Bank returns with a lower than selling price at the Gables in Northwest- What next?

Hi,

We were arranging for financing to buy property at the Gables, the price for a 450m square is $599k but the bank has just valued the land at $555k, should we approach the developer or should we stop with the purchase of the land?

 

Hi!!

What have other similar blocks of land sold for in recent times?

Have you just checked with one lender?

May be worthwhile checking with multiple lenders - have your broker valuation shop.

We had a client purchase OTP for $670k (settled early 2018). One lender came c. $70k short....we could only really go with this lender due to client circumstances. Valuation shopping helped, as a few other lenders came on purchase price at $670k. Challenged the original valuation - the lender got the valuer to change it to purchase price.

 

Most blocks are advertised for the same price, this happened yesterday and the problem is that settlement on the land is this month. We will ask our broker to dispute the valuation. Thanks for the insightful response.

 

If youve signed a contract, neither of these seem to be actual options?

 

We haven't signed the contract with the bank. There is a contract with the developer however.

 

And you think telling the developer the valuation is low will result in.....

 

Well maybe get a discount, seeing that there won't be much demand for land especially after the Royal banking commission findings. Oh maybe it's just wishful thinking.

 

Box hill valuations are notorious for coming in below purchase price. Valuers know that there are another 10,000 blocks and 10,000 units/ townhouses coming on line over the next few years.
If you signed a contract with the vendor you are stuck. Changing banks or valuers will not help much.
If you can afford it and it’s for your ppor then it’s no big deal, enjoy your new life in the new estate.

 

Hi, thanks. It's for us to live in.

 

Can you rescind? Seek legal advice.

Try another valuer, via your broker and see what they come in at.
If low there may be no option but to chip in more cash.

 

We will be consulting with our broker and lawyer tomorrow.

 

If you are buying vacant land at present I would strongly recommend that you get a broker on your team and seek values BEFORE signing anything. It may place you in a better position to negotiate a price or reject the deal. They may refuse a price adjustment but I bet they have some wiggle room in this market when someone throws the valuation back at them. Once you sign they have you.

 

I wish we had known this bit before signing, thank you.