Impact of plans and permit on valuation

Had a mate sell with permits and the purchasers bank wouldn't lend resi so finance fell through.

Still resi rates, which was good. BoQ. Banks aren't dumb and know what is a development site. And there is a bias towards reducing lending towards developments.

 

That's rough re: your mates sale. And here I was thinking that it was only the APRA changes I had to worry about

Good to know that you could still get it through via BoQ albeit at 70%.
I'm bracing myself for the worst from Westpac next week.

 

At 1.5m I can't think of any lenders who can go off COS price except BOM and WBC.

Like Shahin said, even BOM internal system overrides for kerbside/full valuation.

ANZ do have the best val policy where they can go off COS at 80% up to a mill and 90% if the property is under $750k.

Remember, $1.5m isn't chump change, if you were going to lend $1.2m+ wouldn't you do your due diligence and spend a few hundred bucks to make sure the property is worth the price.

Good luck and hope you achieve a positive outcome. I have a similar valuation problem with one of my applications which has caused a whole lot of unwarranted stress.

 

I hear you Watson.

The frustrating part about the whole ordeal is that the valuation did come in at contract price. It's the bit about 'highest and best use' which has thrown a spanner in the works.

I guess it's going to come down to how much discretion the individual credit assessor has when evaluating the application?

 

The lender looks at the front page of the contract of sale so it doesn't matter if the plans and DA were included in the COS. This is of course relevant to lenders that have a no val policy and go by the COS.

 

That's interesting. I can see the perks of being a broker + developer. Knowing the valuation criteria of each lender can make a big difference.

Do you find any differences between the valuation policies of the big four vs smaller lenders (e.g. Citibank, AMP, BoQ, Pepper, etc). Are they more likely to do a COS deal?

 

Even with ANZ, @ $750k COS will go to a full valuation if the property value exceeds $1m even with a comfortable LVR @ 60%.

 

Shahin assist me in getting over the line with a similar deal. Though the property I was purchasing didn't have any DA plans, the RE listing was writing all over that it was a development site. In addition all properties within the 0.5-1.0 km had similar listing that it suggest it's a dev site. This open a can of worms for further questions..

It was also one of the smaller lenders as well.

This is when you need a broker that will massage the deal through with lender's BDM.
Your case may added some level of difficulties since it had a DA. Mine would be telling lender even though it had development potential, I would not realize it and would be a long term buy n hold.

 

Good point.
Can I ask which lender you ended up getting it through and at what LVR?

My broker is working with Westpac at the moment on this one.

Hoping they come back with an approval... but it might be at a lower LVR than what I originally applied for.

I think this scenario makes a good argument for looking at lower priced sites with a lower LVR so you can just push them through via COS.

Easier said than done in many parts of Melbourne & Sydney at the moment though