澳洲Australia property Challenging a valuation | Sydney


在澳大利亚 The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m


Hi Everyone,

recently we had one of our I.P's valued as we're looking to increase our portfolio. Unfortunately it came in way under market price, and I'm not talking 20 or 30k I'm talking about 100k. we believe the valuer has got it wrong and so do all the agents I've spoken too. has anyone challenged a valuation before? Could you share with me what you did and was it worth it.

Cheers Bullfrog  

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Normally a valuation will be based on comparable sales locally. Have you looked at these and compared them to your own property?  

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With such a large discrepancy the first thing that springs to mind is the question.

Does your property have development or other potential?

That is do you and the agents think it will achieve your figure based onthe assumption/fact that a potential purchaser will probably subdivide the block or redevelop?

For residential mortgage valuations valuers are instructed to ignore any potential in the property.

Otherwise there will be a process for chalenging the valuation.

Usually you will have to provie a biais for the challenge such as comparable sales evidence.

Make sure the comparable sales you provide have all the details correct, especially sale date and price. Make sure they are truly comparable, not just cherry picked on price, so similar land size can be important here. Similar locale also helps.

Above all it needs to be recent evidence not 6 to 12 months old, but within 3 months, the market is falling in many places after all.

Talk to your broker or banker and find out the process.

Some places will even order a check or second valuation by another firm.

Cheers

RightValue  

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Ask for a copy of the valuation (if it hasn't already been provided). If you can't get a copy, request a copy of the comparible sales listed along with the comments.

If you disagree with the comparable sales, provide at least 3 additional comparible sales which sold within the last 3-6 months. Ensure you list the address, sale price, basic description (bedrooms, bathrooms, etc) and comments on how it compares.

Don't bother listing properties which are on the market. As they haven't been sold yet, they're not 'comparible sales'.

After all that, you should be prepared to be dissapointed. It's very difficult to get valuers to change their opinion. :(  

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PT_Bear said: ↑
After all that, you should be prepared to be dissapointed. It's very difficult to get valuers to change their opinionClick to expand...
They're just like any other human - if you challenge their professional opinion they get insulted/defensive. Pretty much a 90% chance that they will stand their ground.  

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well maybe that is what it is valued at.

during the good times - yeah you would expect higher values.

another thing is many people assume they get 50% growth after their reno when they really don't know if it could sell for that prices.  

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you have to remember that valuers act for the banks & are under pressure not to over-value, thereby potentially exposing them to risk

having said that, for the price of a valuation (around $250 i guess) it doesn't buy that much of a professionals time - hence most valuers don't put that much effort into their work (from my experience)

you can request a copy of the valuation (after all you will have paid for it) - so you can see what they've benchmarked your property against - ie the recent sales in the area

i had an interesting experience whereby 2 different valuers were used to value 2 identical units i own - they came up with wildly differing values - something like $150k for one & $190k for the other - looking at the valuations i expected that they would have used the same sales as their benchmark but they didn't - so their comparable sales weren't the same!

i challenged the valuation (through my mortgage broker) & the $150k was revised to $190K - no questions asked

the bizzare thing was at the same time i also had a block of 3 units valued (again by 2 different valuers) - the valuation of 1 was lower than the other 2- when i challenged this, the values of the higher 2 were actually reduced by $10k each!

unfortunately it is a bit of a lottery - but i expect you'll have more clout going through a broker  

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we just had a valuation come in 150K under what we expected. Despite showing how their comparative properties were not comparative, the valuer refused to budge... and the bank wouldnt get a second opinion.
a friend of ours suggested getting the bank valuation first, prior to submitting a loan application. if you put in several loan applications, it can affect your credit rating. So better to get the valuation done first and make sure it is at the level you want, prior to doing the actual application. Apparently not all finance institutions will do this. We are going thru Macquarie bank.  

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Bullfrog said: ↑
Hi Everyone,

recently we had one of our I.P's valued as we're looking to increase our portfolio. Unfortunately it came in way under market price, and I'm not talking 20 or 30k I'm talking about 100k. we believe the valuer has got it wrong and so do all the agents I've spoken too. has anyone challenged a valuation before? Could you share with me what you did and was it worth it.

Cheers BullfrogClick to expand...
Yes, twice. In both cases, the bank met us about half way. We used RP Data to find at least 3 genuine comparable sales and submitted thru our broker.

Many valuations are made on the event of a fire sale so can come embarrassingly low. One of our IPs was valued at less than comparable sales for… the land! :eek: Looked like the valuer assumed prices would crash.

Banks seem to want their own demise. Value as fire sales and they will get plenty of fire sales.  

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Banks might like a low valuation: they may have mortgage insurance to cover the loss.  

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vaughan said: ↑
Banks might like a low valuation: they may have mortgage insurance to cover the loss.Click to expand...
No it's not that. It's just the valuers do not want to get sued for bad valuation stuff ups. It happened a lot in the 1980s after the housing crash/recession...this is just a result of that catastrophe for the valuation industry.  

