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Desktop to Site Valuation + Obtaining Finance

Discussion in 'The Buying & Selling Process' started by W4k1ng, 31st Aug, 2016.

  1. W4k1ng

    W4k1ng Member

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    Hi All,

    Very worried about not getting finance for a property we recently 'bought' at auction. Our broker originally advised that a desktop valuation was done, however they have now ordered a site valuation. I presume this means that the desktop val. came back under?
    If the site val. comes back under, is it likely that the bank would a) reject the loan altogether b) advise us of the $ shortfall we would have to pay for them to accept it?

    LVR is going to be a bit over 90%. Property was sold for 20% less about 5 years ago.

    What would be the best thing to do going forward - Just apply to other banks? Get an independent valuation?

    Thanks
     
  2. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    No do nothing and wait for the results of the full val. It does not mean the desktop val was a problem. If you panic now you will do your credit file damage by applying for other finance. Trust that your broker knows what to do.
     
  3. W4k1ng

    W4k1ng Member

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    Ok thanks Alan - all very stressful.

    I should probably clarify to *what to do if the site val comes back under.
     
  4. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    Go with a lender that accepts contract value - eg ANZ. There are stacks of options and a good broker will be aware of all of them. Relax.
     
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  5. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    I agree with Prop here.

    Chill : )

    its quite normal for a desky to come back low on Auction purchase, and in any case, an independent val will usually not be accepted by the majority of funders.

    ta
    rolf
     
  6. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    @W4k1ng which bank is the current application with?

    Most desktops are only available to 80% so 90%+ deal would always convert to a full val.
     
  7. W4k1ng

    W4k1ng Member

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    Hi Colin, the application is with Westpac. Do you know why they would bother with doing the desktop beforehand then?
    Cheers
     
  8. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    With Westpac and St George I always default to a full valuation regardless of LVR as it is up to the assessors discretion if they accept the desktop valuation or not, therefore hit and miss.

    Where as ANZ and CBA I have never had them do a back-flip on there desktop valuation policy.

    Not sure why your broker opted for a desktop, you would have to ask them???
     
  9. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    With Westpac and St George I always default to a full valuation regardless of LVR as it is up to the assessors discretion if they accept the desktop valuation or not, therefore hit and miss.

    Where as ANZ and CBA I have never had them do a back-flip on there desktop valuation policy.

    Not sure why your broker opted for a desktop, you would have to ask them???
     
    Last edited: 31st Aug, 2016
  10. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Just reread the post so may have had something to do with it being an Auction as to why a your broker didn't do a full val.

    Im in WA and auctions are rare here so may be the reason a desktop was ordered as final purchase price would be hard to ascertain.

    Sit tight and wait for the full val to come back and hopefully all is well.
     
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  11. W4k1ng

    W4k1ng Member

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    Desktop valuation has come back significantly less than we paid ~$50k! putting us in an extremely difficult position. I can accept that it is lower, but I think it's at least $20k off, what are the options here? Get a separate valuation?
     
  12. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Probably because the system don't ask for the LVR, it has to be selected by the broker. It probably didn't occur to the broker that the LVR is above 80%. If you're looking for 90% + LMI, it's going to end up being a full valuation.

    Go to a different lender, hope they'll use a different valuer. Low valuations after an auction are extremely rare, but this story is on the increase (still incredibly rare though).
     
  13. W4k1ng

    W4k1ng Member

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    Is going to a different lender the only real option to get a fair valuation? There was a comparable recent sale for >$50k above ours round the corner - can you ask them to revalue?

    Cheers
     
  14. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    If you want to challenge a valuation you'll need to provide them with at least 3 comparable sales from within the last 6 months.

    You should then prepare yourself for disappointment. It's incredibly rare that valuers amend their estimates.
     
  15. Big Will

    Big Will Well-Known Member

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    Further to Peter's post they need to be settled sales (e.g. more than 2 months old to be safe).
     
  16. Brady

    Brady Well-Known Member

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    @Peter_Tersteeg this is not what I've personally found - I had many valuations overturned by providing genuine comparable sales. The only time I have been able to get the comparable sales looked at by the same valuation company I requested a new valuation to be completed by a different company - same bank.

    @W4k1ng what approach has your broker suggested? What did they say when the desktop wasn't used/came back short?
    Whenever I believe a clients valuation is in doubt I'll look at comparable sales prior to the valuation is ordered/completed and sent them to the valuer prior to the inspection, some valuations you will see the property on the report as a comparable sale, others will ignore it. But it's pretty hard for a valuer to ignore and come back with a lower value if it's a genuine comparable sale.
     
  17. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    The reality is we see very few purchase valuations come up short, especially at auction. We do give clients quite a bit of assistance figuring out the fair value of the property. With proper due diligence it becomes very rare.

    In 12 years I've had two properties purchased at auction come up short.

    The first was featured in "The Block" reality TV show. The valuer thought it was worth $200k less than the purchase price. We did a lot of research, selected a new valuer, provided comparable sales and got the result required.

    The second (last year) was a client who I do believe paid too much. Two different valuers came to a similar conclusion and I couldn't find any comparable to support it. There was also a development approval on the site which often messes with the property value and what different people are willing to pay for it.

    Both where unusual properties in unusual circumstances.

    We have had a few house and land or OTP valuations come up short in the past 18 months. Not entirely unexpected in the current environment, I'm actually surprised there hasn't been more.
     
  18. W4k1ng

    W4k1ng Member

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    Thanks all for the responses.

    @Brady - Broker has been a bit 'wait and see'... She has not yet provided any advice on dealing with the low valuation. Will definitely be going to a local broker next time - Mates Rates very frustrating. So they didn't actually do a desktop I don't think, just changed it to full valuation.
     
  19. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    When your value proposition is based on refunding commissions, something has got to give - in this case service it seems.
     
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  20. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    I'd say any broker desperate enough for business that they're willing to rebate commissions, probably has a knowledge base or marketing problem. The top brokers don't have any need to pay for business.