Hi Everyone, I have a question for you. A unit sold in our block (unrenovated, ground floor, very noisy, unusable balcony) for $585,000. I called the agent that sold it to ask what she got for i as we are considering selling our. She said that is great timing because she has just accepted an offer that is going through in a month of $642,500 on another 2 bed in our block. (Not as good as ours but has a tandem garage) but has had a buyer miss out at $620,000 and she really wants to buy in our building. The agent came to ours and as soon as she saw it said I will et you the $620,000 for this no problem since ours is top foors, new reno (kitchen,bath etc) and the buyers saw it and made the offer of $620,000. We got contracts drawn and we signed them. Their valuer came around on Wednesday before a Friday exchange.
The valuer came back and said he valued ours at $560,000!He reasoned in the last 2 years there were some low sales. One went for $540,000 but I know they had bridging finance and already had a house to go to so they sold really cheap and it was unrenovated. He also said we paid $467,000 backin Dec 07 but why does that matter? The area has gone up strongly since then.
My agent went mad saying the demand in our building is huge and they come up for sale only about once or twice per year. Also how can it be possible when a worse unit went for $585,000? She also argued that she sold the one for $642 and got us $620 with in a week so how can it be worth $560? She asked to speak to the manager and he said they may have made an error but not up to $620,000. Therefore we have lost our buyer. Our place is most definitely worth over $600,000.
Our problem is now the agent wants to run with it and advertise the property (at a cost of $2000) and find us another buyer as she is confident she can get us $620,000 but I know an agent has to say that to get the listing. My worry is that we will just run in to the same low valuations again.
What do you all think?
Have you thought about gathering evidence (ie records of sales of similar properties in the area recently) and handing that over to the valuer to assist him in his job?
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
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I had the agent go to him with her previoius sales, also offered him to come back through the others in our block. She also spoke to his supervisor. All no good
Hi Scotty,
Low vals are a massive pain and sometimes unfair considering what the market is doing.
I asked this question of a valuer in Melbourne as we had this happen with a client recently, and they said that as valuers are liable for incorrect valuations, they won't stick their neck out and give a valuation when they don't have the results on file. The default is to wait for the results to be posted by the Valuer General, who do this after securities transfer (at settlement), and the results can be several months old before the valuers use them.So with regards to the other units selling at $585K & $642K, what the valuers will do is wait for that result to be posted officially, so the $642K technically may not exist to them just yet…
Some valuers use different data (from peak bodies such as the relevant real estate institutes or selling agents), but it still isn't 100% known.
Do you know who the lender/valuer was who performed the val?
You'll need some assistance for this job. If you can try to find agents for this, this is too much money to take the risk.
Bloody valuers, I would Keep it with the same agent, she sounds like she will work hard for you to get this sold, the agent may be able to make the change to the other properties that she sold by logging onto RPData and making the changes, that is as long as they have sold and are not still under contract, (I think this is possible but not 100% sure)
Another option, pay $500 or whatever the cost in your area to do a valuation and then tell that valuer you think it is worth $650,000ish, and provide him with the evidnce of the other sales and why your apartment is better, and hope it comes in somewhere around $620,000 and then have your agent go back to the buyer and say look here is a new valuation,
that other valuer didn't know what he was doing etckeiko wrote:Bloody valuers, I would Keep it with the same agent, she sounds like she will work hard for you to get this sold, the agent may be able to make the change to the other properties that she sold by logging onto RPData and making the changes, that is as long as they have sold and are not still under contract, (I think this is possible but not 100% sure)
Another option, pay $500 or whatever the cost in your area to do a valuation and then tell that valuer you think it is worth $650,000ish, and provide him with the evidnce of the other sales and why your apartment is better, and hope it comes in somewhere around $620,000 and then have your agent go back to the buyer and say look here is a new valuation,
that other valuer didn't know what he was doing etc…as long as the buyer's bank uses that valuer and they accept it (if you have a subject to finance clause), which is why I ask who the bank/valuer are. Or you try and get an unconditional contract.