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pennyk said: ↑
we just had a valuation come in 150K under what we expected. Despite showing how their comparative properties were not comparative, the valuer refused to budge... and the bank wouldnt get a second opinion.
a friend of ours suggested getting the bank valuation first, prior to submitting a loan application. if you put in several loan applications, it can affect your credit rating. So better to get the valuation done first and make sure it is at the level you want, prior to doing the actual application. Apparently not all finance institutions will do this. We are going thru Macquarie bank.Click to expand...
yup

val before app on refi is very valuable

ta
rolf  

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Rolf Latham said: ↑
yup

val before app on refi is very valuable

ta
rolfClick to expand...
once i had a val done, checked which val companies were used in the town (small town) there were 2 main val companies. Check which one my bank used and seemed to be the most respected. I paid for the val, I provided valuer with personal info on all the positives of the property as well as progress with DA (it was 90% subdivided into 2 but titles not yet separated) and he asked me what figure I wanted? Within reason but he gave me input.

Do that first if the bank asks the same guy for a val then he has easy work, doesnt even have to visit a 2nd time if he doesn't want to, can submit the same val to the bank and get another fee. You get your val. If he submits a lower val to the bank then you could complain and show them yours. He wont want to do it how bad would that look?


Not so easy in the city coz there are more valuers but u get the gist?  

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I find that if a valuer under-values something, it's usually because for a legitimate reason. A well located property in decent condition should yield the approximate value you want. Those that are used for rooming houses, in a high-rise building, on a main road etc do not attract the same luxury I'm afraid.  

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The last val we challenged was increased.

We done our research, got some comparables and found a few minor faults in the val. With that info, we contacted the valuer directly and he agreed to revise it up.

Without comparable sales and a compelling reason it's hard to get them to move on their initial assessment.

Cheers

Jamie  

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Aaron_C said: ↑
I find that if a valuer under-values something, it's usually because for a legitimate reason. .Click to expand...
our experience on this is some times, not usually.

Examples of stupidity include

1. A property in a quiet cul de sac, valuer finds 3 comps backing onto the M1, why ? because they are the only sales low enough to justify the punt on the val, anything remotely comparable sells for 50 k more.

2. Pre auction val 450, property sells for 505 at auction. Valuer says excessive interest in the property , I will stick to my 450......................

3. Property purchased at auction for 230. Valuer values at 210 because...........the agent told us there was more than normal interest....

4. Duplex pair of older established property. Property sold for 250, valuer comes back at 230 quoting a bunch of sales in adjacent suburb..........yet the closest comp sale at 245 being the mirror duplex settled 3 weeks earlier did not rate !


While I agree valuers are on the money many times, and the white picket fence syndrome persists on refis, valuers are mainly human.

ta
rolf  

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The Challange process.

Yesterday I had a query/challenge to a val I did a couple of weeks ago.

The bank worker supplied some Comparable sales. I saw the email exchage andshe was asked to provide recent sales. The sales were.

Nov 2010
Feb 2011
March 2011
May 2011.

Only one recent sale, apparently a comparable property the blurb said yet it was on 2 and a half times the land in an area where the land value is around $3,000 per sqm and the house was at least 30% larger. The sale figure of this property was almost on the money for their desired valuation figure. In fact analysis of this sale supported my valuation firure.

The other sale, also recent was in a different suburb and surprisingly at the desired price.

I ignored all but the far better sale as irreleevant due to age in a falling market and pointed out that there was adequate sales evidence within the suburb.

Last week I did move on a valuation as some decent evidence was supplied via an agent who did not report the sales prices. It was the 5th valuation figuure I had moved on in over 4 years.

Many times I have had challanges on which I refuse to budge and then see the property sold within a few months at a figure that supports my valuation figure.

The key to any successful valuation figure challenge is providing good recent truly comparable sales evidence.

Providing analysis of them would help enormously as would analysis of the other sales used by the valuer and the property being valued.

A lot of people base their estimate of value on an REA appraisal and they make the mistake of believing REA's who very often quote high to get a listing or ask you what you want and tell you what you want to hear.

Generally I say if you have had a decent REA in for an appraisal, they will give you a value range, the lower end of the range is where the market is and the top of the range is what you hear and want.

However Rolf is right there are plenty of crap valuers out there and some good ones also make mistakes.

I would generally advise someone to just move on and get another valuation or use another lender, it is not worth the anguish and it is hard to get the figure changed. If that second valuation supports the previous figure, well maybe the first one was right.  

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I agree with right value I refuse to challenge valuations it's just not worth the time and hassle for the very remote chance of getting it improved. Just go straight to another lender. Also for refis I find I get better results by doing upfront valuations as per Rolf's comments.  

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Thanks everyone for your input,

Over the past couple of days we have followed the advice that many of you have posted and from what I can gather he still got it wrong.
The main thing that we've discovered is that he has only spoken to one R/E agent and he's taken their advice based on what they think the net rental return should be, not on what it is. The problem with that is that the agent they contacted doesn't have any rental properties on her books because she finds them to difficult to manage. The valuer did not speak to my rental manager or the other agent in town who also has rental properties. We've since contacted another valuer and without seeing the property gave us an estimate much more in line with what everyone else seems to think it's worth.

I'll keep you posted with further developments.

Cheers Bullfrog  

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If the property is where you live on Gold Coast, this will be half your problem, as the worst performing market in the country and a tonne of stock on the market, valuers won't be valuing high at all. There are some very distressed sales there, in fact they are probably all that is moving.  

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