Low valuation and what to do next?

First time property investor and just had my valuation done today which came about 60k short, and was wondering what most people would do in a situation like this? I do have the excess to cover the short fall but was hoping that i didn't need to. This is an OTP property in Newstead I put a deposit down 2 years ago. In a situation like this what would most people do? Keep the property and hope it moves or settle and then put it up for sale? Seeing what options I have from this point forward.

I'm sure many people have experienced this but I am currently kicking myself for not listening to myself and not taking a tougher stance when buying my first property the only thing i can do is take it as a learning experience and hopefully bounce back on this set back. Missing detail is I got sucked in by a spruiker which I felt he was acting in his own interest and took myself as a beginner investor for a ride.

 

I know someone who settled their OTP in Newstead about 3 years ago and the valuation is falling every year. Also had to offer rent-free period & rental reduction to the existing tenant to renew

I'm not seeing much positivity about the Brisbane unit market so would be inclined to get out sooner while it's still "new".

 

I had the exact same for a client in WA. It's not fun, I feel for you.

I don't know the Newstead market but is it something you would buy again today? Will it get you where you want to go? Do some research, speak to PMs to see if there's any demand and make an informed decision rather than an off the cuff/emotional one.

 

See a broker, get a few vals done. They won't all be the same.

 

More than half of that entire suburb is in the highest (worst) rated flood zone. Unit + bad flood zone is definitely not going to be helping.

 

I've had it happen a few times in Melbourne.

Thankfully it hasn't happened to any of my clients in Brisbane, Syd, Canberra....hopefully it stays that way.

With the Melb purchases - we ordered a couple of extra valuations with different lenders. A different valuer often provides a different result. Get your broker to sort out the vals for you.

Cheers

Jamie

 

I'm afraid you made the classic mistake than many make buying off the plan.Yes the Brisbane market is bad at the moment and certain area's have an over supply of units. This will get better in the future and will be absorbed, hard to say how many years though.If you have the money to make up the shortfall you may just have to pay it and ride it out. It's an expensive mistake but it could have been far worse like if you purchased in a mining town for example. Learn from this mistake and move on as best you can.

 

Hopefully its an aberration due to supply concerns and banks seeking lighter vals at present for some regions. I dont think anyone has seen signs of a sales frenzy. Just soft due to supply. And everyone refers to "pockets"

 

Thank you for the responses I've engaged with the broker requesting for a few more valuations to be done and they've advised that the building manager is only limiting the number of permitted valuations to two leaders due to other owners in the building needing to perform there valuations as well. Is this normal practice?

 

This comment really worries me to be honest. I don't think it's possible for them to restrict you. But I think the building owner is concerned everybody won't get funding which may lead to failed settlements and distressed sales.

 

That worries me more too. Is there any such limitation under the in the contract? Sounds like *lots* of people are having concerns.

 

It sounds more like the developer wants you to use valuers they know will value up. There are limited lenders that still let you choose the valuer these days however.

 

If thats the case, Id be finding out which valuers are on the money ( or at least not 60K under) and trying to work towards getting a loan from a lender who uses that valuer firm. Ask the agent which valuers are getting closer to the money than 60K

 

Almost everyone uses valex or similar systems these days @euro73

I was in exactly the same spot earlier this year, tried upfront vals with 5 lenders and didn't 'land' the valuation company the developer recommended.
One of the mortgage managers let me pick the valuer with one of their non bank funders. Not a pretty rate, but the client settled without having to tip in much more cash. The val was still short but manageable.

 

I would personally get that response in writing and order a number of Val's anyway. The broker ordering them will get the response from the building manger as the valuer will need to contact them for access.

Then I would engage a lawyer to see if their are any grounds to walk away from the contract. It's likely not but what have you got to lose. You either order the Val's and get something decent or you can't get any Val's and then may have a get out.

 

I know @tobe, but there are ways to do it . Quite easily in fact


Not my first rodeo.

 

Enlighten me. I'm stuck in the stirrups.

I tried re ordering them, diferent names etc, kept giving me the same val company. They either have me pegged as a serial val orderer or they have tightened the system.