $205 that a REA said they would put on the market for $245 and expect a selling price of $210 – 215. This property also had a valuation done by my relative (done by a different valuer) that came in at $230. So now Im confused. The unit comes in over what the REA expects it would go for and the Terrace valuation comes in $15K under what we have negotiated for.
So what I want to know is do valuers generally under value, in this case by around 5% or should I be wary.
We are supposed to sign the contract on Wednesday 17 Sep so now I have to make a decision.
HELP
Some valuers are more generous than others. I wouldn't be keen on buying a place $15k under value – maybe you could order another valuation from a different company just to be sure. Spending $300 could save you $15,000.
never trust an agent or their estimate.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
Generosity is never a factor in valuations – it is experience and instructions.
In the present market an experienced valuer may provide a more conservative result than you would expect however they will be considering a number of factors that the next valuer may not have taken into account (due to their degree of experience). This may be the currency of sales considered, the degree to which the valuer has assessed the property, the selection of comparable sales considered (and those disregarded), their wider knowledge of market conditions and market cycles. It may be worth discussing the valuation with the valuer to ascertain his rationale (or commission another valuation elsewhere).
The instructions may have led to a different result – is it a market valuation, valuation for mortgage purposes etc?
V aluers do not undervalue, they present a valuation at a point in time based on a willing buyer/willing seller, neither party over anxious (under pressure to buy/sell) etc ie what would a reasonable person in the same position pay for the property?
And then again, valuations change. We receently purchased a block that had a valuation of $480K then was revalued by the same valuer 4 weeks later for $550 (our purchase price). The difference, we were able to use the existing infrastructure (large concrete slabs in a rural settting) which increased the value, where the first valuation was considering the slabs to be a liability to be removed to increase productive land. Nothing changed on the land in that time period except the percieved use of the end purchaser. So where is the logic in that?
MickThanks for the feed back.
I'm getting an opinion hopefully this morning from the rental agency I have selected about the true value. They have a few contacts and have promised to ask around for me.
I am seriously thinking of pulling out of the sale. I know it isn't a bargain, I think the price we have agreed to pay is top dollar so maybe I should look around a bit more. My husband has left the decision up to me……..great…. no pressure!!!!!!!!!!
More opinions gratefully accepted.
in my opinion, and generally speaking bank valuers UNDERestimate and RE Agents OVER estimate.
BUT, the value of a property has many factors – the main factor being – what will someone be willing to pay for it at the time it is sold?
Also, sometimes an area can become HOT just after a news article or development approvals for shopping centres etc…this can sometimes increase the value of a property by $50k overnight (see newbie2)
Get the third opinion and make a decision – be careful of RE Agents values too.
TracyREA generally are not valuers. They will provide an estimate (based on much different criteria to those used by a valuer). You pay nothing for an appraisal, and it is worth it.
Thanks for the feedback everyone.
We have decided not to procede with the purchase as the valuation is the nail in the coffin for this buy.
The problems are:
1. It has a right of way down the side of the terrace that we were told was on the title, (old dunny man lane) but we cannot get a straight answer as to weather we can fence it off and use past the next doors neighbours access gate. The current reasonably new fence is not where we were told is the boundary. Why would you not fence your land to the full extent and leave a "no mans land" when no one needs to use it for access.2. The current owners signed up their tenants to a 12 month lease till May next year at $245 p/w. Our rental appraisal came in at $275 – $285 p/w. The contract was also drawn up in May this year. Why would anyone sign up tennants that far under market rates for 12 months when you are about to sell? I'm not willing to loose out on $1000 + on rent AND pay above valuation because of the current owners being nice to tennants.
3. I have been told by my finance broker that the lender will only lend 80% of the valuers report so that means I will have to dip $15k more into my equity than I originally thought.
We are the third people to start the buying process on this house so maybe the others had the same valuation problem.
So back to the search for a decent investment I suppose.
Thanks
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