CBA and low valuations

I bought a place last year for $205k, bank valuation came in at $175k. Real estate agent had a bit of a freak out at that as the house I put an offer on had a heap of interest and higher offers since I went under contract. There were very few sales of what was assessed as a 6 bed 2 bath house (most are pairs of 3 bed 1 bath on two titles but this was a duplex on one title so was assessed as a single house) so they had to go back to a housing trust sale from ages ago which was direct from government to tenant. I didn't argue with it, I just paid up the difference. On their valuations, this place has a double digit yield.

Now they've done it again, on a place that is already seriously below the lowest recent sales in the area. I'm at a loss how they even came up with this, given there are lots and lots of recent sales in the area and most of those are around double my offer. There's one of a similar price, slope and condition but slightly over half the size. The only thing I can think of is if they have missed the fact that I am buying TWO 675sqm blocks of land and have taken a low value recent sale of a 780sqm block of land at similar price, and scaled it DOWN to one of my 675sqm ones not UP to a 1350sqm block.

Otherwise I am utterly baffled at how my 1350sqm block of land is worth less than the lowest recent sale in the area of a similar 780sqm block in a town where most sales are around 500sqm and sell for half as much again or even double what I offered. Vacant land should be easier to get valuations on than houses, I would have thought.

Sigh. Banks. Currently querying my bank contact and getting some local sales from the agent who, unsurprisingly, is horrified that the bank thinks 1350sqm blocks of land within towns in the Blue Mountains are worth $40k ...

Turns out the mirror image block next door sold for $5000 more than I offered for my pair of blocks in 2014, obviously too long ago to factor into this valuation. A block of similar size a few doors down sold for more than double what I offered, also in 2014.

 

I find it fascinating that on this RPData report I have here, the block I'm interested in comes up as 665sqm - as in, it is two blocks, but RPData has one of the blocks with the same address as what I am buying, and the second block has a different address and no sold data attached to it. So I can see why a valuer who isn't paying attention might think I am only buying a 665sqm block.

 

Hiya

Cba doesn't influence the valuation - they use a third party valuer for both their full valuations and desktops.

I generally find their desktop vals to be the most generous of any lender.

Cheers

Jamie

 

Well whatever valuer they use is very conservative.

My bank contact is contesting the valuation at the moment as I can't progress with the sale with a valuation that low, they've come up with a number that is insanely cheap and it really was based on the larger size. However, apparently they posted photos of only half the block in the valuation report and it seems a bit rich that the adjacent block was worth 30% more 2 years ago. 10% sure, but 30% is a BIG drop.

Also going to see if I can get the vendor down further and set a record low value sale for the area in the last several years.

 

Valuers generally work off sales within the last three months - if they cannot do this they extend it to 6 months. If they're having to rely on sales which are up to two years old, there's clearly a severe lack of sales in the area and they're going to have to take a conservative judgement call. It's not unreasonable in a low transaction environment for sales to jump 30%+/-.

 

I totally agree with Jamie..

 

Very few similar sales, plenty of sales in general BUT almost all the other sales were for smaller, cleared blocks. And flatter, of course. You can't really compare a large, steep uncleared block to a smaller, flatter cleared block at three times the price so yeah ...

Meanwhile I just sucked it up, found $10k under my couch cushions and am continuing this purchase with a mortgage so small the repayments can start to be compared to the cost of a mediocre dinner out per week.