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When applying for a loan, has an agent EVER provided you with a realistic rental estimate?

Discussion in 'General Property Chat' started by jaybean, 27th Mar, 2016.

  1. jaybean

    jaybean Well-Known Member

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    You know the estimate I'm talking about; you purchase a place, and the bank wants a rental estimate to calculate serviceability.

    Every time I look at their estimate I raise an eyebrow over how high they are. I never complain though as it only helps me with the banks. Clearly they do this intentionally to help people get over the line, should they be on the line.

    But it seems to me this should be an easy target for APRA? I mean instead of asking for a letter, have each bank assessor bring up 10 similar properties in the area and take an average. Even a rough 60 second analysis would still be more accurate than what the agents provide.

    Anyway as I said I'm not complaining, but it's always seemed like low hanging fruit. Imagine if someone with a portfolio of 10-20 properties were to refinance with a 10-20% inflated income estimate.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Banks usually do valuations on purchase properties and these have a valuation figure on them for the rents. Can't say I have any many where I get rental appraisal letters from clients these days.
     
  3. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Agree with Terry - lenders generally base anticipated rental income via the valuation report. Having said that - I'd say most rental appraisals I see are a pretty accurate reflection of market rates.

    Cheers

    Jamie
     
  4. jpcashflow

    jpcashflow Well-Known Member Business Member

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    Hello good question but as Jamie and Terry have mentioned allot of banks use their on rental valuation model to judge the actual rental estimate.

    Before I buy a place, I would usually speak to three agencies from a area and try to get a a independent rental valuation. Reason I say this is that some times the selling agent may up the rental income to support his reason for selling the property:)
     
  5. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    The selling agents often over estimate when they're trying to make the sale. We regularly contact the selling agency for a written rental estimate which is usually handled by their property manager and we get an estimate from the PM. It's usually fairly accurate.

    Full valuations do include a rental estimate (often less accurate), but more often we're seeing lenders only requiring a drive by or desktop valuation. These don't include rental estimates.
     
  6. Greyghost

    Greyghost Well-Known Member

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    Wouldn't believe anything that comes out of a salesman's mouth
     
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  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Not our general experience.............1 in 5 the valuer comes backwith a higher amount.

    APRA wont care, based on recent data I have seen, they are focussrd with normalising 25 year statistics than current immediate numbers

    ta
    rolf
     
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  8. pinewood

    pinewood Well-Known Member

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    The appraisal I got for the bank was a realistic range and quite accurate. I agree that the ones that grossly over estimate are the agents selling you the property but they often also say 'I'm not in the rental side' to cover themselves.
     
  9. jpcashflow

    jpcashflow Well-Known Member Business Member

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    I disagree I know some pretty straight the the line agents as well.
     
  10. Santaslayer

    Santaslayer Well-Known Member

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    I had to provide a rental appraisal from a property manager in the area I was buying to Firstmac before they would approve the loan recently. First time I've ever had to do this and I have purchased a handful.

    I received 2 appraisals and they were $20 difference! Of course I sent them the higher rental return but I will be going with the company that gave me the lower appraisal purely because their rental rate was more realistic.
     
  11. Greyghost

    Greyghost Well-Known Member

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    You miss the point.
    Why take the word of someone who has a vested interest in taking your money..
     
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  12. datto

    datto Well-Known Member

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  13. Leo2413

    Leo2413 Well-Known Member Premium Member

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    I agree.

    I listen to them, but I always cross check, verify and then triple check. Even honest characters can have an agenda and in business often do. Agendas are normal imo.
     
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  14. larrylarry

    larrylarry Well-Known Member

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    My broker will ask me to get a rental appraisal in writing. So far, rents pretty spot on.
     
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  15. jpcashflow

    jpcashflow Well-Known Member Business Member

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    Because when you build relationships you both make money :)
     
  16. beachgurl

    beachgurl Well-Known Member

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    I had one quote me a rental of $750 per week for the purposes of the construction loan application. 12 months later on near-completion I go back to the PM who tells me that there's been a downturn in the market and the more accurate current rental is low $600's at best. This was in north Brisbane.
     
  17. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I had one where the agent told me i would get $550 pw rent when after settlement this dropped to $475 pw. 20% inflated. I knew he was exaggerating so didnt rely on it but made sure i used a different agent to rent it.
     
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  18. Azazel

    Azazel Well-Known Member

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    Yeah, they've been pretty close in most instances.
    But I would definitely double check, get some appraisals from some other agents.
     
  19. larrylarry

    larrylarry Well-Known Member

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    I agree. I also would ask agent how I could improve the rental without overcapitalising and you can quickly know if the agent has any clue.
     
  20. Azazel

    Azazel Well-Known Member

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    Definitely, ask them if there's anything they think needs to be done.
    They may not know everything, but ignore their advice at your peril too, especially if the rental market is a bit soft.