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Bank valuation coming back way lower than accepted offer

Discussion in 'General Property Chat' started by Gwynneth, 22nd Sep, 2016.

  1. Gwynneth

    Gwynneth Well-Known Member

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    Hello, would like to know what do you do in such scenarios when bank valuation comes back lower? This is a bit weird because previous property which we did not proceed with came back with higher valuation and now the other property we have an accepted offer has a lower valuation.

    Should we check out with other banks?
     
  2. MsAli

    MsAli Well-Known Member Premium Member

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    Hope you did an upfront val without a full application

    Could...
    - challenge the valuation
    - negotiate the price down
    - do up front and / or desktop val with another lender
     
  3. Simon Moore

    Simon Moore Mortgage Broker - Melbourne Business Member

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    There are several banks that offer upfront valuations, you can 'valuation shop' with the help of a broker who is accredited with multiple lenders.

    If the valuation came in 'way lower' than the offer price my first point of call would be to read the valuation report. Has the valuer gone to the right house? (it does happen with kerbside valuations). What has the valuer said in the report that justifies a significantly lower price, and is it reasonable? If it's not, ask them to have the valuation reviewed and provide recent sales to back up your opinion.
     
  4. Gwynneth

    Gwynneth Well-Known Member

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    Hi guys,

    Thanks for the quick replies! There will be another valuation happening tomorrow. Will keep you all posted.

    Thanks.

    Cheers,
    Madina
     
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  5. TMNT

    TMNT Well-Known Member

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    I have always been used to ignoring OTP, the valuation will be at the contract price unless there are unsual circumstnaces , eg family transfer, and if hte banks value it lower either youve severelly overpaid or they did a desktop or driveby

    or its an area that is so elastic market
     
  6. jins13

    jins13 Well-Known Member

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    Hey OP, this seems to be the norm. There is also another thread I have about my val experiences. By any chance are you using liberty too?
     
  7. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    First thing I do is let the client know and see if they actually want to proceed.

    If they do - then I order two more upfront valuations with different lenders - if the purchase is within a city then there's a good chance the job will land with a different valuer.

    If that doesn't work- contesting the valuation is also an option. But realistically - if a few vals all come back short - a contest is unlikely to do the trick.

    Cheers

    Jamie
     
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  8. Beano

    Beano Well-Known Member

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    If you settle and obtain another valuation you may well find your purchase price is the new market (you have set the new market price!) :)
     
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  9. Angel

    Angel Well-Known Member

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    Earlier this year our townhouse was valued 20% lower than the 2 appraisals I had done. Turns out he wrote it down as 2 bedrooms rather than three.
     
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  10. Beano

    Beano Well-Known Member

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    Did they correct the appraisals?
     
  11. Simon Moore

    Simon Moore Mortgage Broker - Melbourne Business Member

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    Just last week I had a valuer note a house down a 'semi-detached' when it was fully detached. They are in such a rush to get everything done that mistakes do happen.
     
    Last edited: 23rd Sep, 2016
  12. jins13

    jins13 Well-Known Member

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    Or by sending a newbie to do a professional job
     
  13. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Thats the correct move right there ^^^^^

    I think they should be called valuers opinion rather than valuers report.
     
  14. Angel

    Angel Well-Known Member

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    Actually I don't recall, everything was a blur that week. My broker sent me copies of the vals a few weeks after all the dust settled. He did phone back later that first day and said "it's fixed", meaning we qualified overall for the refinance. It was only recently that I noticed the discrepancy.

    My PPOR also came in under the appraisals by about $40K (my modest guess) and $60K from CBA's desktop val appraisal that a local agent gave me.

    In front of me now it shows:
    High bushfire risk (4). There are 600 brick and tile houses between here and the forest. About 80% of those houses have a swimming pool. Each property will be surrounded by paving and concrete rather than grass or bush land.

    I notice the recent market sales he compared it to were approx. six months older than the date of the inspection.

    He suggests replacement insurance amount $105K MORE than what he valued the improvements to the land.

    He gave it a medium market risk (3) due to recent market movement and market volatility. Besides the election uncertainty around Capital Gains and NG and increased investment into Brisbane at the start of 2016, he suggested the unit oversupply in the CBD would impact my value. He previously noted we are 16.25 klm from the CBD.

    Rolls eyes.
     
  15. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Sounds like he was fresh from Uni. I find the older more experienced valuers are the go as they have seen a few cycles and have a greater understanding of whats at stake for the end user being the landlord.
     
  16. the world is your oyster

    the world is your oyster Well-Known Member

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  17. Angel

    Angel Well-Known Member

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    Yep, he was rather young.
     
  18. Big Will

    Big Will Well-Known Member

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    I didn't read the article but from reading first and last paragraphs I am guessing it is about providing CMAs to the valuer.

    I have tried this before and also provided REA price and PM rental price and the valuer didn't even glance at it and declined to take it with them.

    My sample size is one but it would likely come down to the individual valuer themselves and if they want this but I would say they wouldn't as not to be influenced.
     
  19. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    @Big Will valuers have access to the equivalent of a CMA, but with significantly more information that is more up to date than the one you've got.
     
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  20. jins13

    jins13 Well-Known Member

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    If it helps, you can possibility ask your broker to do a Residex or something similar to give you an idea. In saying that the data may be 90 to 180 days old and may not be reflective of the current market value, but at least you know if something is coming under by $100k, there is a concern.