Low full bank valuation results - why?

I am trying to fathom some results from bank valuations and request any assistance from pc members.
Both full walk through valuations for CBA for fully renovated properties - cosmetic but everything done.
One came back at $580 then ended up selling 2 months later for $725. Approx 25% low.

Recent one was with a different valuation company and also provided valuer with rea appraisal which was pretty fair at 600 - 650.
Similar comps would be around 630 mark.
Result came back at 550. Approx 15% low. That price may just buy you a rubbish condition renovators delight if you're lucky.

As looking to refinance to bank (current o/o to become IP) I would have thought instructions would have been assess at fair market value.

Presentation was meticulous as if an open home but I can only guess they are shaving the valuations or ignoring the condition of the property?

Any ideas or clues as to what I am missing with these results appearing to be well under market value?

Thanks

 

Could be a relatively young/new valuer that is scared of messing up so is err-ing on the side of caution to keep the bank happy...

 

Conservative valuers. Real estate appraisal probably worked against you.

 

What terry said. Don't give the the agents appraisal, just the comparable sales. And give desktop or drive by valuations a try. A lot of the time they give a better result.

 

Thanks all - tried desktop val but that didn't pick up the full Reno done only the 5% suburb move in last 4 months or so since purchase.
Note for next time to try comparables only - thanks.

 

Valuations for finance are necessarily conservative. Banks want to be sure they can get their money back if the loan goes sour and a quick sale is needed.

Probably even more conservative since being stung in mining town collapses.
Marg

 

What you meant to say was instructions for a 30 day fire sale...

 

Full vals can be quite conservative - order another with a suitable lender? Two shots usually improve your chances, as valuers do have variances on the same security (i've seen ~15-20% variations multiple times before, more commonly 5-10%).

 

Exactly!
Banks just want to make sure they can recoup any losses.
Marg

 

@craigc, is this for a house or unit and in what area?

I recently got 3 extra low vals from 3 different lenders for a 2BR 1970s walk up unit in Rosebery,
at least 100k lower than agent's estimate / comparable sales.

We assume it's the looming oversupply in our case...in yours it might just be a conservative valuer

 

Looking at CBA due to 90% LVR with no LMI (CPA) so low val may still work even compared to 80% of a reasonable val.

On both occasions it is a 4 bed house in SE Melbourne. Current one is on a smaller block but factored into price expectations

Problem may have been I bought current one at very good price (cue bmv debate) only 6 months ago - I was on the ground and ready to jump and beat crazy crowd in 1 day offer.
If bank val is using that as a starting point pre reno rather than recent comparable sales or it could just be a fire sale price as mentioned above.

 

You raise some very good points. An agent will quote on what they can sell it today and they'll be optimistic in order to win the business. A valuer will give more consideration to future markets and the risks. They're going to be err on the side of caution and be pessimistic.

 

Get a second opinion on the estate agents appraisal!!

You could also get a second opinion from another lenders valuer. I've found them useful in either challenging the original valuer or explaining to clients it isn't a 'rogue' valuer that gave them the bad news.

St George/BOM have a similar 90% no lmi policy. You could try getting a val from them?

 

REA I have used before and realistic to conservative on appraised sale price. Likes to provide realistic sale price and overachieve result.
Also comps was recent similar size (newer but similar std finish to Reno) 4 bed freestanding unit on smaller land sold 630k. Unrenovated 4-2-2 houses on larger blocks low to mid 6's
A larger land component would push house to high 6's at least but block I have is smaller so discount price.

Thanks for StG / BOM 90% no lmi tip. May consider them depending on servicing calcs. Will check with broker & see how we go.

Thanks!