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Bank Val < Purchase Price

Discussion in 'The Buying & Selling Process' started by montoya, 18th Sep, 2015.

  1. montoya

    montoya Well-Known Member

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    If the bank val happens to come in below the contract price whilst the contact is still conditional. Can you:

    A. Request a copy of the bank val report (actually, are you entitled to this report anyway?)

    B. Rescind the offer during the cooling off period and put forward a new offer (unconditional as P&B and Val is already done, and no issues in getting the loan approved other than the val)

    C. Are there any other implications to think of if going ahead with B instead of just letting the property go?

    We don't wish to / want to pay the cash difference , nor change to a lender that will do a desktop val.

    Any help would be greatly appreciated.

    Also, I'd be interested in seeing anyone's opinion who has their finger on the pulse in the Redcliffe area as to what they think the property is worth.. Will post details as it's not an advertised sale on here if asked.
     
    Last edited: 18th Sep, 2015
  2. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Hiya

    Do you mean when the contract is still conditional? I.e. Subject to finance?

    If so - I would a) contest the valuation with comparable sales and at the same time b) order another upfront valuation (or two) with a different lender.

    If you can't get a better result with the above - then you should be able to pull out of the deal under the finance clause.

    Cheers

    Jamie
     
  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Depends what low val means for you

    Ta

    Rolf
     
  4. montoya

    montoya Well-Known Member

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    Sorry, I did mean conditional. I've edited my original post to avoid confusion.

    We're within our 5 day cooling off period still too. I'm hesitant in pulling out under finance as we would need to provide a letter saying we've been declined finance and that would then hurt our future chances if something were to come up.

    As for getting different vals, I'd rather pull out if we are paying too much than find a valuer willing go fudge the numbers if that makes sense.

    Not sure if it's buyers remorse setting in or we were way off the mark with the offer price on this one.
     
  5. RetireRich101

    RetireRich101 Well-Known Member

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    I just went unconditional on a Brisbane property today. definitely not for the faint hearted though.
    I got the usual 7Day B&P, 14Day Fin clause initially under contract. However ,the Fin clause got extended few times, total 33 days!!
    2 bank valuation, both came back 10% short
    Lender 1 rejected because the house was in bad shape.
    Lender 2 accepted, but also gave the run around because of the same reason.
    I had to fork out more cash for the deal because ban valuation < purchase price, However I could get this to 85% LVR, at the end which helps a little.
    You have to trust me on this, I have not had a Seller/Agent requesting a written letter to withdrawn under clause. If under B&P, they might request for the report. I've withdrawn few times already without the need to provide 'please explain' letter.

    Your DD will confirm the price you paid, so bank val just get to by for borrow reasons not a true representation.
     
  6. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    It shouldn't be difficult to get a decline letter from the bank based on a poor valuation result. It wouldn't be too difficult to go back and apply for finance again afterwards.

    The bank probably won't give you a copy of the valuation, but if you went through a broker and they order the valuation, it's fairly easy to get a copy.
     
  7. JacM

    JacM VIC Buyer's Agent Business Member

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    As Peter has pointed out, this is an example of just one of the reasons life is much easier for you if you use a mortgage broker. When you are going into bat for yourself by dealing directly with a bank, things are unnecessarily harder for you.
     
  8. Bran

    Bran Well-Known Member

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    Why not use the val to bargain them down? I like the idea of a valuation as a crutch. After all, the next lot of funds is dependant on the bank val - if its low (again), you are behind right off the bat.
     
  9. Don Nicolussi

    Don Nicolussi New Member

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    In this instance it really depends on your own due diligence about the property. In the first instance its not a good idea to rely on what the valuer thinks it is worth. Different valuation numbers are not about "fudging". You could send 3 individuals to the same address and get three different results. This is why I stress that the investment decision has to be based on your own research. The finance and the valuation are just tools to help you achieve your investment goals.