"Banks lend based on the independent valuation they receive of the property – not the agreed purchase price – meaning borrowers must make up the shortfall themselves."
Interesting that this comment featured in the article, is this true I wonder?
As buyers agents, we have argued the inconsistencies in valuation
approach between private treaty vs auction for years. Consider this, there is no law that says a valuation determined via the auction system is "market value" although 99.999% of auctions will be viewed this way and valuers are not even in attendance to scrutinize the price achieved and importantly how it was achieved, the valuation becomes an historical record for both the mortgager and mortgagee, where is the independence in all this if a private treaty transaction is treated differently to an auction transaction, particularly if
the valuation come in less than the contract price? When purchased at auction - historically, valuers agree the market has been determined, even if the only other bid is a vendor bid, but now valuations need to be independent, so they haven't been then? Valuers have argued they always have been, now we
are being told they aren't/weren't (that's the inference in the article)...under the microscope of the faltering global markets and a patchy local property market - underpinned by a clear lack of confidence, the floors in the valuation system (we as an industry group have been talking about for years) are finally frothing to the surface! The valuation system is long overdue for an overhaul but will anything be done? If we are to have a fair independent system, there needs be a review!
The valuer didn’t go to the auction, but they have no problem agreeing to the price paid, but they also didn’t witness the private treaty negotiations but here they do have a problem – most of the time and this can cost the buyer a lot of money and even incur them an irrecoverable loss, why?
The improving LVR's are one thing and a an appetite for lending will be well received by the market I'm sure however, unless the valuers "agree" that this is a good thing for buyers and this is supported wholeheartedly by the banks (the funders), the valuers will perform the way they think their Master's want them to, rather than independently!
Why is private treaty scrutinized differently to an auction transaction?
This is one of the reasons buyers benefit from getting independent property advice from a buyers agent as well as engaging them to transact and manage the process!
read the article here...Banks relaxing LVRs and serviceability criteria but valuations still conservative: Sam White
Interesting that this comment featured in the article, is this true I wonder?
As buyers agents, we have argued the inconsistencies in valuation
approach between private treaty vs auction for years. Consider this, there is no law that says a valuation determined via the auction system is "market value" although 99.999% of auctions will be viewed this way and valuers are not even in attendance to scrutinize the price achieved and importantly how it was achieved, the valuation becomes an historical record for both the mortgager and mortgagee, where is the independence in all this if a private treaty transaction is treated differently to an auction transaction, particularly if
the valuation come in less than the contract price? When purchased at auction - historically, valuers agree the market has been determined, even if the only other bid is a vendor bid, but now valuations need to be independent, so they haven't been then? Valuers have argued they always have been, now we
are being told they aren't/weren't (that's the inference in the article)...under the microscope of the faltering global markets and a patchy local property market - underpinned by a clear lack of confidence, the floors in the valuation system (we as an industry group have been talking about for years) are finally frothing to the surface! The valuation system is long overdue for an overhaul but will anything be done? If we are to have a fair independent system, there needs be a review!
The valuer didn’t go to the auction, but they have no problem agreeing to the price paid, but they also didn’t witness the private treaty negotiations but here they do have a problem – most of the time and this can cost the buyer a lot of money and even incur them an irrecoverable loss, why?
The improving LVR's are one thing and a an appetite for lending will be well received by the market I'm sure however, unless the valuers "agree" that this is a good thing for buyers and this is supported wholeheartedly by the banks (the funders), the valuers will perform the way they think their Master's want them to, rather than independently!
Why is private treaty scrutinized differently to an auction transaction?
This is one of the reasons buyers benefit from getting independent property advice from a buyers agent as well as engaging them to transact and manage the process!
read the article here...Banks relaxing LVRs and serviceability criteria but valuations still conservative: Sam White
Thanks for this go through friend. Well, this is my first trip to your blog! But I respect the persistence you put into it, especially into useful articles you discuss here!..property valuations
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