Some valuers come from well outside the target area and only go on past sales in the area as their guide.
Then some drop 5% to 10% to cover their butt.
We know that the major banks (Westpac & Commonwealth particularly) have a huge chunk of their money tied up in residential loans.
They don’t really want much more and we suspect that they will start moving interest rates independent of the reserve.
I have heard that they have instructed some of their main valuers to discount their thinking by 10% as a subtle way of killing a deal.
They are really just going to ‘cherry pick’ the best of the best deals.
We are experiencing rejections on some (previously) gold brick deals.
Maybe speak with a non-bank or second tier lender, arrange your own valuation from a panel lender and offer your property for sale with a val (at true current valuation as you described) and an agreeable funder.
Correct me if im wrong. The big 4 banks are really the only people in control of where property values are heading? I feel there is some form of control that needs to be regulated in the housing market. It;s absurd to think property can just keep going up.
IMO, i think banks will start to lower their valuations with the anticipation of interest rate rises.
(Banks are obligated to their shareholders to maximise profit outcomes) i strongly think there will be an independant rate rise in the coming months.I see 2 main factors effecting property prices in the future. 1; increased interest rates 2; A rise in unemployment.
I cant see any major concern for unemloyment unless China's economy slows down, and some say we are in the early stages of a severe depression, the only thing thats been able to keep the world economy alive is world wide stimulas packages (PRINTED MONEY). Unfortunately for some i think the property cycle has peaked. I am predicting a very flat growth at best over the next 12 months.I am sure there are plenty of people out there that disagree with me, but i strongly feel that there is a lot of risk out there in property. I have been monitoring SOLD prices lately and vendors are taking 10-50k less than advertised on properties prices between 500-650k
Any advertised price on property atm is well above the vendors wildess dreams, i think people are slowly starting to realise this, and the banks will adjust their valuations accordingly. This will prevent people falling into negative equity if prices fall.
Good luck to all investors, got a little off course with my response but thats my 2c worth.
Cheers,
Steve.hschmid wrote:I have heard that they have instructed some of their main valuers to discount their thinking by 10% as a subtle way of killing a deal.Complete load of bollocks.
Reality is that many people have paid over market value for properties in the last year or so.
Going back almost 2 years I had a client who purchased a property and needed to sell his existing home. The bank valued at 700k and it took more that 6 months to sell, finally selling for 550k. When I met the client they said they would have never overcomitted if the bank didn’t inflate the value. They then lodged a complaint to the banking ombusman…
Valuers sometimes get the figures wrong. But almost every time in a slow market (like now) an owners estimate is out.
Going back to the original post – did you get a copy of the valuation?
You might be right however a lot of properties in metro melbourne have dipped 5 to 10 %. if they dropped or previously sold over market value is debatable.
I didn’t get a copy of the valuation as the buyers bank ordered it. HAving a copy wouldn’t be much good anyway since they admitted they made a mistake on it.
keiko wrote:Bloody valuers, I would Keep it with the same agent, she sounds like she will work hard for you to get this sold, the agent may be able to make the change to the other properties that she sold by logging onto RPData and making the changes, that is as long as they have sold and are not still under contract, (I think this is possible but not 100% sure)
Another option, pay $500 or whatever the cost in your area to do a valuation and then tell that valuer you think it is worth $650,000ish, and provide him with the evidnce of the other sales and why your apartment is better, and hope it comes in somewhere around $620,000 and then have your agent go back to the buyer and say look here is a new valuation,
that other valuer didn't know what he was doing etcThats not going to assist, unfortunately. Neither banks nor mortgage insurers will accept a valuation that has been ordered by the vendor. Thats precisely why lenders have panels of valuers who they assign valuations to randomly, and its precisely why mortgage insurers have check valuation departments. Valuers are liable to lenders and insurers for the information contained in a valuation report, so they arent going to take chances. If they provide a dud report they could be cut from a lenders panel, and that means a huge hit on their income. Valuers are always, always always required to provide 3 comparable sales on a valuation report they prepare for mortgage and mortgage insurance purposes, at a bare minimum, which are officially recorded on an independent dtabase such as Residex or RPData, for example. The 3 comparables usually include one superior, one inferior and one similar sale. They will never never never use data thats not provided by an independent source, so your agent yelling at them and telling them she sold one for 642K wont have one bit of influence, I'm afraid. Until the 642K sale appears on rpdata or residex, the valuer will behave like it doesnt exist. Thats the cold, hard reality.
