3 year old OTP purchase valued at contract price

We are about to settle on an OTP purchase from 3 years ago. The valuer wouldn't entertain anything except the contract price.

Is that normal? Does it depend on the valuer or their company?

Bank of Melbourne is the lender.

 

Where is it? And how many apartments in the development?

It's not uncommon for these things to come in for less than Contract price.

 

I've seen off the plan come in higher, lower and the purchase price - this includes properties that have taken years to be completed.

Depending on where you've purchased - a valuation at purchase price can be a good thing! Some come in under which leaves the borrower in a terrible position.

If you'd prefer a higher val ask your broker to order another upfront with a different lender. ANZ could be a good option - they'll lend against the valuation result if it's higher than than the purchase price.

Cheers

Jamie

 

I think you should be relieved that it came back at the contract price!

 

If you do another val (I'd reccomend 3-6months) even a week later, you may find that it comes back higher than your contract price.

Valuers are obviously cautious in this current property climate about valuing properties. Even more so for OTP builds. Thus once the value the property that isn't directly related to OTP settlement etc they may be inclined to increase it a tad. Just my two cents from experiences in the past

 

It is a small development of 7 apartments in a suburb of Melbourne.

Similar apartments in the area are selling 100-150K higher than ours which is why I was surprised. It's that the valuer looked at the apartment and decided it was valued at exactly the contract price, they said their policy was to use the contract price and would never use anything higher regardless of when the contract was signed. I'd love the have their job, getting paid for doing nothing.

Not a big deal is I have equity elsewhere to provide the balance in a separate loan.

 

Settle. Then revalue. Job done.

 

The valuer is engaged by the financier not you, they take their instructions from their clients in accordance with the valuation standards. They have not done nothing per say but reinforced the bank's lending policy with confirmation that your otp unit will be adequate security for the loan. The outcome could have been worse.

If you defaulted on the loan, the bank gets paid from the LMI if applicable who then seek reimbursement through the valuer's professional indemnity insurance.

Yep...they've done nothing.

PS - you placed a bet that the otp would be worth more than you paid (to the detriment of the developer), neither party won outright it is a draw. Why did 7 units take 3 years to build? Why didn't the developer invoke the sunset clause?

 

Strange - St George/BoM do lend against higher vals. I've done a couple in recent months and had no issues with Sydney price increases obviously justifying higher vals.

Do another one with a bunch of lender options (Macq, ANZ, etc).

 

The valuer said that, or the bank said that?

Or is that how the bank explained it to you?

I have never seen a valuer with that policy, and would be really surprised if it were true.

 

Valuers are super conservative at the moment, they donot want a repeat of the GFC where they were burnt, across the board - I am seeing valuers taking a conservative approach on valuations. I am not seeing many exceed contract price.

As stated above, move on - would be sound advice

Cheers Ivan

 

This is a happy problem to have with OTP - considering the normal story is of valuations coming 10-20% under purchase price and nowhere to go.

Settle, sit tight and revalue as a normal settled property post settlement. The best results will be 6 months in when the previous valuation will fall of the radar completely, 3 months potentially but they may very well refer to the previous recent sale price in any comparison tempering any higher value assigned.

 

NAB will also accommodate a higher valuation amount over contract price.

 

Just get several other bank vals done. Any of the brokers here will have access to to do that for you. What you have to understand is that valuers are a funny lot. There are lots of different companies engaged by banks to perform the role, and within those companies there are lots of different valuers. Some are commercially minded- others are pedantic , tight fisted so and so's... the end result is that valuations can often be a game of russian roulette. Get more than one opinion

 

I call them valuers opinions rather than actual valuations, so as suggested engage a broker and "val shop" if required as the right or wrong valuers opinion can make or break the deal at hand as well as future plans.

So, so important to have a person on your team who understands the nuances when it comes to valuations.