A property valuation can really make or break your ability to get a home loan with lower valuations having devastating impacts on your ability to refinance to a cheaper rate, fund the purchase of a new home or in some rare cases limit your ability to sell your property. Over the last year we have been privy to the results of countless valuations and learnt a thing or two that may help you with your next investment decision.
Some banks are better than others
Just the other day I ordered two full valuations of a property and managed to get a $95,000 value variance. I’m still confused by this considering it was in the Perth metro area with a lot of recent sales history in the neighbourhood. Obviously the client went with the more favourable option allowing them to use equity for their latest investment. The lesson here is that it is always worth a second opinion.
Desktop valuations are a great option
There are basically three different types of valuations banks use to value your property. A Full valuation where a person walks through your property to value it, a Kerbside valuation where a person drives by your property to value it and a Desktop valuation where a person uses a computer program to value it leveraging off RPdata/CoreLogic property analytics information.
Here’s the interesting part. In the last year 9 times out of 10 I have seen higher values placed on properties that have had desktop valuations relative to the others available. The catch here is that banks put restrictions on the these valuations depending on area you living, the type of property you have and the properties estimated value. Generally speaking they will also only rely on them when lending up to 80% of the property value in the metro area. One other thing to note is that like all other valuations they do very from bank to bank.
Ask for a full valuation if you have renovated
A desktop or kerbside valuation will not do you any favours if you have renovated your property and looking for equity. Its pretty obvious here but they can’t really look inside your property to see the results of your blood, sweat and tears. In this case ask for a full valuation upfront.
Appeal the valuation
If you have received an unfavourable valuation you can appeal it. The bottom line here is that you will need evidence to support your logic. A real estate agent might be able to help here but remember valuations through your bank are always more conservative than that of an estate agent largely because a bank does need to consider cost recovery if your default on your loan.
As brokers we have the ability to leverage our relationships with banks to get the best out of your valuation and most of the time it is free. We are a worthwhile choice especially in a market that has not seen a lot of growth in the last year.