How to grow a large investment portfolio – building deposits

How does RPdata verify this information? Not suggesting anything shady, but what would happen if my 2 bedroom unit was inadvertently updated to a 3 bedroom unit? Would that directly (& favourably) impact my desktop valuation?

 

you could try that. i just log on and change it if i need to. i only have rp data for qld now though.

 

depends if a bank is using rp data for the desktop and i'd also imagine that a panel valuer would look at it before agreeing to the value. when he did his desktop val. could get lucky though.

 

Thanks Elives. I have just created an account online with RP Data. However it doesn't look like that I can update details on the property myself. Is this service only limited to fee-paying users?

 

yes you have to pay for for a account, just contact rp data someone might just change it for you.

 

An insightful post, as always, thanks Redom

I am interested about the valuations processes, especially when a property is reno'ed/extended, hence increasing it's value. If a valuation comes back at pre-reno valuation, can you ask for another valuation (eg a kerb/full to verify updates made)? It could become an issue if, when selling a property, the bank's valuation comes back lower than the sale price as the valuation doesn't take into account the changes made prior to selling (hence allowing/forcing the buyer to pull out due to finance).

Will have to look into Elive's comments about changing the property's attributed on RP Data so updates are taken into account. Do all valuers/banks use RP Data, or would you need to go to the source for the RP Data (I'm thinking if a bank/valuer used Pricefinder data then they may still have the old valuation)?

 

Usually when selling the val will come back at purchase price or the bank will go off the CoS, so not really an issue.

 

Wonderful, thanks Jess. Would have assumed that not everyone doing renos/extensions etc prior to sale would update the property details with the data providers. It seems that this mainly impacts reno's for equity releases.

 

In that case you’d just order a full val if the desktop came in low - there’s ways to make it work.

 

This sounds silly but studying alot can be counter productive due to the accumulation of HECS/HELP debt which impacts on your borrowing capacity. Studying these days is a real expensive exercise!

 

Can we claim the charges at tax time ? If one got multiple propertise then does the fee's get divided into number of properties ?

 

Possibly, if it's for borrowing purposes - check with your accountant. Often this is either included in application fees though, or free with some lenders.

 

Only if the valuation relates to a loan and then it would be deductible against the income that relates to the loan - as a borrowing expense.

 

Usually it pays you back handsomely in income increases over time though.

It can be expensive and reduce capacity temporarily, but its usually a long term investment that pays off.

Perhaps not so much for a property investor in the last decade though! I suspect in Sydney if you decided to drop out of school 7 years ago, worked very hard for a couple years (on a lower income) and used relatively loose financing environment to build up a western sydney portfolio; you'd be well well in front of the same person who went to school + uni for the last 7 years and invested in their future income potential.

 

About desktop valuations and the basic description of the property (number of bedrooms, etc). It's really not a big deal...

Some lenders ask for this information in their online order form. If I don't know the details I simply look it up online. However many lenders online form doesn't include this info.

I have provided clients with thousands of CMA (Comparative Market Analysis) reports from Residex (now owned by Core Logic, who seem to own anything valuation related) which has default values, but allows them to be changed. It happens all the time that I get an email asking for a new report where the default values weren't accurate, so we update them and run a new report.

The inaccuracy of bedrooms, bathrooms and car spaces never made any significant difference to the figure on the front page of a desktop valuation.

That doesn't mean that a 3 bedroom house is worth the same as a 4 bedroom house, it just means that these reports take into account a lot more than the number of rooms. A 3 bedroom house may be worth a lot more than a 4 bedder in the same suburb:
* It's in a better part of the suburb.
* It's on a larger block of land.
* The house is in better condition.
* It's got an 'X factor' the other house doesn't.

Other than the basic description of the property, other considerations also go into determining the price point:
* What the property last sold for.
* Land size.
* 'Walk score' - an algorithm that tries to put a value on the position, relative to shops, schools, etc.
* Other stuff that's black magic voodoo.

If you look at a CMA report for a 4 bedroom house, it will include comparable sales for 3 bedroom houses in the area. Some of them will have sold for more than some 4 bedroom houses.

The base description is really just used to drop the property into a very broad pool of properties for comparison sake.

A CMA report or desktop valuation is simply a statistical model of the property value, taking into account a lot of different data. For a purchase, if the estimated value is within a margin or error, they just go with the purchase price. For refinances, it really is just blind luck and there's usually nothing you can do to change the outcome.

The main caveat on this is if the property has been renovated since the last sale. The algorithms have no way to know about or quantify this.

If you're not happy with a desktop valuation result, you can always ask for the report to be upgraded to a full valuation. Be warned however, that in my experience desktops usually have better results than full valuations. Lenders will always use the figure form a recent full valuation over a desktop.

 

Great post.

It never ceases to amaze me that the lynch pin in the whole borrowing exercise is the valuer. I'm in Perth so it's a big deal here at the moment. Thank goodness for AVMs and Modelled Estimates, both CBA and ANZ work wonders here to help people in tough situations which IMO is part of the reason why these two are market leaders.