13/10/2011
Question: I’m an investor with 4 properties located in Sydney. In the last year or so I have had valuations done on two of my properties by professional valuers. In both cases I had more than one valuation done as there appeared to be no consensus on the properties' value. Indeed, the low and high valuations varied by $80,000 on one and $95,000 on the other house.
Surely, it can't be that hard to do - these are inner city locations in established suburbs! In both cases, I have tried to get the lower-end valuers to reassess their decision by providing mountains of supporting evidence to no avail. As they were commissioned by the banks, the valuers didn't feel obliged to even discuss, let alone, change their decision. The problem, of course, is that with one stroke of the valuers pen, people's lives are affected and in my case those low valuations put us in a very serious financial situation from which we are still scrambling to recover.
But who is keeping an eye on the valuers? Why can't they be taken to task or even to justify their 'professional' opinion?
Answer: When a valuer is retained by a bank to perform a valuation on your property, technically speaking the bank is the entity which owns that valuation. However, under privacy laws, the bank is required to give you both access to that written valuation, and to the valuer who performs it, since it has been done on a property which you own and is considered information to which you are a party. Although the banks do not advertise this, you can apply to them, in writing, to receive a copy of the valuation.
Many valuers receive a high proportion of their work from being ‘panelled’ valuers – that is they sit upon the panel of valuers from which the bank will make a choice when ordering a valuation in your area. The bank is continually assessing this panel and will frequently remove valuers from their panel. Since banks do not like valuers to be too enthusiastic, since their valuations govern the amount of money to be lent, often those valuers returning higher valuations are the first to be removed. Understandably, valuers are cautious when it comes to bank valuations, and will often return valuations some 10% under true market value.
You can query this, and as long as you can gather significant evidence that the price given is too low, you may have success in getting the valuer to increase their valuation. You must understand first, however, the criteria upon which a valuation is done. Many people simply look at listings in their area to determine market value, but the price people are asking for their properties is never an indication of what the market will pay. The criteria used is to compare your property against other similar-sized properties in your area which have been sold in the past few months, and then weight this very slightly by how your property presents. Aesthetic improvements add little to market value, and so while your property may appear to be more well presented than another, this rarely impacts on its ultimate value. If you can prove that other properties with the same dimensions as yours sold recently for a significantly higher price, then you may have a case.
Answers supplied by Margaret Lomas, Destiny Financial Solutions ((www.destiny.net.au)
