Bank valuation comes under purchase price

Find a good broker, have more than 10% saved, don't sign a s66w or bid under auction (almost impossible in this market), put in a subject to finance clause....this market is absolute ********

 

We have a big deposit, but have to use every last dollar to try get anything decent, and at auction

 

For an auction purchase there is no subject to finance clause, unconditional contract

 

As a valuer, I'm struggling to find settled sales to justify auction sales. Obviously it depends on the patch/area you're in but you don't need to be a valuer to know prices have increased since Jan to now or that the market is on a sharp incline.

Generally, If you purchased a property on auction the purchase price would be supported by the valuer. Exception being the purchase was extremely above market. But auction sales paint the most up-to-date market conditions, pending number of registered bidders, underbid and market sentiment..

If a valuer is not supporting an auction purchase, he/she better have damming evidence to support their val..
Another thing, no valuer is in the business of breaking deals over a measly >5%. Honestly, just makes the valuer look stupid/bad. 5% in the scheme of $1-2m is nominal ($50-100k) and can be easily justified. The few times I had to knock back an auction amount was because there was irrefutable sales evidence in the sale complex/next door in a very short period of time (under a month), again doesn't happen often but it does happen. Easiest thing to do is order another valuation with a different bank, chances are you'd get a different more accommodating valuer..

 

that’s very helpful, thanks

 

wow that’s worrying at an auction. I always heard that the banks take the auction price as market value. Does this under value problem only affect people who are borrowing more than 80%? Or do you still need to come up with the shortfall even if your LVR is 50%?

 

If someone was buying at LVR 50% of the purchase price, can’t they just increase the LVR rather than fork out the valuation shortfall?

 

Serviceability issues?

 

Yes, generally this wouldn't be a problem. The interest rate can increase as the LVR increases, which can impact servicing but this would be pretty unlikely.

 

Very hard to say this back when property prices were booming during COVID.

A valuer will go out on-site to inspect the physical condition of the property - land size, postcode, surrounding neighbourhood, planned development, no. of bedrooms, no. of bathrooms, wall type, roof type, fixtures and many many many more. It is difficult to say that the market value determined by buyers/sellers will take into consideration of all the above.

 

Not sure what you're replying too? I stated value is not determined by what someone is willing to pay, you seem to be confirming the same thing.
I know what valuers do, I've been dealing with them them for clients for 10+ years...