Valuer recommending commercial finance so he gets paid more?

hi

Any thoughts on this situation that is giving me a hard time?

Residential, low density zoned land. Fully serviced. Could potentially be subdivided into up to three lots, or just built on with a big back yard. Valuation recently completed on behalf of the vendor stating it is residential, low density single title.

The valuer assigned to it tells me he has to decide whether wants to do the job or not as it's not worth the $xxx fee when he has to commute to do the job. Tells me he is able to charge a higher fee if he claims its a 'commercial' valuation as there could be a possibility to subdivide (stca of course and whether it's feasible is questionable and if that is the intention is arguably none of his business??). I thought they could only value 'as is' ?

Val comes in deeming it to be commercial and residential loan declined.


Where do I stand? Is this valuer for real?

Any way to get the finance over the line? Has this valuer acted out of line? Is there a body to turn to (fair trading)?

Any help is appreciated

 

Who instructed the valuer?

 

Why is it your decision to decide what the guy gets paid? Have you engaged the valuer or has the bank? If it is the bank, tell him to go back to the person instructing. They may decide to appoint someone who is more local to the site.

 

Sounds questionable.

Get your broker to speak to his BDM and explain the situation. If you're not using a broker you can try talking to your branch manager. Go up the chain as it will likely be above the the loan clerk's pay rate.

 

Who's a loan clerk?

 

@goodtimes who has ordered this valuation?

Have you ordered it direct, if so is it on the intended banks panel?

If it's bank/broker why is the valuer telling you this?

 

Not uncommon if you have paid a premium as it is a potential development site or has council approved plans as valuers instructions are to value the property at the 'highest best use'.

This is one thing I always warn my clients who want to purchase potential development sites as the valuers will want to refer this to their commercial team which can cause headaches when seeking a resi deal.

See if your broker can go through another bank who might not even require a valuation and can rely on the contract of sale price.

 

I've seen this several times in the last few months. It's not the lender or broker instructing the valuer, it's the ValEx that's automatically upgrading to a 'long form' valuation.

They've started doing this recently, it means they do a valuation to determine the 'highest and best possible use' of the property. It's usually done on a properties with high potential for subdivision (I can't remember the exact zoning at this time).

I had to get to some fairly high level people in ValEx to get this info. At the senior levels in the banks they're aware of it and even supporting it for various reasons. Most people I've discussed it with in the banks are unaware that it's happening at this point.

The problem is the lenders receive a 25 page valuation for commercial use rather than a 6 page residential valuation. They determine that the property fits under commercial policy and decline the application. I lost a perfectly good pre-approval with the CBA on this basis a few months ago. Quite a few other lenders have the same response. If the valuation suggests it could be a commercial property, they drop it very fast.

To get around this you need to use a lender that doesn't necessarily use ValEx, or you use a lender that's still flexible in their credit policy for investors. Both of these require some very specific lender knowledge.

 

Valuer engaged by the bank (big 4).

Regional location 25 minutes drive from the valuer. There are no closer valuers.

There is no DA submitted regarding this land.

FWIW I recently (3 months) purchased with the same bank, same postcode, slightly more expensive, slightly larger site, unserviced, medium density, with an expired 12 unit DA. Residential loan, straight through, no questions asked.

I'm feeling hard done by from the valuer and my gut is telling me he has acted out of line and deemed it commercial for no other reason than to line his pockets. Am I missing something or over reacting?

 

Jeez does sound rough. If no da then surely that's a crock. You could say virtually any larger vacant land property has subdivision potential. I'd be pushing back on that

 

Think different - drop the temperature to freezing, turn the water to ice and push. Works every time.

 

Better to be able to order val yourself via broker then take it to banks who will recognise that valuer.

 

We've had quite a few upgrades to long forms recently that would otherwise have been standard short form vals last year.

Credit, when speaking to them, have been surprised to see long form valuations being required. Usually these have been for small subdivision, duplex/constructions. Haven't seen credit decline based on commercial type deal yet (the deals still fit standard resi policy) - but it does add layers of time & cost to the process.

 

It may be being driven by the fact that valuers really haven't had a pay increase since 1985! Yep.. Still $200 to value a standard resi property. Also with all the desktop and AVM's they would be hurting I reckon.

We have the perverse situation in Sydney as well for low LVR deals where we are low balling the estimated values (under $2,000,000) when we think the property is worth more. Its not to jib the valuers out of a higher fee but so we can order vals upfront with $2M or $2.5M being the limit for this.

 

I've seen this coming up more in recent history - in particularly its a pain if there's an existing or expired development approval on the property.

If anyone is making a purchase of a property and wants it to go through as a simple residential lend, for the love of god don't get the DA done until after your finance is in order unless you want a spanner in the works.

As per the valuers forcing the type - it's a symptom of the centralisation issue of valuations into an ever smaller group of companies. Tough times, reduced margins and more onerous work - I don't envy the work of a valuer.