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Getting a valuation successfully revised?

Discussion in 'Property Finance' started by opal3259, 12th Nov, 2015.

  1. opal3259

    opal3259 Well-Known Member

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    Hi Guys,

    Anyone out there ever manage to get a valuer to revise their report with a higher price?
    Had a property valued a few months - came back well below market.

    It's a converted warehouse type - with very few real comparables in the area.
    Valuer came back at 1.225million.

    Spoke to a few agents.
    All agreed market value is somewhere between 1.65 and 1.85 million.

    So here's the rub.
    The unit next door just sold for 2.5 million last month (larger property - but pretty comparable in terms of size and type, etc).

    Any brokers/investors out there ever get a valuer back in and come back at a higher price?

    I know they don't like doing it in general, because it's kind of an admission they got it wrong the first time.

    Any tips on contesting the original valuation?
    Interested to hear your thoughts.
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    The valuation is based on sales evidence to back their conclusions. If they have excluded certain sales evidence that should have been considered, then they can review eg: 2/34 Any St Somewhere (next door premises sold on the weekend but hasn't settled) this may be used as persuasive evidence as the deal hasn't been completed.

    If you were to get the val in a couple of months this sale is hard evidence.
     
  3. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    "Just sold" isn't the same as "Just settled". Until settlement, the valuer won't take into account a recent sale. Even then it's a lot easier if to wait a few more weeks for the sale to be registered with the office of state revenue (where a lot of property data comes from).

    I have been able to successfully challenge a valuation a few times by providing solid comparable sales and good arguments. That said, these are the rare exceptions. The vast majority of challenges have been completely unsuccessful. Valuers simply don't like to change their mind.

    My experience is that the better tactic is to get a second opinion from another valuer via a different lender.
     
  4. Redom

    Redom Mortgage Broker Business Member

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    If you've got the flexibility to move, IMO best tactic would be to order a different valuation. If not, chances of changing their mind is reasonably slim, unless its an obvious error. They rarely change, so its worth having a plan B If possible/required.
     
  5. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Provide a list of comparable sales which have settled, asking why they were not considered compared to the comparables used. Do not provide anything significantly different in terms of fitout, lettable area etc, else it will be simple for them to exclude. Note the key features which make the like comparable properties.

    If the property is genuinely worth more based on comparables, it can be possible to have the value ratcheted up - I've had commercial vals overturned due to obvious errors (not taking into account substantial landlord owned features, factilities, grossly incorrectly estimated hardstand etc).

    Worst case, push for a new val through another valuer on the lenders panel - but I'd be pushing the first one as much as possible before forking out another 1.2k+.
     
  6. opal3259

    opal3259 Well-Known Member

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    Great feedback guys - much appreciated.
    I'm sure this thread will come in handy for others in the same situation.
     
  7. opal3259

    opal3259 Well-Known Member

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    Very interesting.

    Their original valuation did note that they used comparables outside the 'normal' sale window.
    In other words, more than six months old. The main reason for this is because the property is unusual in nature. Think converted firehouse.

    Even if they find another comparable property - it's either going to be in a different area or outside the regular sale window.
     
  8. Rixter

    Rixter Well-Known Member

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    Here's what I've successfully done when getting a shock from residential valuations coming back low.

    Get an independent valuation carried out. There's no point in getting any licensed valuer in as this person may or may not be on the approved list of valuers for your bank.

    Find out which valuers are on your banks panel by simply phoning them and appoint one of those.

    Instruct them that you want a valuation done of the property based on a Fair and Open Market Value. You will find it will come in a lot different to a valuation done for lending purposes (which is very conservative).

    Take this valuation to your bank and show them that this is the valuation done on it. If they dont like it remind them it was done by one of their Approved Licensed bank valuers and therefore must be a realistic representative of the true market value of the property.

    Hope this helps
     
  9. opal3259

    opal3259 Well-Known Member

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    Hi Peter,

    Thanks for the feedback.

    Meant to introduce myself at the last Melbourne meetup - but got caught in discussion and ran out of time.

    My broker is trying to convince me that the valuer will look at a recent sale even if it hasn't settled... which sound fishy to me.

    I'll organise another valuer to come out from their panel.

    In your experience, how long do you have to wait before the original valuer will come back out again (e.g. 3 months, 6 months, etc)?

