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 7 top tips to ensure you win every time you get a bank valuation.
- Research: As with any part of real estate, researching is key. Investors should visit a few Realtors in the local area and try and find sales of similar properties to give them a rough ballpark figure. Note: Realtors generally price properties slightly above what they are worth giving investors the ‘best price on the day’ valuation. Some may even show sales of properties which may not be comparable. Our advice would be to visit the properties cited by the Realtor and see for yourself if they are in fact similar.
- Private valuations: In this article we talked about banks not accepting valuations carried out by investors or appraisers who are not listed in their preapproved panel. Ask the lender who is in their preapproved 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 appraiser 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 to obtain a mortgage.
- 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%) does no harm, but don’t go too high as it will most likely be ignored.
- Timing: 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 outside or desktop valuation. On the other hand, properties with poor interior would be better of with an outside or desktop valuation. Note: Investors can potentially influence which type of valuation their property receives. By opting for a loan of 80% with mortgage insurance will guarantee the bank will perform a full valuation. Investors can later reduce the amount borrowed after valuation has taken place. We suggest asking the bank if they can provide a full valuation first before going down this road.
- Challenging valuations: 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.
- Changing lenders: After implementing all tips suggested in this article, investors who still somehow managed to get a poor valuation can change lenders and try again.
Have you had a bad valuation on your property? Need a help with managing the process? Please contact our expects today to discuss on 1300 88 73 28.