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Valuers or sith lords

Discussion in 'Property Finance' started by sammmeee, 8th Aug, 2015.

  1. sammmeee

    sammmeee Well-Known Member

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    do valuers work for the dark side?

    Just purchased a WA IP where it is 30% under market. Valuation came in and made me laugh. Came in dead on purchase price. Comparable were laughable... They were comparing units with a 3x1 on large block. Only 1 was a house had smaller sqm and they said it was better internally. I actually inspected that particular house it had holes in walls ect ect the sold price was still 20% higher.

    There have been no houses sold for this price since 2005 yet it still came bang on purchase. I know they do give higher val prices as I had one in 2011 where the bank vale came in 10% higher.

    Why bother valuing, if the don't actually do it properly. Or just wear darth vader masks when they go out to value!!
     
  2. thatbum

    thatbum Well-Known Member

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    Ha I was kinda hoping this was a poll.
     
  3. bonanzawealth

    bonanzawealth Well-Known Member

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    "Do not underestimate the power of the dark side"
     
  4. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

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    Vals only come at contract price or less, not more
     
  5. Hodor

    Hodor Well-Known Member

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    I've never had a problem with Val's. My last one for a refi was 5% higher than I was hoping.

    Guess my time will come.
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    What you agree to pay for a property is its value.

    In 14 years I have only seen 2 or 3 valuations that have come in over purchase price.
     
  7. sammmeee

    sammmeee Well-Known Member

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    Not true as I posted earlier purchased an ip 2011 valuation came back 10% higher than purchase price. instant equity .. Easiest paper profit ever.. That valuer was definitely a Jedi knight
     
  8. sammmeee

    sammmeee Well-Known Member

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    Really? Oh I must have got lucky with the one that got over purchase price.. I still believe they are all Sith lords that practice in the dark arts..
     
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  9. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    I feel your pain but wait a couple of months and try again if you can
     
  10. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    even if the val was at market, you cant borrow against it in most scenarios

    lender will take contract or value, whichever is lower

    ta
    rolf
     
  11. chunho01

    chunho01 Member

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    How long do I usually need to wait in these scenarios? 12 months? 6 months after purchase? (or actual settlement date?)
     
  12. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Depends on the bank. With some banks 1day.
     
  13. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    typically, you will need to move lenders to get the deal done, or like mots of our clients that do these, settle with cash.....


    very rare that a lenders valuer will come in above the purchase price after settlement for a top up withoin 9o to 180 days unless there is compelling evidence for them to so.

    that compelling evidence isnt in the borrowers opinion, it needs to be in the valuers opinion.

    ta
    rolf
     
  14. Dazedmw

    Dazedmw Well-Known Member

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    That seems right. Really the only times I have encountered it was when the sale was a non market transaction. In one case a guy needed cash quickly to cover debts as he had to retire due to health and didn't want to risk losing everything. Cash buyer, 21 day settlement on a commercial property at about 15% below market value.

    Val still included a recommendation the bank lend on the lesser of the contract price and the valuation.
     
  15. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    My ones were non related party purchases. I recall one involved a unit which was identicle to one accross the hall which had sold recently so the valuer had to value it at the sale price - or so he said. Pre GFC though. The clients got a 95% loan with no LMI as it was still 80% LVR based on value.
     
  16. Azazel

    Azazel Well-Known Member

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    "Do or do not... there is no try."
     
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  17. sammmeee

    sammmeee Well-Known Member

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    I would prefer if Yoda did the valuations...a very optimistic guy!!
     
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  18. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Who's your loan with and what LVR? CBA's desktops are the Yoda of valuations - you might be able to refinance with one of those.
     
  19. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    The reality is valuers are commissioned by the bank for the bank's purposes. Their risk also lies in that they could potentially be liable if the bank makes a loss due to the loan going badly and the valuation isn't up to scratch.

    This essentially means their liability occurs when they're optimistic in their estimate, they don't get into trouble with the bank for low valuations. It's also worth noting that professional indemnity insurance for valuers isn't easy to come by.

    You may have managed to get a bargain, in my experience most people just end up paying market value. Regardless when you negotiate a price, you are defining the market and a cheap price on a purchase contract simply makes the valures job easy for them. They'll use the purchase price as the basis for their valuation and even if they didn't that's what the bank is going to lend against anyway.

    Also keep in mind that a valuation post settlement is going to be heavily influenced by the original purchase price, especially desktop valuations.

    May the farce be with you.
     
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  20. Dazedmw

    Dazedmw Well-Known Member

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    This is very true.

    The valuer is assessing how much the bank can get for the property if you default on your loan today. If they property had a "value" of $500k but you got a bargain at $400k why didn't the vendor sell it to all the other buyers willing to pay $500k (the "value")? Unless there is a very good reason why the bank could sell it for $500k when the vendor could only get $400k the valuation is nearly always going to come in at $400k.

    And as Peter said, valuers are paid to be conservative ("prudent purchaser" I think is the term used in the Bank's Standing Instructions) not optimistic or speculative.