Low Valuation - Central Coast vs. Sydney

That should be okay, just don't want too many pointless ones moving forward.
Servicing should be apparent before a credit check is even performed, so hopefully that Aussie one didn't reach your file.

 

Good chance it didn't. I tried to get finance approved through that one particular broker for 6 months and wasn't told that servicing was an issue until 4/5 months into the process. In amongst the brokers holidays, family emergencies etc. they seemed to completely forget about my loan.

 

I think this is one of the key "issues". There are no comparable sales for a property configured like this. Copa is not in the Newcastle Uni catchment, but if this house was there instead of being at the beach, you'd be lucky not to have it valued as a commercial property (student accommodation) and only offered a 60% LVR on a mortgage for it.

 

I can vouch for this, the bank valued our place at $630 in May, recent sales at the time of 2 others in our block are $780. I questioned the bank over this and she said "Yes that sounds about right, the bank will always value a good 20% lower.

I did find it strange that they did an estimate valuation too ie didn't come to my house, so doesn't take into account the "alterations" we have made to the place.

 

Are these low valuations only happening for cash out purposes, or have people been getting low vals on purchases?
Do the banks value more generously if its an original purchase and even more so for PPOR's, or does it make no difference?

 

Its rare for purchase vals to come back low, because if the house was sold on the open market, its hard for a valuer to argue the price isn't the fair market price.
Refinancing, or valuations without a sale attached are much more likely to come back short. These days a good rule of thumb for most areas is to have a look at the capital improved value on your council rates notice. If you want to have the property valued for much more then be prepared with at least 3 comparable sales.

 

Re-vals were for cash out purposes. I'm not sure if other people are getting low vals, I haven't heard anything along these lines from the agent I deal with in the area.

When we purchased CBA lent $600k so it may be the case that was 80% of a $750k value which was $50k+ under purchase price. When we purchased the basement was flooding, house was in really rough shape from bad tenants and the rent was only $650 per week (It's $955 now).

 

I will need to keep an eye on the market up there and refinance when I can get 3 in a row that are similar to my house. Summer is normally the best time but that didn't help me much with the first val which was the lowest one until I appealed it.

 

Hi Tim & Chrissy,

I know Copa well. My brother in law is building a 4 storey house going up the hill on the headland above the rock pool and he used to own a shack on Ensenada. The issue you have I think is because it is a holiday home / 2nd home area the prices are more volatile than normal. The valuers will be more conservative than they would normally be. That and lack of comparables is what is causing you grief I would say.

I have kept a casual eye on the market there since 2007 ish and it does have big boom and bust cycles. During the GFC some higher end properties halved in value and nothing was selling unless the vendors fire sale'd them. So there is a history of volatility there which the valuers are well aware of.

I find valuers normally come in between 5-10% less than market for revals but in Copa I would almost expect 15%-20% less. That said if the prices hold into 2016 then you should be able to get closer to true market value later in the year as there will be a stack of comparables and steady prices hopefully. You also need there to be no surprisingly low sale prices. They often say one sale doesn't a market make but I find one really low sale can influence them a lot!

 

Thanks Marty, that info is really helpful, I suspected that may have been the case and unfortunately not much I can do about it except wait!

We bought there because we thought it was perfect the raise the kids, we blew the budget by about $250k though so have to wait a few years before moving. The beach is literally across the road and the wife and kids love it so even with the reno's and issues it's all been worth it.

If you look on the first page of the thread I have posted pictures, it's one of the original Copa homes, I purchased it from the 3rd owner who owned it for over 50 years.