Buyers Agent Property values $55K under Purchase Price

Discussion in 'The Buying & Selling Process' started by Jane Ridder, 10th Oct, 2021.

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  1. Jane Ridder

    Jane Ridder Well-Known Member

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    Hi,

    Just trying to get some perspective on something that recently happened with my client.

    Last month the client used a buyers agent to purchase an investment property in Sth Caboolture Qld. It's a freestanding 4x2x2 house and it looked in decent condition. The banks desktop valuation came in $45K under purchase price which was obviously disappointing, so then a full valuation was ordered and it came in at $55K under purchase price.

    The BA insisted that it was still a good deal and suggested the client use different lenders to get a better valuation. The client decided not to as this didn't guarantee a better valuation and could affect her credit score.

    It turned out the vendor was motivated to sell quickly and lowered the asking price by $25K. The client really liked the property and upon further consultation with the BA decided to proceed.

    I know the markets are a bit distorted at the moment, but my question is, has anyone else experienced this kind of variance in purchase price vs valuation lately?
     
    Scott No Mates likes this.
  2. boganfromlogan

    boganfromlogan Well-Known Member

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    Is the end result kinda fair do you think?

    It seems valuations are a brake on prices from this story.

    IMHO there is a difference between sales prices and (bank) valuation, although i didn't think Caboolture South would be the place where it was most apparent. Is the difference 10 - 20%?
     
  3. Scott No Mates

    Scott No Mates Well-Known Member

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    The BA sees value in the market for their client based on the client's directions & stock on the market.

    The role of the bank's valuer is to protect their client, the bank. Valuers will use completed sales not wet signatures on contracts as the market to establish values.
     
  4. Beano

    Beano Well-Known Member

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    The last 29 properties I have purchased all have been purchased over the bank valuation.

    One was purchased a million over the second tender.

    In hindsight they are the best buys I have ever made .

    Never regretted a purchase.

    Only regretted the ones I did not buy.
     
  5. Jane Ridder

    Jane Ridder Well-Known Member

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    Makes sense I suppose.

    This should work out ok in the long run. It just took me by surprise because the area up there doesn't come up very often as an investment hotspot. The client drops about 10% on purchase price and BA fees, but as they say, short term pain, long term gain...
     
  6. Terry_w

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

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    Doesn't make sense to me. Was it new property?
     
  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    A low val ( more than one val on the same property via different means) is an opportunity to negotiate


    ta

    rolf
     
    Terry_w likes this.

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