Valuer Undervalued my property. What to do?

Hello,

I have signed a contract to purchase an existing house in Moreton Bay QLD. Assisted by my BA and my broker through the process. I have a pre approval from Westpac. The purchase price was $430k. Westpac came around to the property for an in person valuation and ended up under valuing it for $400k.

Being new to investing - I usually hear that this happens all the time with new property. Particularly with OTP. But I am still trying to get my head around how this happened? My BA and broker both say that they are shocked that this has happened and can't understand why.

My broker immediately ordered 2 more vals from CBA and ANZ. Those both came back at $430k. We have tried to dispute the val with Westpac but so far they have refused to budge.

So all is well and good I can go with CBA even though Westpac's rate is a little more competitive. But my problem is, I have previously requested a loan that was unconditionally approved to be declined from Macquarie Bank (due to making some newbie mistakes) - this happened less than 6 months ago. Then I got a pre approval from Westpac. And now if I'm to get a loan with CBA - then that would be 3 credit enquiries in a row from 3 lenders in the space of less than 6 months. Wouldn't this be detrimental to my credit file and therefore detrimental to me building my property portfolio?

Would CBA even approve my loan if they see the amount of enquiries I've had? I have heard/read that it's only very rarely that a valuer would change their valuation and banks do not accept vals from other banks - my broker has escalated the issue with Westpac but I really don't know.

Just want to seek others' advice on this issue. Go back to Macquarie Bank and tell them my circumstances have changed? Go ahead with CBA? Pull out of this property deal under the finance clause and find another that hopefully Westpac will be able to value on purchase price?

Is this common with existing property and with valuations?

 

1:can you complete the purchase with the $400k valuation
2 : is the issue the valuation or the ability to complete the purchase or to put less equity in
3: valuations are opinions based on comparatives
Can you tell me whether it is the market evidence or the % adjustment or the % used for the DCF or the yield or the sundry improvements that leads different values? (I assume the 3 methods used)

 

Shouldnt your mortgage broker be answering this? They know about the previous decline? If not tell them.

 

1. I can but don't want to as I need that cash for second investment property + cash buffer. (I'm using cash deposit, not equity)
2. Issue is with val because it means that I either go with another lender who values at purchase price or put in an extra $30k in cash. Which I don't want to do.
3. I don't really understand what those terms means but I did get comparables from them. But they were largely different to ones anz and CBA used except like one in common. But CBA said mine property is superior to the comparable. Whereas westpac said my property was inferior to the comparable.

Yes. She knows. She has sent an enquiry to Macquarie asking about it. Just waiting to hear back. I just wanted people to share their experiences or knowledge or opinions on this matter.

 

3 lenders 6 months wouldn’t be concerned if everything else stacks up. Why couldn’t your broker confirm this?

 

It is very unlikely you're going to be able to successfully dispute the valuation with Westpac. I would be steering toward the most suitable lender that has returned the $430K valuation & wouldn't be considering Macquarie.

 

Woww. I had no idea that 3 lenders in 6 months wouldn't be a concern. I was kinda over the top with panic. My broker is just trying to help me with what I want. So to fight the val. And I guess I never asked, I just assumed 3 lenders is too many. But in your opinion, when does it get so bad that it affects your credit file? Because everyone says credit enquiries with multiple lenders is bad but I no one ever tells you how many is too many.

Yes, I have read that valuers very rarely change their valuations. I guess I wanted to try anyway as I felt I was out of options and there were two other banks who valued at purchase price.

And yeah I wasn't sure going back to Macquarie is a good idea, it was just an idea I came up with in the hopes I wouldn't have to apply to a 3rd lender.

Thank you. She's doing a good job with trying to help me get what I want.

 

3 enquiries in 6 months is hardly reason for concern with nothing else.

I guess what I’m more interested in is what did the BA even do for you? I get it Val’s do come in short from time to time but the point of a BA is to find good deals.

If your an over excited rookie with a happy trigged hand at auction I get how you could pay overs and get a low Val....but being steered from a BA and still getting a low Val..

Are you saying you purchased OTP?

 

As mentioned the credit enquiries can be easily explained.
I would be asking how much commission the BA is making off the new development (if any), and then asking the broker for their slice (if any).

 

Did you find the broker or the BA?

 

Did you know that when you sign up for utilities most run a credit check. If you move into a new place, and connect water, gas, electric, phone, internet... Wow, that is a lot of credit checks in ONE day.

I have never heard that any amount of credit checks are detrimental to a credit file. In any case, credit files are more of a US thing. Hardly mean anything in Oz.

 

Actually @Jasmine used to be more of an issue - previously there was limited data sharing, just that someone had enquired about their credit.
If there was multiple credit checks within a short timeframe banks used to be concern, had you changed the information provided, why hadn't you proceeded etc
Now with more detailed credit sharing, credit checks will show what type of facility you have along with the limit.

But even with old credit checks 3 in 6 months I don't think would have been a concern.

 

Try telling the lenders that, when you have a low score or Default - then it definitely means something.

 

My BA was shocked that the val came back so low as well and said it has never happened to any of his clients. He said that he has checked with other BAs and they also think the property is worth more than $400k. And 2 other banks have come back with a $430k val.

And no, this is an existing house in Strathpine 4500 QLD. Highset weatherboard queenslander built in the 1970s.

I am paying my BA, no commission. Broker isn't getting commission either. This is an existing property.

I found both.

 

Thank you. Heard back from the valuer, as expected they're not willing to change their val. I'm going to apply for a loan with CBA.

My credit score is in the 800s. I was told that it was 'good'. I myself personally don't know what is considered good or bad though.

 

Yes 800 is a good score.
It pays to understand your credit score and how it impacts the way creditors view you.
Here's some helpful info

• Below average to average (0-509). It's more likely an adverse event will be recorded on your file in the next 12 months. You are in the bottom 20% of Equifax's credit-active population.
• Average (510-621). This score suggests that it's likely that you will incur an adverse event in the next 12 months. Your score places you in the bottom 21-40% of the credit-active population.
• Good (622-725). Adverse events are less likely to be recorded for the next 12 months. You fall in the mid-range (41-60%) of Equifax's credit-active population.
• Very good (726-832). Unfavourable events are unlikely to be recorded in your credit file within the next 12 months. Your score places you in the second-highest percentile range of the credit-active population (61-80%)
• Excellent (833-1200). Adverse events are highly unlikely to happen within the next 12 months when compared to the average Australian. The odds of no adverse events occurring on your credit file in the next 12 months are five times better than the population average and you are in the top percentile range (81-100%).

I personally pay a yearly membership to Equifax and I get monthly credit score updates BUT the best part of the membership is that I get alerted to ANY activity on my credit file, this is especially helpful if someone tries to use your details to apply for credit (identity theft)

 

Equifax scores (credit score)

Below average to average (0-509)
Average (510-621)
Good (622-725)
Very good (726-832)
Excellent (833-1200)

 

FYI Credit Checks are not the same as credit enquiries and the checks don't impact your credit score but the enquiries do.