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Getting a valuation when refinancing or applying for a LOC

Discussion in 'Real Estate' started by jscott, 7th Feb, 2006.

  1. jscott

    jscott Well-Known Member

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    Question regarding the use of your own valuer when applying for a LOC or refinancing a property you own:

    All the books on real estate seem to advocate commissioning your own valuer but the banks always seem to insist on using their own. What do fellow forumites do when appplying for a LOC, simply use the banks valuer or commission your own?

    I understand that if you use your own, it needs to be one of the banks panel valuers and you also need to ask them to format it the way they normally do for XYZ Bank...

    The line of thinking is that when you commission the valuer they are working for you and you'll get a more favourable valuation, whereas the banks valuers are more likely to come in low...

    I've never used my own valuer, always just let the banks send whoever they like, but I guess I've been lucky (I do provide evidence of course) since when they ask me what I think its worth - their valuation has always come back the same.
     
  2. TryHard

    TryHard Well-Known Member

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    Hi jscott

    The 'procedure' I was advised by a very experienced valuer was this :

    1. Ideally, find out the bank's panel valuers

    2. Approach one of the panel (or another very experienced valuer) and tell them you're considering selling, and would like a private valuation to ensure you set the price correctly. If the valuer is not part of the bank's panel, let them know you're seeking the highest possible valuation for refinancing purposes.

    (at this point, the experienced valuer will find reasons why the lowest recent sales in the area should be discounted, and as many reasons and similarities as possible between your property and the highest sales in the area)

    3. Receive the very professionally prepared and presented valuation arriving at the fair and justifiable figure (the ones I get are bound, very well presented, colour photos, heaps of comparisons to justify the value arrived at, etc etc) - the key thing is to clearly show why recent LOW sales must not be included (discounted because of inferior position, sales in the same family, smaller land size, no improvements etc) - its the low values the bum-covering valuers are going to be trying to stick to (lowest risk for them if bank chases them later)

    4. Contact the bank and start the process of revaluation. Tell them up till this point you had been considering selling, and in that process had just funded a private valuation.

    If it was a panel valuer, let the bank know you have checked and found the valuer you used is in fact on their panel, and you'd like to nominate that as the valuation, as its current. They may refuse and insist on another - not sure how this works - prob. depends on your bank. (However its my understanding that the original valuer can't arrive at a different value, and even if the bank sends a different firm, you then have 2 of their nominated valuers disagreeing). Therefore you might be up for the bank's valuation fee, but you should receive the valuation you were after, or close to it.

    If you didn't get a panel valuer, when the bank valuer visits, let them know you had funded a private valuation, as you were considering selling. Not trying to interfere, but you have a spare copy of the report, and you'd tagged with post it notes the issues you believe were relevant. State you have received a valuation of $ x and you believe the report justifies this, so if this report is any help they're welcome to this copy - as it contains the background you've used in arriving at the value you've suggested to the bank.

    5. If your valuer has done extensive research, the bank valuer will need to refute part or all of your valuation in order to arrive at a vastly different value - and you would then have the avenue to protest the bank valuation if it didn't arrive at your intended figure.

    6. Of course, the above exercise costs around $600 (based on what my valuer charges) in addition to the bank valuation fee. In your case, you've already been getting the result you wanted, so if it ain't broke it might not need fixing :) However in my case it has worked well, on each occasion achieving a value I'm pretty certain the bank would never have entertained ;)

    Cheers !
    Carl
     
  3. jscott

    jscott Well-Known Member

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    Thanks for that Carl. I actually just had the banks valuer around ten minutes ago and put this question to him. He reckons that its a myth in property investor circles that commissioning your own valuer is better as the banks want to get the highest valuation possible anyway to give out the most money possible as thats how they make their money. He did say that he's happy if investor's commmission them (valuers) directly as they charge more money than the banks pay....

    Anyway - once again I just got what I wanted for the value (Obvioulsy not going high enough!). Being in Perth with a booming market still I think they just give you whatever you want, because if its too high it won't be in a couple months.
     
