Nobody wants to get a poor valuation for their property, it can affect future investment plans or even their overall net asset position so we have put together seven top tips to ensure you win every time you get a bank valuation - also check out this months case study for a real life example of how managing this process can help increase your equity.
As with any part of real estate, researching is key. Investors should visit a few real estate agents in the local area and try and find sales of similar properties to give them a rough ballpark figure. Note: Real Estate agents generally price properties slightly above what they are worth.
Some may even show sales of properties which may not be comparable (same number of bedrooms/bathrooms, within 2 kilometres of your property) so our advice would be to visit the properties cited by the agent and see for yourself to double check.
In this article we talked about banks not accepting valuations carried out by investors or valuers who are not listed in their panel. Ask the lender (or your broker!) who is in their panel of appraisers are and pick one located closest to the property.
Although it may not be accepted by the lender, investors can meet the valuer at the property and speak with them at length to gain a better understanding of things and receive a fair valuation. Chances are the lender will then use the same person to run their own valuation, and come back with an identical figure.
Note: A typical valuation will set investors back around $500, be sure to tell them it will be used for mortgage purposes.
Estimating the value of your property:
Every lender application form will have a question asking the investor how much their property is worth. Providing a slightly higher estimation (by 5-10 per cent) does no harm, but don’t go too high as it will most likely be ignored.
If the current housing market is on a downtrend, chances are the value of properties will be also be less than desirable. For investors who are looking to investment in more properties and wish to leverage the equity in an existing property to purchase a new one, wait until the property appreciates before getting a valuation.
Types of valuation:
Newly renovated properties that have received a makeover will gain a much more favourable valuation with a full valuation than either an drive by or electronic valuation. On the other hand, properties with poor interior could be better of with an drive by or electronic valuation. Note: Investors can potentially influence which type of valuation their property receives - By opting for an LVR over 80% the bank will perform a full valuation/under they can obtain an electronic val. We suggest asking the bank if they can provide a full valuation first before going down this road.
Investors who feel the valuation conducted on their property is unjust can appeal by showing supporting evidence to back their challenge. Such evidence can include comparable sales that happened recently which may have been over looked by the appraiser, without evidence the challenge will not get very far. A second option is to ask the lender to run a second valuation of the property usually at the expense of the investors, though they may not always agree to this.
After implementing all tips suggested in this article, investors who still somehow managed to get a poor valuation can change lenders and try again - which is where we can help!
Article by Discovery Finance Group *Please note this article is NOT sponsored