The Block 2019 - Valuation ?

Last weekend 5 units were sold in a row to 5 buyers at public auction. Each was slightly different in floorplan and style etc. But all largely identical in area and location etc.

Have some questions concerning potential valuation by a lender. And lets assume for simplicity its the one lender in each case so there is no impact on different lender val policy.

Sales :

• Tess and Luke: 38B Grey Street sold for $3,620,000
• El’ise and Matt: 38D Grey Street sold for $3,450,000
• Andy and Deb: 38C Grey Street sold for $3,420,000
• Jesse and Mel: 38E Grey Street sold for $3,378,000
• Mitch and Mark: 38A Grey Street sold for $3,374,000

So lets dumb this down and assume each buyer seeks a loan and servicing poses no issues whatsoever. Lets assume they want to borrow 80%

What value would be used ? 80% of what ??

- Actual sale price ? Variance is $246K between highest and lowest.
- Lowest sale price ?
- Some other "value" ? ie less than sale prices ....eg does a lender strip out of the interior fixtures and furniture and appliances etc ? The interior fixtures are quite high value at cost but potentially may have little value on disposal. eg Gumtree. I cant imagine any lender would allow the valuation of furniture, a free car (?) or the like to be unadjusted. How may that work ?

 

Each unit would likely value at purchase price. They are all slightly different and were sold at auction. But part of the purchase price may include furniture? - which won't be lent on.

 

It's a styling show, the purchase price included the furniture etc. So a depreciation shedule would be required for the hard construction costs.

Now for the hard question: as it would have been the sale of 'new property', would the banks valuation exclude the GST which would be part of the purchase price (on drop of the hammer)

 

GST isnt a additional element of cost and is just ignored for new residential premises values etc whether or not it is included in the price but excluded for Commercial property as no lender typically lends the GST since they may likely claim a credit. A buyer of new resi premises can never claim the GST and so it is part of the cost / value. The selling price is a market price whether it includes GST or $1 or 1/11th. It wont matter. Its like cars. A dealer sale includes GST but a private sale shouldnt. It doesnt make it cheaper as such.

 

Thanks for clarifying.