Hi,
We are buying a PPOR at the moment, but are struggling to get a decent valuation.
This is the scenario; my husband grew up in the house we currently live in(his parents’). The people across the road were family friends- my hubby grew up playing with their kids, and they are fellow Christians(we consider them family, in a way).
The lady passed away a few years back, and the man has married again. Of course, the new wife doesn’t want to live surrounded by the house the first wife designed and lived her life in, so they decided that they wanted to sell. Close to two years ago, they decided to put it up for auction. They came over to let us know, and we mentioned something along the lines of “what a pity it wasn’t for another year or two, because we can’t get it just yet!”
He said that if we wanted it, we could have it quite cheaply.
I found out from another church friend that he immediately cancelled the auction, hoping that the ‘family across the road would get it instead’.We were mortified, of course… We didn’t want them put out because of a throwaway line we made.
A few months ago, they told us that if we wanted it, we could get it for $350,000.
But they were about to go ahead and put it on the market, because they needed to move on.
We were starting to look for a PPOR by this point, and did some figures on it, and decided that it would be a good purchase. We got an RP data market appraisal done on it, and it came up for between $444,000 and 529,000.
So we offered them the $350,000, with an extended settlement so we could come up with the $$(they also needed an extended settlement).
Long story short, the banks valuers are refusing to present the value as being more than $350,000, as that is what the purchase price is. Because we aren’t related, they won’t count it as a favourable purchase. We have another 3 weeks before the contract goes unconditional.
I do believe that we should be able to get a higher value. So far, we’ve had one valuer do a drive-by, and that’s it. The house is much better than that, it’s finished very nicely, has a full two bedroom granny flat, and 5 beds/3 bathrooms, 6 bay carport, none of which are visible from the road.
Any ideas for how to get a higher valuation?
What if we ask the seller to get it valued independently, without informing the valuer of the contract of sale price? Would that give us any leverage?
We can still go through with the sale of we don’t get a high valuation, but if we do, it would save us $12,000 in LMI, plus interest that we could be saving.
Looking forward to seeing your ideas…In regards to the above post, most valuers will take the easy way out and choose to take the valuation on the contract price, this has happened more times then I can remember.
You could however,as you have suggested. (What if we ask the seller to get it valued independently, without informing the valuer of the contract of sale price? Would that give us any leverage?)I would proceed as it is a bargain, you are in the position of being able to finance and I would not be worried about the valuation.
After 6 months or so, you could get an independent valuation which the investment is around $600 there abouts, as per above comment and refinance and use the already gained equity to purchase an investment property or invest in other investment products that create cash flow to pay down the mortgage.They are just ideas.
Here is a report that I wrote on valuations, it might help you down the track
https://drive.google.com/file/d/0B6R0sWMpeDOPSDg4Sl9hYnpkYTQ/view?usp=sharingMortgage Refinance Specialist | Equity Release Australia
http://equityreleaseaustralia.com/
Email Me | Phone MeRefinance and Equity Specialist, mortgage broker for investors
Jessica, you are buying a residential property and therefore irrespective of the valuation a lender will only lend against the purchase price or valuation whichever is the lower.
The exception comes with an off the plan property with a contract dated > 12 months ago and a related party transfer.
Don’t waste time trying to convince a valuer. He is working for the lender and not you and certainly will not value it at a higher figure than the Contract price.
Cheers
Yours in Finance
0-40 Properties in a decade. Ask me how.Richard Taylor | Australia's leading private lender
Thanks for the responses.
In your experience, is the RPdata appraisal likely to be very different from actual value? In this case, the appraisal is much, much higher than the purchase price. Yet RPdata didn’t have any facts about the house itself. It said it had ‘unknown’ bedrooms and bathrooms.
Is it usually so far off the mark? Onthehouse puts an estimate in at only $330,000(from 265,000 to 400,000). Would anyone hazard a guess…
Thanks again for you responses… Looks like we might go ahead with the purchase and not worry too much.
Yes you will find that a proper valuation will be very thorough and give different results as a RPData report will give you an estimate of recent sales in the area and is very generic. Most banks who perform the valuation (depending on the panel of valuers at that particular bank) will go on the contract if it is much lower than true valuation or will do a drive by and also use RPData information, but not all. Unfortunately it is out of our hands if relying on a bank valuation for the finance, although in most cases your mortgage broker would know which valuation companies are used for which lenders product you have chosen.
Mortgage Refinance Specialist | Equity Release Australia
http://equityreleaseaustralia.com/
Email Me | Phone MeRefinance and Equity Specialist, mortgage broker for investors
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