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Valuations... equity...

Discussion in 'Property Finance' started by Bran, 1st Jul, 2015.

  1. Bran

    Bran Well-Known Member

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    For the MB's and other learned PCP's (PC peeps).

    How accurate do you find the residex valuations are compared to subsequent bank vals? Are the bank vals routinely more conservative, on par, or not related... Residex state they get within 10% of purchase price 90% of the time or similar

    (Black Panther. 50% of the time it works ALL the time).

    Secondly, how soon to access equity, especially in a rising market with perhaps, no immediate plans to purchase, but a good bank val might just hurry things along?
     
  2. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Ultimately the banks will rely on their valuer not Residex, so for finance purposes it doesn't really matter which is more accurate, what matters is which one the bank actually uses.

    It's not uncommon to see a bank valuation come back lower than what the owner believes the property to be worth when it's for refinance or top up purposes. In a lot of situations I do believe the valuer is conservative but it's very difficult to argue with them. When it's a purchase it's almost always spot on the purchase price.

    Residex also has a 'confidence' indicator on the front page of their full reports. I have noticed the higher the confidence level, the more the report and valuers tend to agree. I've also noticed a lot of confidence indicators recently are coming back at around 70%-80%. This could be that the market is so hot that Residex is building in it's own level of conservatism. I prefer confidence indicators to be above 90%.
     
  3. KUS50

    KUS50 Member

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    My experience is that: 60 % of the time, the Residex valuation is accurate every time - lol - though seriously it's often pretty close.

    As for accessing equity - quite simply you can tap into it as soon as you have a valuation at a higher value.

    I have done this in as little as 10 weeks from purchase after a quick reno -
     
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  4. Bran

    Bran Well-Known Member

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    Part of my reason for asking, is about 2 months ago I had what I thought was a very low valuation on a property I then couldn't refinance. Residex has put it at nearly 20% higher than this, and probably 10% higher than what my best guess was. I guess we can get a val and find out.
     
  5. KUS50

    KUS50 Member

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    I'll give you a real life example of the disparity between a computer generated report, bank valuation, actual purchase price and subsequent bank valuation after a 10 week 30k renovation.

    Residex computer generated valuation before purchase was $425k

    Public trustee commissioned 3 valuations - they ranged from $295k - $330k - On market for 295k.

    I paid $275k (of course the bank valuation for the mortgage was $275k)

    10 weeks and 30k in renovations later I ordered another valuation and came in at $425k ;)

    The bank accepted the valuation at $425k which the valuer justified by listing the improvements to the property since purchase (he was one of the valuers who previously valued it at $300k)

    I was able to refinance and buy another property with a deposit drawn from the increased equity :)
     
  6. Elives

    Elives Well-Known Member

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    where was the property?
     
  7. KUS50

    KUS50 Member

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    Yes mate, this is something I've dealt with 1st hand myself, it will definitely stifle your momentum.

    This is how I dealt with it....

    I ordered a valuation on another property - I believed it to be worth $450k.

    The valuation came in at $390k, it was much less than I needed to move forward so I was pretty disappointed. I rang my property manager and got them to send me all the suburb sales for 3 months (RP Data CMD). I also got on RealEstate.com and searched similar properties that had sold in neighbouring suburbs. Once I had some comparable property sales that justified my opinion of the value I got my broker to order another valuation.

    I asked my property manager to let me know when the valuer would be attending and made sure I was there when he did the inspection. (Fortunately it was a different valuer, he had no knowledge of the previous valuers opinion) I told him what I thought it was worth, showed him my comparables; which I'll admit he was reluctant to look at initially, and told him why I was refinancing. He lightened up a bit and offered me some of his investing wisdom and left without indicating his opinion on the valuation.

    It came back the next day at $485k - two valuations within one month - 95k disparity. Needless to say I was then able to tap into the equity and move forward.

    I approach all my valuations this way now, and if I don't get what I want I order another one.
     
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  8. KUS50

    KUS50 Member

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    1st property was East Ipswich
     
  9. Elives

    Elives Well-Known Member

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    thats crazy i just bought my first property in one mile
     
  10. 4point5million

    4point5million Well-Known Member

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    You really just need to learn to look at comparable sales - then if you val falls short of what you believe, you may have a proper shot at challenging
     
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  11. Bran

    Bran Well-Known Member

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    Thanks guys.
     
  12. drg86

    drg86 Well-Known Member

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    I recently went though the valuation process. Had just renovated and was ready to pull the equity for next IP.

    So the numbers. Bought for 360k, 35k reno over 15 months. Online valuation was estimated 400k. I got bank to order full valuation. Came in at 480k, which was enough for the new IP so didn't chase another, however I was disappointed with that number but understand a bank will tend to be on the conservative side.

    I expected at least 500k, reason being that a house in my street sold for 550k 8 weeks earlier...not renovated, and one around the corner 500k. Mine was on 50% bigger block and had the entire house renovated inside and out, going off those recent sales could say it has a market value of about 600k.

    So with this experience vals can be way out
     
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  13. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    I find residex to be reasonably close when the confidence index is leaning towards the high side.

    I often generate a lender valuation/report too so you can cross reference with the residex result.

    Cheers

    Jamie
     
  14. albanga

    albanga Well-Known Member

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    Some valuers are simply more detailed than others as well.
    I had 2 valuations done.
    First valuation - Walked her thoroughly through every room, she was taking heaps of notes and photos. I have an old run down granny flat out back but asked to go through it, realised it was self contained and "could" be used if desired. Her valuation was 640k.

    Second Valuation - Asked no questions, didn't even really look outside and when I said did you need to see inside the granny flat, he responded no. Pretty much sat in my kitchen on his laptop. His valuation 610k.

    Without being biased the 610k valuation was downright laughable.
     
  15. jpcashflow

    jpcashflow Well-Known Member Business Member

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    In the last couple of week I have seen valuations come in slightly lower for refinances. Could be a trend for the near future.