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Valuation - propertyvalue.com.au suggests 10.12% increase in 4 months

Discussion in 'Property Finance' started by Fortune Favors the Bold, 9th Aug, 2016.

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  1. Fortune Favors the Bold

    Fortune Favors the Bold Well-Known Member

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    How does a site like propertyvalue.com.au do their calculations of estimated value? I bought a property in mid April for $1.8 million and now, just 4 months later, propertyvalue.com.au is providing an estimated value of $1,982,000 - which would be an increase of 10.12%. That seems impossible.

    That said, I'd be delighted if they were right.... :)

    A couple more relevant details:
    • Propertyvalue.com.au know the sold price of $1.8 million, even though I asked for it to be undisclosed (how they got it, I don't know)
    • They're indicating an estimated value of $1,982,000 as of today
    • They're providing a value range of $1,800,000 to $2,200,000
    How can their value range be so broad, and how did they calculate a 10.12% growth in value over such a short timeframe?
     
  2. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Perhaps a couple of big sales in the area messing with the overall statistics?

    Perhaps it's even accurate? At that price point there might not be a high turn over of property. A couple of cash up individuals buy a house at a premium (because they've got the cash), but there's no other transactions. The overall price increases because that's what the data is saying. They may not be compatible sales however.

    Perhaps it was truly undervalued back in April?

    It would be interesting to see what a registered valuer thinks.

    Valuation websites, RP Data, Residex. There are all statistical models and it is possible for the stats to draw incorrect conclusions.
     
  3. Fortune Favors the Bold

    Fortune Favors the Bold Well-Known Member

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    Thanks for your thoughtful response Peter, and for all your help during the settlement process several months ago.

    All of your points are worth considering, though I don't think it was undervalued at the time of purchase.

    I'm not sure if there have been other big sales in the area recently, but I can certainly say that there are very, very, few sales in the pocket in which the property is located.

    What would be the best way to get insight from a registered valuer? I'm not sure I'm ready to pay for a professional valuation this early on, unless there's good reason to do so.

    What sites / tools do the banks and brokers use for instant value estimates?
     
  4. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    We order valuations via the lenders websites. They generally go through valex.com.au

    These days many of these valuations are also desktops but there are ways to get the lender to send a real person to the property. One of those reasons would be the price point. They'll almost certain send a valuer in this case.

    More likely than not, a valuer would start with the purchase price in April and give you something close to that. It's unlikely they're acknowledge a sudden increase in the market, arguing that it may be unsustainable over the longer term.
     
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  5. Fortune Favors the Bold

    Fortune Favors the Bold Well-Known Member

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    Interesting. Thank you Peter.

    Imagining a situation where the bank did a valuation and it actually came back at $1.982 million, as propertyvalue.com.au is estimating, what would suggest as good options for next steps?

    One big challenge, as you and I previously discussed briefly, is that our (my wife and me) borrowing capacity is probably already maxed out. Would there be any way for us to access that nearly $200,000 in increased value?

    By the way, I wrote to the buyer advocate I worked with on the purchase, who I understand is quite well known and respected in Melbourne, and he writes "The market is running strongly at the moment so I wouldn't be surprised is a buyer was willing to pay a figure close to $2m."
     
  6. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    I can't remember the specifics about your servicing from our last conversation, but I'm happy to take this offline and take a look at the options. Drop me a line.
     
  7. Fortune Favors the Bold

    Fortune Favors the Bold Well-Known Member

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    Thanks - I will do.