    The bank said they like doing it every 12 months, but I have heard of people being able to do it in less time than that.
     
  10. opal3259

    opal3259 Well-Known Member

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    I'm picking up what you're putting down Rick :)
    Clever.

    In your case, I gather they didn't argue that the valuation was based on 'open market' and not fit for 'lending purposes'?
     
  11. opal3259

    opal3259 Well-Known Member

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    Hi Corey.

    Got it.

    I think I'll end up doing a combination of both - getting a new val and pushing the existing one to come back in.
     
  12. opal3259

    opal3259 Well-Known Member

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    Another question for you valuation gurus :)
    I know that valuers are not supposed to take into account 'agent appraisal' in theory.

    However in practice, do you think their reports are influenced by these?

    In other words, if they are thinking a property is worth roughly 1.3 million and you hand them three different appraisals from local agents with figures ranging from 1.7 to 2 million... does this change their thinking or do they just blindly exclude them?

    Again, I understand what the valuation guidelines say.
    I guess it's a question of theory vs what actually happens.
     
  13. Rixter

    Rixter Well-Known Member

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    Correct...they understand if push ever came to shove at end of the day it would be put to open market.
     
  14. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    As far as I'm aware, they're not influenced by agency estimates at all. Keep in mind an agency is trying to get your listing, they may quote a high figure to do that known they can condition you downwards over time.
     
  15. Dazedmw

    Dazedmw Well-Known Member

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    ok, a few thoughts;

    A standard valuation is only valid for three months so depending on how long ago a "few months" is it might be out of date. If three months has passed you might be best to give the valuer a ring, talk about the new sale and see if they think its worth ordering another valuation through your lender. You would also be able to confirm the story with settled/just sold and if you should wait a month or so.

    The original val is based on the evidence available to the valuer at the time, its a bit hard for him or her to take into account a sale that happens a few months later.

    If previously there weren't good sales available and now there is a much more comparable sale just settled you should have a good chance to get an increased valuation (without anyone having to admit they were wrong).

    That's an interesting approach although it will work with less and less banks as time goes on. More and more banks are only accepting standard instructions vals for lending purposes and refuse to accept client instructed valuations. As you say, instructions are important and banks have found that their staff aren't skilled enough to weed through a client instructed valuation and work out which part of the instruction may or may not be acceptable to their risk team. That is why they all have standardised Standing Instructions these days.

    This is a point of contention with valuers. The banks and Valex want settled sales however why are settled sales a better indication of the market than a more recent unconditional auction sale that hasn't settled? I believe these days to satisfy Valex valuers are putting in settled sales in the sales evidence and then commenting on more recent sales in the comments section of their reports. So while its not "evidence" according to Valex it can have some influence on the valuer.

    I would imagine not at all. Valuers base their assessments on sales so unless the appraisals come with sales evidence they are unlikely to have any influence.

    In the situation where a valuer was in court defending their val I imagine one who said "i was influenced by an agent's appraisal" would be dead in the water.
     
  16. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    A few times....and each time I felt invincible! Getting a valuer to change their mind is not easy. With each contest I've had at least three comparative sales that strongly enhanced our argument. I also managed to track down the valuer and speak with them directly - bypassing the formal channels.

    Cheers

    Jamie
     
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  17. Davothegreat

    Davothegreat Well-Known Member

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    My broker arranged for lending valuations on all of my properties back in September. Today I've had my lender order their own valuation on an IP that I'm trying to release equity on and it's come back significantly lower than the September valuation (460k instead of 535k). I provided them with a copy of the September valuation, we'll see where it goes. The loan guy isn't confident the assessor will accept it because it wasn't ordered by them and also said if they ordered another one they'd always use the lowest of the available options anyway. I'm thinking the assessor shouldn't be confident in having me retain my loan products with them if they can't sort this out.
     
  18. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    The stock you are looking at here isnt ROM straight comparable either, and a single sale does not a comparable make.................

    Id agree with the others, choose and move if you can

    ta
    rolf
     
  19. Dazedmw

    Dazedmw Well-Known Member

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    That's a disappointingly large difference. What kind of property? Residential I assume, unit or house?
     
  20. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Interesting little bit of information:

    With some lenders, if the loan is above 80% involving LMI, even if the valuer does change their mind and increase the estimate, they won't accept the revision and will still use the first valuation.