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Corelogic Valuations are a waste of time & money

Discussion in 'General Property Chat' started by standtall, 8th Jun, 2016.

  1. standtall

    standtall Well-Known Member

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    Not sure if anyone else has experienced this with Corelogic valuations via propertyvalue.com.au subscription.

    Two perspective properties I have tracked in last 3-4 weeks.

    June 2
    • Property A: Valued at $504,000 with high confidence. The unit next to it is also valued at $504,000 with high confidence. Both units look identical.
    • Property B: Valued at $704,000 with high confidence. The unit next door (again identical) is valued at $735,000.

    June 8
    • Property A: Now valued at $394,000 with high confidence. The unit next to it is still valued at $504,000 with high confidence.
    • Property B: Still valued at $704,000 with high confidence but the unit next door is now valued at $855,000.
    These properties are on the market and these erratic valuations can seriously mislead potential buyers.

    Corelogic support responded to these anomalies (identical same floor units) with a generic email without addressing the massively fluctuating gaps.

    In summary: Online valuations are completely unreliable and just a waste of money.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yep. They are just computer generated after all. Not sure what could cause this but perhaps a property with similar number of bedrooms/bathrooms sold for less recently.
     
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  3. standtall

    standtall Well-Known Member

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    yes, but it should be affected 'the next door' valuations.

    I asked a local broker and she thinks that someone might have ordered a valuation through Valex on those properties and hence their valuations changed in line with newer valuations. She also thinks lenders have the ability to 'dispute' the automated valuation and they can actually get it changed on the system. That's a very disturbing thing if she's true.
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes that is true.

    Why is it disturbing?
     
  5. standtall

    standtall Well-Known Member

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    I go to a bank asking for a $400K loan with 20% deposit. Bank gets the value revised down by $20k on valuation and I now have to pay for an LMI.
     
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  6. euro73

    euro73 Well-Known Member Business Member

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    If I order a valuation through 5 different banks, for the same property...and each bank sends a different valuer company, I can guarantee you I wont get 5 results that are the same. Valuations are more often than not, pretty similar, but it's also reasonably common for large variations to occur between valuers... so if you have a firm view that you received a dud valuation - have your broker try elsewhere, via a different lender, and save yourself the LMI
     
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  7. standtall

    standtall Well-Known Member

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    yes, but I am still not convinced.

    A lender can tell whatever valuation number back to Corelogic and they will start using as the value?
     
  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Banks don't instruct valuers what to put down.

    I think you are confusing things here. Are you talking about the computer generate valuations or full valuations? There is a huge difference
     
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  9. euro73

    euro73 Well-Known Member Business Member

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    As Terry said, banks do NOT do this. Are you using a broker, or dealing directly with a lender?
     
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  10. standtall

    standtall Well-Known Member

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    That's not the point of the thread. I am not intending to put an offer on any of the properties here. The point is that Corelogic valuations are seriously flawed and no investors should use them in their due diligence process as they can hurt you really bad with their inconsistency. Funny part is that some lenders do rely on them for 80% LVR decisions.
     
  11. standtall

    standtall Well-Known Member

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    Thanks - then what explains these big fluctuations?
     
  12. euro73

    euro73 Well-Known Member Business Member

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    SOME valuations are inconsistent, yes.... and yes it's an imperfect system, but it;'s what exists...

    The overwhelming majority of valuations are accurate within a very small margin of error
     
  13. euro73

    euro73 Well-Known Member Business Member

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    OK... think of it like this... CBRE sends out Mary to value your property. Mary has 2 years experience and is ultra conservative by nature. She is also a little lazy doing her comparable sales research, and decides to low ball you by 30K under the purchase price. OPTEON sends out Amanda, who also has 2 years experience and is by nature a little less conservative. She is also a bit of a geek and digs really deep to find comparables to support the contract price, and values on the money. Timmy is sent by MVS, and he has a personal ( not professional) view that the suburb you are buying in has been a little inflated by some recent speculative sales in the area, so he low balls you by 20K ...

    In other words, valuations are not done to a strict formula. On any given day, you will get variations between valuers....

    But more often than not, if they can find comparables to support the price, they will support the price.

    Also, just so you know, valuers are not allowed to use valuations from within the same development as comparables.... so you need to find units at different locations to support your argument
     
  14. euro73

    euro73 Well-Known Member Business Member

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    and the reason is... a developer could sell to a family member at an inflated price to create a comparable sale .... settle that property first and voila! He or she has set a new benchmark for the value of the other units. So valuers cannot use comparables from within the same development.

    This is why so many brand new projects - especially the ones that are the first to be sold in an area where everything else is older, inferior stock, struggle to get valuer support. This applies to house/land, and to apartments and townhouses etc.. During a boom, valuers will typically just roll with it and support the higher price because the market is surging. But when the market slows - like is happening post APRA - valuers start to tighten up quite a bit.
     
  15. Elives

    Elives Well-Known Member

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    standtall,

    they can vary it's your job as the investor to look at the comparable properties and make up your own mind about what you think the valuation comes in at. rp data / residex / pricefinder are just guides.

    etc if the property you like is valued at 500k but one with identical attributes sells for 420k 200 metres away it will most likely effect the automated valuation. But that property could be on a busy road / un renovated / backing onto train tracks. the auto val won't pick these finer details up.

    Cheers, Elives
     
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  16. standtall

    standtall Well-Known Member

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    100% agree with that.

    I think my main issue is the erratic swings on identical properties.

    I am a computer programmer by hobby. Corelogic's model should be consistent on 'externally similar' properties. For example two similar sized units on same floor of a building should have same valuation as they score the same on all the factors used in the automated model. A human valuer would value them differently based on a few other factors such as aspect, internal condition, extra fixtures etc. but if a computer model is returning 20% plus minus variance, then it shows that system is completely broken or has been over-ridden.
     
  17. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Computer generated based on varies variables - which tend to vary!

    These are not 'valuations' but guestimates.
     
  18. Chris White

    Chris White BUYERS AGENTS & PROPERTY MANAGERS Business Member

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    I use them regularly and they are usually fairly accurate if there has been plenty of comparable sales. I also use APM and PriceFinder to crosscheck though. Occasionally there are variances so its good to cross-check against other systems.

    Its just a starting point though for more detailed analysis.

    I think you are reading too much into the banks agenda etc......
     
  19. S.T

    S.T Well-Known Member

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    The problem is with the data supplied, there is no 'floor' there isn't any 'interior size' etc so it makes it quite hard to value via data. Usually they have bedrooms, land size, car spaces, bathrooms, location. Some fairly basic information about a property to try and value off of. If the data was more complete with the other information for properties, then we should see more accurate price estimates.

    I have one of my properties which still comes up on Pricefinder as a 3 bedroom, when it's a 2 bedroom. I'm getting ready for a fight with council when they send me the updated computer generated valuation soon as I know it will value on 3 bedroom increasing the value and my rates!
     
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  20. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    But rates are done off land value, doesn't include the value of any improvements (eg. Dwellings), at least everywhere that I invest.
     
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