Hi,
I bought an off the plan apartment for $428k 2 years ago. The settlement is coming soon, so I checked on the recent sales price for a similar unit in the same/nearby buildings. The mkt price was around $550k, I was expecting the bank valuation would come close to that. However, I just got the valuation results, the bank valued my property only at $440k. Is the valuation by bank always significantly lower than the mkt price? Does the valuation results varies a lot from different bank? I don’t feel very comfortable because I was hoping I can use the capital gain to borrow and purchase another investment property.
Hi Asou,
It is good to know that market prices have moved upward. That provides hope of a better outcome for you.Is the valuation by bank always significantly lower than the mkt price?
A valuation for finance can often be below a market appraisal conducted at the same time. A bank has their $$ on the line, so their vals tend to be more conservative. This shows up whenever we find a bargain – even though the market value of a property can be (say) $500k, and we have managed to form a contract with $400k as the purchase price, the bank usually only allows the contract price as the val, thus ensuring that we put in our 10% as a deposit (they ignore the 20% Equity we have through good buying).
One other thing that banks are looking at right now (especially re apartments) is a pending over-supply. This has been widely reported recently, especially for apartment towers in/near CBD’s of capital cities. So maybe they are building in a bit of protection for themselves. See, it CAN happen that an over-supply leads to falling values.
Does the valuation results varies a lot from different bank?
Have a chat to your Mortgage Broker re this kind of thing. Some banks might have a more pliable lending algorithm, and you might need to switch to gain the benefit of that.
If you don’t have a MB, chat to those here – a good MB is worth their weight in gold!!
Benny
Hi there – Put simply your val has come back at more than contract price….thats a great result. Valuers are generally conservative and will be lucky to get contract price – valuers generally are valuing apartments lower especially in a ‘high density’ area. Remember their conservative as their arse is on the line, they are predicting a doomsday scenario so valuers are pulling back.
Valuations don’t differ too much as bank appoint a panel of valers and generally they are quite consistent in the apartment market.
Good news for you – hope you have a tenant and get moving!
Cheers Ivan
Redwood | REDWOOD | SMSF | PROPERTY | FINANCE
http://redwoodadvisory.com.au
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Hi Asou
Sorry have to disagree with the previous posts.
If you purchased the property 2 years ago and settlement is coming up i would be concerned if the valuation came in at the purchase price.
We have had a number of forum clients valuations come in considerably higher than the purchase price on off the plan properties and the lenders will advance against the valuation rather than the purchase price.
Course all depends on where you purchased but I have to say I would probably getting your Broker to order another valuation to see what comes back in.
Cheers
Yours in Finance
0-40 properties in a decade. Ask me how.Richard Taylor | Australia's leading private lender
I am thinking the main reason for such low valuation is I will be living in it. If I initially applied my loan as an investment property loan, then the valuation would turn out to be a lot higher. However, I want the first home owner grant so I must stay for 6 months.
Hi Asou
Whether you intend to occupy the property or not will have NO affect on the valuation.
2 of the 4 deals we have done for forum clients recently were for owner occupation.
One property came in at $155K more than the purchase price and the client set up an equity loan in additional to the funds needed for settlement so he could start an investment portfolio.
Cheers
Yours in Finance
0-40 Properties in a decade. Ask me how.Richard Taylor | Australia's leading private lender
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