NSW Banking Valuation - good deal?

Discussion in 'Where to Buy' started by Dii, 23rd Mar, 2021.

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  1. Dii

    Dii Member

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    Hey all,

    I'm afraid of overpaying for a property - crazy market in Sydney; even for units. Hence, I'm negotiating a price (cause in my opinion was a bit overpriced) but the developer is very strict and won't reduce it anymore - they are too confident that is priced correctly (again, crazy market...).

    So, during the settlement, if the bank valuation comes the same as purchase price would that mean that the price was a fair one?

    Thanks,
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    hard to sell. 99% of valuations are for the contracted price. If you order your own valuation before contracting it might come in different.
     
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  3. Lindsay_W

    Lindsay_W Well-Known Member

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    Assuming this is an 'Off the Plan' purchase?
     
  4. Dii

    Dii Member

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    Hey, thanks for the reply @Terry_w , @Lindsay_W .

    No, the property is ready to settle. I'm not doing my own valuation, I'm considering the bank's valuation. So, if the bank valuation meets the purchase price it means that the purchase price is fair? Alternatively, if it comes lower, it means that was a good deal and if it comes higher, I over paid for it. Is that simple or there's something that I might not be considering...?
     
  5. Trainee

    Trainee Well-Known Member

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    Huh? The bank valuation is supposed to be what the bank will lend for it.
     
  6. Lindsay_W

    Lindsay_W Well-Known Member

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    Regarding Short Form Valuations (not Desktops or Automated vals)
    They are not an indication of whether or not you got a 'good deal' although if the valuation comes in lower than what you're paying then it's an indication that you've overpaid, typically only happens for brand new/off the plan properties.
    It's highly unlikely that the val will come in higher than what you're paying as Terry mentioned above 99% of valuations come back the same as the contract price.

    Property is meant to be a long term investment, so the concern about overpaying now might be a non-issue when you consider what the value will be in 20+ years
     
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  7. Dii

    Dii Member

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    @Lindsay_W ,

    It makes sense. Thanks for the explanation :)
     
  8. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    The vendor wants to sell for the most they can get, the purchaser wants to buy for the smallest amount, they meet somewhere that's somewhat acceptable to both of them.

    Hence the 'market value' of the property has been determined.

    Valuers recognise this and will do their best to align their estimate of the property value to the price you've paid. It's extremely rare for the valuer to disagree with a purchase price.

    The valuation isn't a commentary on how good the deal is for either party, simply a justification that you've paid fair value for the property and that it's in line with other sales in the area.
     
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  9. Stoffo

    Stoffo Well-Known Member

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    Also, market trends influence valuations
    In a falling market the valuer may come in well lower
    In a rising market there isn't the worry and valuation more likely to be close to contract price.
    We haven't seen or heard about anywhere near the number of buyers expected to default at settlement for OTP purchases, or mortgage defaults that were being talked about last year.....
     
  10. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    Hey buddy,

    Just a tad confused.

    The property is ready for settlement but the valuation hasn't been done ?

    Normally the valuation is done before your loan is even fully approved.

    But to answer your question and in short, yes if the valuation comes back at purchase price then the valuer sees the purchase price at par in comparison to the market. And vice versa .
     
  11. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Define "fair price" pls

    ta
    rolf