Is it a dangerous buy if bank valuation is slightly lower than purchase price

We have secured 3 bedrooms house (really good condition), and it is in a more expensive pocket , full of 4 bedroom house. And there are only a few 3 bedrooms with not much selling around. Most activities are 4 bedrooms with its higher number of stocks.

The whole market is really hot. Property got snapped up within hours to three days.

Outside the expensive pocket(same suburb) , other 3 bedrooms are much cheaper and in normal / below average condition.

So our contract price is 435K
But the bank valuation came in at 432K only.

It seems the majority of lower end 3 bedroom affect the valuation.

Is it a dangerous sign that we are paying too much? Should we target the 3 bedrooms house outside the expensive pocket?

We use CBA for mortgage.

Thank you.

 

This being the place you were considering knocking the price down by 50k? And you are worried about 3k under val?

at some point, you have to make up your mind. You want it or not?

 

We want it, but sorry for being silly. This is our first purchase.

But we really want to know what happen on the ground usually.

Does bank valuation usually equals to purchase price? A few k shortfall is still normal? Or it is not normal?

 

Did you get the price reduction on that retaining wall? Your inspection clause must have expired by now?

its more an attitude thing. Why be concerned over a 3k shortfall on the val if you are willing to accept whatever the retaining wall will cost to repair? Or maybe it wont fall down.

how will you react if rates go up, a toilet breaks?

you want it? Accept that there will be some unexpected things instead of agonising over every detail (and then accepting it anyway when it all seems too hard).

 

in 7 years time, if it keeps increasing in value, $3k won't seem much.
Imagine if your parents paid double for their purchase way back - it doesn't matter in the long run.

But, can you afford it?

 

We feel warm that you remember our situation. At last we pulled out of the contract. Because the inspector told us it would take weeks of repair work. It is not just the retaining wall. Its the whole steep bank slope of poor drainage.

So we just cancelled it even the seller is willing to reduce price.

 

For mortgage purpose, bank valuation came in at 432K only

When will this bank valuation update? If the suburb continues to rise strongly and we would like to extract the equity, would it take a year for the bank to update the 432K valuation upward to reflect the market condition before allowing us to do that?

 

valuations don't automatically update. You can apply for a new valuation and some lenders will allow this a day after settlement whereas others will not allow a new val for3 to 6 months

 

In a rising market with favourible comparable sales , if a buyer apply for a new val after 6 months, will the new val reflect the changes of the past 6 month? Allowing the buyer to use the equity.

Or it would generally take 1-3 year for the new valuation figure to "increase"?

 

It will depend on the valuers opinion, but in the past it has happened frequently. I have even had increased Val's 2 days after settlement

 

Are the valuers in CBA usually more lenient in valuing the properties, and tend to give higher value? Or it is really up to the valuer?

 

Jaw-dropping... have a stupid question:

wont it be a much easier world, if the buyer can directly access to the automated valuation system of the bank ?

everytime we feel interested in a property and ready to put in an offer, we need to ask the broker to request the valuation from the bank.. and sometimes our broker is quite busy..

 

You cannot generalise like this

 

Im actually surprised the valuation came in 3k low (less than 1% of contract). Thought they have would have gone of contract in that stage. I get it if its 2-3% of but around 0.6% margin should be there for error anyway.

Note I have no idea how valuers work but did recently have a property value by 2 of the big 4 and they were about 10k off (400k price)

 

Get a Mortgage Broker, don't go direct to bank

 

You have bought the house. What happened with your loan?