How can property valuations be miles apart? Edwin Almeida
How does a property-valuer come up with distinct values of the same property and all within four weeks?
Background:
A couple were splitting up amicably and both accepted to explore the opportunity to buying each other out. Each party made loan applications to separate lenders for finance. Both parties agreed to buy the other out at $520,000.
First Valuation - Strike one:
The first attempt at financing the purchase was made and a property-valuer was engaged by lending body to provide a valuation report. The mortgage broker received notice that the valuation report provided to the bank, stated the value of the home was only: $500,000.
Second Valuation - Strike two:
A week later, the second party attempted to obtain finance with a different lender and the lender appointed their panel valuer. The valuer on their panel, so happens to be the same valuer. BINGO!! You guessed it, the valuation came back at $500,000.
Third and Final Valuation - Strike three?
The subject property is placed on the market. The agency suggested a cleanup of the garden and staging of the home. A keen purchaser exchanged contracts at $545,000.
The new purchaser’s lender sent their panel valuer, 4 weeks after the first valuation was obtained, now wait for it: YES, the same valuer appeared on the scene.
This time however, the property valuation report came in at contract price: $545,000.
What happened from the first to the third valuation other than; mowing lawns and a simple make-over?
Leave me your thoughts:
Before you go jumping to conclusions and for the savvy mortgage brokers out there, here is a little more background information;
- The couple had approximately $180,000 equity in the home.
- The new purchaser obtained a 95% LVR on their mortgage. Figures disclosed to the agent at the time of purchase.
- The property settled on or about three months ago; time calculated from publishing of this article.
Now please: this is your turn to enlighten me with what just happened? I welcome your comments and this with great anticipation.
EDWIN ALMEIDA is licensee in charge of Just Think Real Estate.
He is also the creator of Oz Real Estate.TV and a presenter for propertyinvestingvault.com.