Besides, who says the valuation that the lender ordered on the 642K sale, was for 642K? It may have been lower. The valuer cant just work on the word of the selling agent. The selling agent has no idea what the valuation came in at. The buyers may have had loads of $$$ and the valuation may have been lower than 642K, but they just wanted that property so they tipped in extra money. No one knows how large their loan was or what LVR it was. You cant expect a valuer to work in theories. They just wont do that.
Maybe the buyer didn’t want the property – got his mamager to knock the deal on the head?
Bollocks???? I was told this by a panel valuer (the horses mouth).
I agree with your sentiments about the market though.
I am a bear and I think there is a dangerous bubble in the works.
If I were lending my money, I would tell my valuers to drop their figure by 30% (not 5% to 10%).
euro73 wrote:keiko wrote:Bloody valuers, I would Keep it with the same agent, she sounds like she will work hard for you to get this sold, the agent may be able to make the change to the other properties that she sold by logging onto RPData and making the changes, that is as long as they have sold and are not still under contract, (I think this is possible but not 100% sure)
Another option, pay $500 or whatever the cost in your area to do a valuation and then tell that valuer you think it is worth $650,000ish, and provide him with the evidnce of the other sales and why your apartment is better, and hope it comes in somewhere around $620,000 and then have your agent go back to the buyer and say look here is a new valuation,
that other valuer didn't know what he was doing etcThats not going to assist, unfortunately. Neither banks nor mortgage insurers will accept a valuation that has been ordered by the vendor. Thats precisely why lenders have panels of valuers who they assign valuations to randomly, and its precisely why mortgage insurers have check valuation departments. Valuers are liable to lenders and insurers for the information contained in a valuation report, so they arent going to take chances. If they provide a dud report they could be cut from a lenders panel, and that means a huge hit on their income. Valuers are always, always always required to provide 3 comparable sales on a valuation report they prepare for mortgage and mortgage insurance purposes, at a bare minimum, which are officially recorded on an independent dtabase such as Residex or RPData, for example. The 3 comparables usually include one superior, one inferior and one similar sale. They will never never never use data thats not provided by an independent source, so your agent yelling at them and telling them she sold one for 642K wont have one bit of influence, I'm afraid. Until the 642K sale appears on rpdata or residex, the valuer will behave like it doesnt exist. Thats the cold, hard reality.
Besides, who says the valuation that the lender ordered on the 642K sale, was for 642K? It may have been lower. The valuer cant just work on the word of the selling agent. The selling agent has no idea what the valuation came in at. The buyers may have had loads of $$$ and the valuation may have been lower than 642K, but they just wanted that property so they tipped in extra money. No one knows how large their loan was or what LVR it was. You cant expect a valuer to work in theories. They just wont do that.
I have done it before, I have used a bank panel valuer that I have ordered and the bank accepted the valuation, so it can be done.
It may be possible that the valuation for the other property sale was less than $642k but that doesn't mean anything as when the sale price shows on RPData at $642k then the new valuer will take this into account.
So hans whats ur opinion about getting into the mortgage industry at the moment. If lenders are asking valuers to drop figures by up to %30 then this would mean it would be extremly hard for people to get loans since most prices will be above valuations. Im thinking about getting into the industry but these sort of forums tell me maybe to not waste my time for it will be extremly hard for an experinced broker to makae money let alone a newbie. What u think?
Just for the record i’ve only seen 2 valualtions under purchse price in the last 12 months. I know that people dealing with off the plan apartments come across low vals all the time but for houses it’s pretty rare.
