Shocked (in a good way) by bank valuation for a development

Discussion in 'Development' started by drfuzzy, 16th Sep, 2018.

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  1. drfuzzy

    drfuzzy Well-Known Member

    Joined:
    13th Sep, 2015
    Posts:
    59
    Location:
    Australia
    I'm at lock up stage of a 2 high-end townhouse development and need additional lending.

    It has been complicated to obtain - even though my LVR is low at around 30-40%

    What has shocked me is that the valuation came in a bit higher than I expected. I am confident they will sell for between $2.8m and $3.2m each and hoping for the higher end of that. Bank valuation came in bang in the middle at $3.0m.

    This is despite the valuer not being able to see the final product, quality of the finishes etc. Also, the townhouses haven't been subdivided yet and have common property/basement etc which I thought would reduce the valuation.

    This has got me wondering if
    1. my estimated sale price is a bit light on; or
    2. if the bank valuation is aggressive/fully valued.

    What is the experience of others? Are bank valuations that exceed market value common?
     
    Last edited: 16th Sep, 2018
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,599
    Location:
    Gold Coast (Australia Wide)
    yes and no

    depends on market position, valuer, valuation type

    full vals rarely exceed market though

    Be mindful that at 40 % lvr, a valuer will possibly be much looser than at 80


    ta

    rolf
     
    New Town likes this.
  3. drfuzzy

    drfuzzy Well-Known Member

    Joined:
    13th Sep, 2015
    Posts:
    59
    Location:
    Australia
    ta, thanks Rolf.
    Maybe it is the LVR.