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Valuations

Discussion in 'The Buying & Selling Process' started by Seal, 25th Aug, 2015.

  1. Seal

    Seal Well-Known Member

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    I am considering purchasing in brisbane. this will be my first IP.

    i was wondering do other people get valuations done (and put this in as a condition of sale: subject to valuation)?

    and how much do you pay for them, and do you reckon they're worth it?
     
  2. 2FAST4U

    2FAST4U Well-Known Member

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    Most banks and brokers will provide desktop valuations for free. As for conditions I just have a subject to finance condition because I have already scoped out the market/can tell if it's under market value before I make an offer on something.
     
  3. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Hiya

    Are you asking if you should get a valuation done prior to offering?

    If so - no, generally not.

    The bank will *usually* commission their own val once you've had an offer accepted on the property. It's part of the finance approval process. I say *usually* because some banks won't require it depending on the location of the property and the size of your deposit. Some may also just go off a desktop valuation. On that note - hit up your broker/banker for desktop valuations. They should be free and will provide you with some good info (comparable sales, etc).

    Cheers

    Jamie
     
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  4. Redom

    Redom Mortgage Broker Business Member

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    Most that i see is a subject to finance clause (which incorporates valuation in it).

    If you have a solid pre-approval, a more specific valuation clause could be inserted if your worried about it. If issues do arise, depending on your LVR and purchase price you can usually get around it by going to a lender like CBA or ANZ (local brokers/banks) and they'll just take the contract + rental appraisal (IP).

    In saying that, most purchase valuations do come back in at the contract price. I've had a few out of line, but usually sorted by doing another val or two (for LMI loans) or using a no val lender.

    Cheers,
    Redom
     
  5. Michael_X

    Michael_X Mortgage Broker Business Member

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    Ask for two weeks finance clause. During this time your banker or mortgage broker will get the valuations done.

    If you are placing offers, feel free to use this template

    Name – Insert name to be on the contract
    Offer amount - $XXXX
    Postal Address – Insert your postal address
    Deposit - $1,000 on signing of contract by vendor & $9,000 on unconditional contract
    Finance – X weeks from contract date (usually two)
    B&P – X weeks from contract date (usually two)
    Settlement – X weeks from contract date (usually six)

    Hope this helps.
    Michael
     
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  6. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    I'm agree but I'll expand on why upfront valuations before purchasing are a terrible idea...

    As Jamie indicated the banks will want their own valuation of the property. The logic suggests that you could simply get a broker to order an upfront valuation through your preferred bank and use that for the finance.

    The problem is that the vendor may not like the banks valuation of the property. The valuation from the bank would be based on the valuers best estimate and not a purchase contract, we often see these come in short of what the property might really be worth.

    You'd then negotiate a purchase price which is different from the valuation result, most likely a little higher. If you then apply for finance with that bank, they've already got a recent valuation on file for that property. Unfortunate it's lower than the actual purchase price but as it's a current valuation the bank may be forced to accept that result.

    This means you'd have to put up the difference as cash.

    Instead take up the offer of free property reports. They're essentially a desktop valuation but it's not associated with any particular bank. They also have a lot of useful information about actual sales, which a full valuation is actually lacking in.
     
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  7. Seal

    Seal Well-Known Member

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    thanks everyone for feedback.
    I don't need the valuation in order to get a loan. i can get a loan for more than i will probably need for this IP.

    the main thing that i was considering, is the possibility of getting an independent valuation to tell me what the property is worth. My mortgage broker and bank will get a valuation done, yet as you've commented, it will usually be undervalued/conservative. I have access to pricefinder, which can give me all recent sales etc, and i can probably work out roughly what i think it's worth, but wondered if an independent valuer (who actually goes round the property as well as use local recent sales) may give me a true indication of what the property is worth, so i don't pay too much for it.

    So just wondering if people have done this?
     
  8. Heinz57

    Heinz57 Well-Known Member

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    I paid for a Herron Todd White valuation of an unusual property as I thought the asking price was too high. It came back 200k lower. However the vendor refused to budge and I ended up walking away. I don't regret spending the money because it was not a typical property and not much to compare with.
     
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  9. jpcashflow

    jpcashflow Well-Known Member Business Member

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    Melbourne
    Hi,
    Getting a valuation done before buying a property is a waste of time and money.
    1) The vendor of the property has to let the valuer come in... this can cause the vendor to think that some one is interested in the house!!!.
    2) Using as a tool wont help out on a "Hot Market" but it would assist in a cold market.
    3) Generally speaking there is enough information out there to gauge on how much the property is worth.
     
  10. Pins

    Pins Well-Known Member

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    Actually we got an independent valuation done (at our own cost) prior to purchase in one instance and it helped us decide what to bid at auction. There were a lot of variations in terms of sales over the asking price in the suburb, and the house also had a unique renovation which made it more challenging in terms of comparable sales.

    Obviously it has no bearing on finance and you have to account for the fact that valuations vary, but in this case we found it to be $600 well spent.
     
  11. Seal

    Seal Well-Known Member

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    Good points JPcasflow. What tools do you use to work out the price?
     
  12. Seal

    Seal Well-Known Member

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    Yes, i imagine if an unusual place, then it may help. and also if going for auction (which sounds like the market was 'warm' to 'hot'?
     
  13. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Desktop reports are a good start- hit up your finance person. There's plenty of useful websites too - I remember @Propertunity provided a comprehensive list of sites to use when carrying out due diligence. I can't remember if the thread was created on SS or here though.

    Cheers

    Jamie
     
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  14. jpcashflow

    jpcashflow Well-Known Member Business Member

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    Hi, I usually use RP data and a couple of other little tools...
    Realestate.com.au has become a great tool as well
     
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  15. cheekykoon

    cheekykoon Well-Known Member

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    Sunnybank
    Hi, I've a OTP property ready for valuation and the mortgage broker ordered a valuation. We are not familiar with the Brissy market and hence would like to seek some advice with the mortgage broker.

    The valuer is Taylor Byrne Valuations. Any idea if they are generous?

    I need this valuations to be close or I could try to order a valuation again and as I understand, the system will pick a valuer and hopefully get one with more generous valuations.

    The subject is a 4 Bedroom townhouse in Coopers plains, villa like in a community of 12 units in the development. Hope to hear some good advice with valuations from the experts here.
     
  16. Big Will

    Big Will Well-Known Member

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    Don't know the valuer and even still it can still matter between the individual (not a company) and what instructions the company has been give by the bank.

    As for what the property could be worth where are your comparable sales sitting? If you want us to give opinion there is not enough information. Need things like street address, number of baths, number of living, finish of the property, land size (it is a townhouse), building size, car accommodation.
     
  17. cheekykoon

    cheekykoon Well-Known Member

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    Hi Bill, I guess in the department of comparable sales, there is little info.

    The subject property has 4bedrooms over 3 storeys, 3 baths and 2 cars garage. Over 120sqm of living spaces and land wise, its about 120 sqm for the unit.
     
  18. htopg

    htopg Well-Known Member

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    My broker ordered valuations for me.
    I found it useful for me as a guide for the auction.
    I also used past sales from domain.com.au/realestate.com.au to get a feeling of the right price.
    If the contract price is higher than the valuation price, then my broker will not submit that valuation to the lender.
    If the contract price is lower than the valuation price, then my broker will submit that valuation to the lender to back it up.
     
  19. JZ93

    JZ93 Well-Known Member

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    Melbourne
    How long does it take for the valuer to get back to the bank? It's eating me up in anticipation!