Bank valuation on house with uncompliant swimming pool

I deal with brokers and bankers .

But my broker told me he can't do loan for house with uncompliant swimming pool. Surprise.
My banker said he is ok but house valuation will be impacted considering the remediation cost. But can't tell how much.

Anyone has more insight on this ?


Thanks!

 

Broker is wrong

 

Time for a new broker.

 

Was there a valuation issue?

 

What’s uncompliant with the pool?
Not approved by council?

 

Yes Need council approval. Somehow the properties I inspected all have non compliant pool certificate. (Need that in NSW btw)

I am sure it will impact the valuation when fixing cost considered.

 

Firstly why would you purchase a property with an compliant pool? Swimming pool compliance is in place because people have died in the past. Is this really a risk you want to take?

If you really want to make this purchase, write into the contract a clause that the vendor will remedy the problem, or an amount will be held back at settlement to remedy the problem. Don't release your deposit until this is done.

Finally, how would the bank actually know that the property isn't compliant? A desktop valuation would never pick it up. A valuer probably wouldn't spot it unless it was dangerously obvious (if it is that obvious, see my previous comments).

 

None of this is advice, just experience with Sydney property. The NSW contract has to include a certificate of compliance or non compliance. Compliance is recorded in in government records (council? fair trading?). A lot of older houses have non compliant pools (no barriers, etc). Usually the seller makes it compliant prior to sale, or the contract states that it is non compliant, and the buyer takes on the risk and has 90 days to rectify.

Fairtrading has a specific section on this, and conveyancers treat it matter-of-factly, so it seems to be a common situation. So this is not the same type of situation as, say, unapproved structures. There seems to be a clear, certain process to rectify.

The question is whether the bank takes this into account? Can NSW brokers answer this?

 

I've never seen any bank or valuer comments about pools

 

True.
As council regulations continue to change over time many pools fall into not being compliant, this doesn't mean they are dangerous (and lets face it, everyone has a different opinion of what is safe).
Councils have such a back log of properties to inspect that have changed hands, this isn't likely to happen inside of 6 months (more 12-24 months if they don't forget).
My neighbor sold over six mo ths ago, non compliant pool, negotiated and reduced sale price by $5k (being 50% of estimated rectification costs) 6 months+ later and nothing has been done to raise the fences or remove climable trees.......
Don't understand why the bank wouldn't/couldn't just factor in rectification costs

 

Did you end up buying the property? Was your valuation affected by the pool?

 

In this case i was helping the seller. The buyer bought without a compliance cert.

 

Our son just bought a house with non compliant swimming pool fencing.
Negotiated a $20K extra price reduction.

 

We had one of these recently and got the loan approved through a major bank with some pushing.
We just had to show the applicants held sufficient funds post settlement to complete the required works to bring the pool inline with the required standards. The estimate for this was provided by the valuer.

In our case the pool fence was climbable and also windows in the house which led directly into the pool area were not lockable.
Another issue that arose was the requirement to use rental income for servicing, and the valuer not providing a rental estimate due to being classed as unsuitable for rent.

The only reason the valuer picked up on it was due to the certificate of non-compliance in the NSW contract.

Just my 2 cents.

 

Thanks for the info! Didn't know that the valuer can indicate the rectification cost in their valuation. Does the bank accept estimation from our own's tradesmen if it is lower?

 

No worries! I didn't know they could either until ours came back with an estimate.

In our case, we also backed up the valuer's estimate with a quote from a repair company to show it wasn't going to more than what the valuer outlined.
Given the general risk attitude of banks, they normally will take the higher of the 2 figures to be safe.

However in saying that, I am sure you could argue the tradesmen's quote is more reliable as they would be doing the work, up for debate.
This will really be up to the assessor you get on the day, no real way to know beforehand if that would work.

 

The bank will consider whichever is the higher amount.

 

If I was the buyer I would certainly prefer the seller to have the certificate of compliance, otherwise negotiate the price down in line with the expected costs to rectify.

 

I have seen this before and generally, the valuer puts down the property as unacceptable for rent. In their comments, they will state the estimated rental and the estimated essential repairs costs.

 

Had a purchase where there wasn't a complaint certificate as a few things needed to be rectified. Valuer didn't note anything adverse.