Control the Valuation


One big tip we have when it comes to arranging a valuation on a property is to ensure you always control the valuation process. Where possible, you need to instruct the valuer directly, meet them on-site, tell them the valuation you need and support this claim for valid information. It makes sense, however a lot of people get tripped up before they even start the process when they are told the bank must organise the valuation. Sound familiar? It doesn't have to be that way.

Instructing the valuer

Anyone can employ a valuer, it doesn't have to be the bank. However, if you are going for a loan, whether it is at purchase or refinancing, the bank will require a valuation 'for mortgage purposes' and will therefore want to instruct the valuer themselves. You need to try and avoid this situation. There are a couple of ways. The first big tip is to find out which valuers are on your bank's panel. You can ask your broker, they should know, or you can contact the bank and ask them. They'll often ask why and whether it is for mortgage purposes. If you say 'yes' this is when you may hit a road block. So why not go for a non-mortgage reason? Maybe you want to know market value. Perhaps you need it for insurance purposes. Whichever way you go, you tell them you want to run with a company the bank recommends as they deal with them all the time. This way you'll get the valuer you need.

The Valuation

Once you have the valuer's details and arranged an inspection, prepare yourself. You need to provide them with a detailed written report of supportive sales and a valuation figure you have in mind. As a general rule, aim for a little more than you want to achieve. Make sure you research all sales, not just those that are supportive. The last thing you want is to be seen deliberately avoiding low sales. If there are low sales, find out a compelling reason why this was the case. It could be anything from flood prone, to termite infested, to related sale (i.e. husband to wife), to pipes through the property. Meet them onsite and pass on the information. Most valuers are very supportive of this... it helps them do their job, but be warned, the occasional valuer sees it as 'telling them how to do their job'. Recognise the body language and responses and step back a little if you see them reacting negatively.

Having the Valuation Reassigned

Once you receive a favourable valuation, you are now ready to go to the bank. Only one problem. If the valuation wasn't for 'mortgage purposes' then the bank may not accept it. Not to worry! Sometimes they'll accept it anyway, but if they don't, in most instances they'll just have it reassigned to them, providing the valuer was on the bank's panel to begin with, hence it is important to use one of their valuers. In rare instances they will still need another valuation, but the strange thing is in most cases it is the same valuer, sent back to the property to carry out another valuation. I guess they aren't complaining, it's easy money for them as the job is already done! The good news is they are rarely going to drop their valuation figure the second time around, at least not significantly. Why? Because that is an admission of guilt. That is them putting their hands up and saying 'you got me, I got the valuation wrong'. It doesn't happen.

Your valuation came in low

The critical reason for controlling the process is to ensure you obtain a valuation you are happy to accept. If you do not control the process then a few things can happen. 1) your valuation can come in low and there is nothing you can do about it because you weren't there to guide the valuer, and 2) the bank will see it and at that stage it can be all over red rover. The worst possible outcome, especially if refinancing, is when the valuation comes in lower than your loan or LVR amount. Ouch.

If you control the process then when a valuation comes in low you can throw it in the bin and arrange another. The bank doesn't see it and you haven't entered into a high risk situation. Once you receive a valuation you like, then go for finance.

Click here to see a real life example of this in action, in an article we wrote a few years ago.

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