Often you don’t even need to value a clients existing properties (subject to lender) so I’d have to say where I’m sitting the valuation problem with the banks is a little exagerated:- unless of course you are financing off the plan properties in which case; I’d say the properties are more likley overpriced than values being low…
Before you pull me up on the no Val issue. It’s worth noting major banks look after high rated clients. Westpac is getting a bit tighter however CBA still accepts owner estimate for valuation if rating 1 or 2 existing client. That means; if you have long term stable employment, minimal external debt, and have been with the bank for a long time – your estimated value of existing properties is often sufficient as the valuation.
Problem with most brokers is that knowing who has a cheap rate is easy – it’s on the net.
Understanding valuation policies, underwriters discretion for exceptions to policy, how credit scores are assessed, and having the right contacts to pull a few favors is all foreign to the average broker.To echo Banker's statement, I haven't had a single low val for a client who has purchased in the last 12 months (perhaps this might be becuase they've all been in the Melbourne market). The only low vals I've seen have been for refinances or top-ups where some of my client's expectation may be a little too high…
keiko wrote:euro73 wrote:keiko wrote:Bloody valuers, I would Keep it with the same agent, she sounds like she will work hard for you to get this sold, the agent may be able to make the change to the other properties that she sold by logging onto RPData and making the changes, that is as long as they have sold and are not still under contract, (I think this is possible but not 100% sure)
Another option, pay $500 or whatever the cost in your area to do a valuation and then tell that valuer you think it is worth $650,000ish, and provide him with the evidnce of the other sales and why your apartment is better, and hope it comes in somewhere around $620,000 and then have your agent go back to the buyer and say look here is a new valuation,
that other valuer didn't know what he was doing etcThats not going to assist, unfortunately. Neither banks nor mortgage insurers will accept a valuation that has been ordered by the vendor. Thats precisely why lenders have panels of valuers who they assign valuations to randomly, and its precisely why mortgage insurers have check valuation departments. Valuers are liable to lenders and insurers for the information contained in a valuation report, so they arent going to take chances. If they provide a dud report they could be cut from a lenders panel, and that means a huge hit on their income. Valuers are always, always always required to provide 3 comparable sales on a valuation report they prepare for mortgage and mortgage insurance purposes, at a bare minimum, which are officially recorded on an independent dtabase such as Residex or RPData, for example. The 3 comparables usually include one superior, one inferior and one similar sale. They will never never never use data thats not provided by an independent source, so your agent yelling at them and telling them she sold one for 642K wont have one bit of influence, I'm afraid. Until the 642K sale appears on rpdata or residex, the valuer will behave like it doesnt exist. Thats the cold, hard reality.
Besides, who says the valuation that the lender ordered on the 642K sale, was for 642K? It may have been lower. The valuer cant just work on the word of the selling agent. The selling agent has no idea what the valuation came in at. The buyers may have had loads of $$$ and the valuation may have been lower than 642K, but they just wanted that property so they tipped in extra money. No one knows how large their loan was or what LVR it was. You cant expect a valuer to work in theories. They just wont do that.
I have done it before, I have used a bank panel valuer that I have ordered and the bank accepted the valuation, so it can be done.
It may be possible that the valuation for the other property sale was less than $642k but that doesn't mean anything as when the sale price shows on RPData at $642k then the new valuer will take this into account.
If you can name a single lender or mortgage insurer that accepts a val ordered by the customer, and is undertaken by then valuer in the customers name, I'll defer to your point…but I dont believe you can. Maybe its happened in the past, but its definitely not normal practice. For a valuation to be acceptable to a lender for mortgage purposes, it must be prepared noting the lender, the mortgage insurer and any other related parties ( such as state custodians, perpetual, etc) on the report. Otherwise, in the event of a delinquency or repossession, an insurer wouldnt pay, and a borrower could challenge the legality of the mortgage and would win, and walk away.
What you may have been able to do is order the valuation on behalf of the lender…some lenders do allow that- but in those cases the valuation report is prepared for the bank, not the customer. Its unlikely you ordered it in your name, and the bank used it.
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