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Valuation when selling a home privately

Discussion in 'Property Finance' started by WilliamB, 9th Sep, 2015.

  1. WilliamB

    WilliamB Well-Known Member

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    Hi,

    We are currently negotiating with a buyer to buy a newly constructed property (i guess you'd call it off the plan? about a month from completion) and their finance will be over 80%, which I expect will trigger a full valuation of the property.

    If the valuer visits before completion (ie in the next week or two), it is unlikely they will value at contract price due to items being incomplete, as yard not finished, and still a few defects in home to sort.

    We aren't particularly concerned about the valuation stacking up on completion, as there is sales evidence to support the number (even though we all know it is highly interpretive depending on the valuer), however I don't want to fart around too much given any number of things beside the valuation could go pear shaped, so I'm looking to make sure anything in my control is addressed.

    My broker suggested to me that if I have an agent friend, who was willing to put their name on the contract as agent, it would give the Valuer less room to "interpret" the valuation and screw us over as it would be better interpreted as an on market sale.

    Does that sound rational?

    Cheers
     
  2. BurnettGroup

    BurnettGroup Well-Known Member

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    If there applying for finance as you say, (80%+ on LVR), then the valuation will be performed either by their Bank as the financier, or one of the Banks, panel valuers. No comment on your Broker.
     
  3. WilliamB

    WilliamB Well-Known Member

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    It would appear I wasn't clear in my query above.

    We understand how valuations work, he was simply suggesting that maybe if we had an agent on the contract of sale, the valuer may be more likely to consider this as an "on market sale", rather than private, and be more likely to value on or near the contract price.

    Cheers,
     
  4. BurnettGroup

    BurnettGroup Well-Known Member

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    Understand what your saying. Even on a contract of sale, there still needs to be a price. Honestly, what your proposing, is holding a stick of dynamite with a lit fuse at both ends. Have you thought of just getting your own val done, at least you then have a price guide, to then go ahead and perhaps seek an agent. Then you at least have a bit of leverage. Just a thought.
     
  5. WilliamB

    WilliamB Well-Known Member

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    Sorry, you've lost me.

    We don't want to seek an agent? Leverage for who?

    This is a private sale that we have already negotiated, and I'm happy with the proposed contract price.

    My only concern is the val won't stack up to contract price especially if it is incomplete. If the buyer gets the wrong valuer on the day then the sale may fall through.

    We thought perhaps if the valuer reviewed the contract of sale, noticed it had an agent on it (even though not actually doing anything other than being on the contract), s/he may be more likely to value at or close to contract price because it would appear to have been an on market transaction, rather than a private sale.

    Perhaps there is something I am not communicating well enough?

    Edit: perhaps i made it seem in my first post as if I was buying. my apologies
     
  6. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    I think most decent Valuers will be able to put a value on an incomplete property based on plans and an inclusions list. (They'd do this for construction loans etc). There would be no reason to put an agent's name on the contract, to give it some legitimacy, in my opinion.
     
  7. BurnettGroup

    BurnettGroup Well-Known Member

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    Thats ok, just wanted to make sure, I had understood you correctly, as @Propertunity has said and I made mention of, the agent is not really required, which is why I said "no comment on the broker" as he could steer you down the wrong path. As for the valuer, they have a job to do. In my experience get the val before you sell a property, otherwise, you could sell yourself short.
     
  8. Dazedmw

    Dazedmw Well-Known Member

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    The lack of Agent on the Contract may trigger the valuer to look a bit closer at the sale process. However a good valuer should be able to work out the conditions of the sale and the sale process regardless.
     
  9. WilliamB

    WilliamB Well-Known Member

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    Thanks guys!

    Cheers,
     
  10. WilliamB

    WilliamB Well-Known Member

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    Cheers mate, but as I mentioned, we are happy with the sale price. I am keenly aware of recent sales in the area and believe the price is on the money, as mentioned we would only sell it for a premium.

    I have seen the kind of brain farts valuers have some times, which was why I was trying to make sure I addressed every possible risk I could control.

    Will see how it goes!

    Thanks!
     
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  11. BurnettGroup

    BurnettGroup Well-Known Member

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    All the best. I'll keep my fingers and toes crossed for ya.
     
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  12. neK

    neK Well-Known Member

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    For some brokers (depending on their status - ie how many loans they have written), there are certain banks they can go with that will simply accept contract value provided it was sold through an agent and is <80% LVR.

    I think that is what your broker is hinting at.

    Eg. St George do this up to a certain value for houses. Not sure if the APRA rules have changed this in any way.
     
  13. Marty McDonald

    Marty McDonald Mortgage broker

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    No that's not it Nek. Over 80% and is likely to be full val regardless. It also doesn't matter how many deals the broker has done with the lender.

    OP I agree with your broker. Much easier for a 23 year old graduate valuer to hang his hat on an "arms length" transaction ie a contract with agent involved. For an experienced valuer it shouldn't make a difference (but maybe it will).
     
  14. neK

    neK Well-Known Member

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    @Marty McDonald But 80% and below is full val required? Or simply contract price?
     
  15. WilliamB

    WilliamB Well-Known Member

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    Yer plenty of banks will value at contract price at 80 or under.

    He was specifically referring to LMI loans, but we are all good cheers!
     
  16. Marty McDonald

    Marty McDonald Mortgage broker

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    Sometimes yes even if under 80%. Can be 1% LVR and full val.

    Contract or automated valuation (AVM) with many lenders but always only if full arms length transaction (contract with a selling agent) and standard, well located property with loan and property under a certain $ value. They all have different business rules basically!!
     
  17. tobe

    tobe Well-Known Member

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    If the property is unfinished every lender will want a full val, regardless of lvr. I agree with Marty, it won't make much difference whether there is an estate agent involved, as long as you ensure the valuer knows it's arms length.