  4. TryHard

    TryHard Well-Known Member

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    Hey js

    I guess must depend on the area, the bank and the valuer, and the bank's confidence in the particular market. All mine have been in Brisbane, and it would be fair to say we're not in a booming market at present ;-)

    In my experience the complete opposite was true - the banks have undervalued by miles, and only with irrefutable alternative opinion would they consider budging. Could also be that my servicability has been a bit suspect at times, so maybe they are just giving * me * a hard time ;-)

    Interesting to hear the other sides of the valuer story tho' :)

    Cheers
    Carl
     
  5. Tropo

    Tropo Well-Known Member

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    "Interesting to hear the other sides of the valuer story tho"
    Cheers
    Carl


    Carl,
    Not long ago I got valuer from the bank to asses value of my PPOR ( at that time I was considering to buy IP ).
    When he finished I asked him : what was the value of my "dog" house..?
    He said ...What do you think it is...
    I gave him a value, and he said.
    I can not tell you how I value your 'Palazzo' but my value is much higher than yours.
    Guess what.....I still do not know what the value of my PPOR is! :rolleyes:
    :cool:
     
  6. jscott

    jscott Well-Known Member

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    I wonder if you became a valuer yourself how you could influence the process (I mean prove the true value :cool: )
     
  7. Tropo

    Tropo Well-Known Member

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    jscott,
    I am not sure if I understood correctly your question, but below is my 20 c.

    I guess that the first step is to define what the true value is !!.
    In my view true value is amount of money somebody is prepared to pay for your PPOR, your car or one ton of gold at the time.
    In case of pro valuers, their opinion on value (say your PPOR) is purely subjective.
    It's hard to prove true value or disaprove it as long as you can not define it.
    I tend to think that value as such does not exist, because you can not measure it - so far.
    Different people value same things in the different way.
    That is why PPOR owners are in the opposition with the bank valuers.
    :cool:
     
  8. Jacque

    Jacque Team InvestEd

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    Hi Jscott

    I've used the lender's valuer in the past for PPOR valuations, and assisted him with the research, by providing a sheet of the relevant information required as well as my own homework, which has always included comparable sales. The first response was unsatisfactory, so I complained and backed my evidence up even more with statistics (cg figures since the last valuation, cost of renovations etc) and also was able to find anomalies in the original valuation that further validated my claim for a higher value. (Age of house was out by 5-7 yrs, comparables used were on busier roads etc)

    The second time I simply handed the valuer the sheet (all nicely done to make his job easier) and the valuation came back exactly as expected.

    I think the important thing is that your supporting evidence is realistic and valid, you don't overestimate and you show the valuer that you have access to recent comparables yourself.

    Also make sure you add on any improvements, as this does affect valuations; especially items like refurbished kitchens, bathrooms and hard landscaping.
     
  9. investor

    investor Member

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    I agree with Tryhard and Jacque.

    With the grand plan of refinancing the reno in Melb to buy in Syd it was important to me to get the highest valuation possible. Hence I found out what a professional valuation looks like and made a template. I then filled it in complete with digital photos of comparable sales etc, it did involve a few early morning trips with measuring tapes to check property sizes but I ended up with a very professional report.

    I then found out who was on the Banks panel of valuers. I engaged them and spent 4 hours walking them through the property and showing them the amazing amount of value added - in my opinion. Having paid my $500 I was confident that their valuation would be used.

    Then the unthinkable - in my mind anyhow - the Bank choose another company on their panel - in means of fairness and spreading the love around.

    Luckily on the loan application I made sure I was listed as the contact for the valuer. Imagine my surprise when the wrong company rang.

    Quick footwork allowed me to find out that the valuer didn't have alot of time and was relatively new - so I offered to send my valuations through. She came up with the same anticipated value. Situation recovered.

    Hope this helps. :)

    Jane
     
    Last edited by a moderator: 16th Feb, 2006