Low valuation - what to do?

Are there any other blocks around the same area similar in size that have been sold recently? If so, you might compare their prices.

Cheers

Tom

oh ok thats nice will think about this.

ya there are few blocks which have been sold in that estate, i am trying to finding data on those.The listed price for similar size blocks is in the same range but not sure for what price was it actually sold.

ya there are few blocks which have been sold in that estate, i am trying to finding data on those.The listed price for similar size blocks is in the same range but not sure for what price was it actually sold.[/quote]

You may need to have access to RP data to find this data.
If you want you can email me the address of the property ( include the DP number) and ill see if it comes up with any recent comparative sales within the same street for a similar block size.

Regards
Michael

we too have a $10k rebate from the developer. It's phrased as
"if the purchaser shall pay to the vendor 7 days prior to the due date for payment of the residue under this contract an amount of $10,000 less than the residue, then the vendor shall accept such lesser amount in lieu of the residue, however the price shall not be deemed to have been reduced"
This does my head in, as the bank will probably value the land at $10k less, and only give us that amount, which is FINE so long as we can settle "7 days prior to the due date". Otherwise we will have to find another $10k in a hurry.

has anyone else had the same or similar rebate? And how did it all go with the bank?
any advise will be much appreciated.

Annoyingly, the developer NOW has a sign saying "no complicated rebates"!

Lender will not take in consideration any rebates...as it doesn't "Add" value to the property- its only adds value to your bottom pocket ; which got noting to do with the lender's "security" that they will eventually hold:)

The banks valuation and approval will be final as long as you don't change the contract mid way, meaning it will take in consideration this rebate at the time of approval.

So basically you are saying they will most likely value the land at the rebated price, not the full price on the contract?

What i mean is rebated prices has no bearing on the "true" value.

Meaning if it's worth $200,000 the valuer will value it has $200,000 based on 6 comparative recent sales ( in most cases anyway...we all have stories regarding poor valuations

However if the builder is selling you the land for $220,000 with $20,000 cash rebate than the valuers will still value it as $200,000.

As I am at this exact stage of waiting for the bank valuation, and reading through these posts, it baffles me that those who do the valuations, just get away with murder most of the time it seems! Any regulations around what they do? One of my pet peeves is feeling like you have to do someone's supposed 'bread & butter' for them.

I've been advised that side rebate agreement letters can be organised with the land developer/builders, so as to not include the rebate information in the contract of sale and hence the banks will not be aware of the rebate, but on the flip-side a solicitor has said the side letter agreement may not have any standing if not included in the contract, and you're therefore at the mercy of the land/builder.

It's okay for the banks to reject loans based on unfavourable valuations, but the quality of the valuation should have some rules and effort exerted into them. *sigh*

Good Luck, valuations seem to be completely hit and miss, we had 3, first 2 come back 40k under our contract price, last one come back spot on contract price.

Yep, it definitely seems that way doesn't it. Good luck with your valuation. We're currently about 2 weeks out from handover. At the time of writing my post it felt very frustrating, but I'm so glad we kept going and went to other banks. It is definitely worth it now. Best of luck with it all.

I just bought land and loan for that wasn't a problem to go through unconditional.

But after reading this thread I'm getting nervous about construction loan now.

What do I need from builder which would be base for bank to do their calculation? I.e just initial quote, formal tender, or final contract? Thanks.

I was pretty relaxed as my broker told me few weeks ago that there won't be an issue as long as I can sell my current house (already in market for sale).

but panic mode is on full throttle now.

To get unconditional approval, banks will need the fixed price contract from the builder as well as approved council plans.

Make sure all costs are included. Sometimes people want to tender out some work to 3rd parties (i.e driveway, fencing, etc) because it is cheaper, so make sure you have quotes for that included as well.

Cheers

Tom

Thanks Tom, I'll contact builder to find out what they can provide without paying them more than initial $1000 deposit.

Hi all, just an update - the broker called and said I received full approval, and documents will be arriving shortly. No mention of valuation issues, so looks to be spot on. I will refer back to this thread come construction time to ensure I have the right documents.

Time to start a blog. Can't decide which platform to use..

It's a tough world our there, we had our block valued spot on on the valuations papers, but then put in a note that an amount $20k would ave been s'more realistic price. Bank only wanted one price so it became undervalued

Lucky our build came back spot on as we added $130k on top of base build price. So relieved

We have had a low valuation come in - land valued in Feb spot on price paid but land not registered/paid for to July but when ANZ did the construction loan application, land had gone down by 10,000, construction -10,000 below cost to build - valuer would not budge, land is in short supply according to him, maybe that's because when the developer releases a stage IT SELLS - construction loan based all on 1 property - which sold 18mths ago!!! - we settled on the land with the original land only loan and valuation - we then asked for another valuer, we supplied other sales in the area (did not take any notice) and ended up with the same one and this time he decided to down value the construction value so the overall house value would be $20,000 under cost to build - we have had to find this amount quickly to get our house underway - but the annoying thing is ANZ branch have told us as soon as the house is finished come in get a new valuation and they will be able to put the personal loan we had to get under the house loan - yes we might seriously consider refinance but with ANZ - not too sure about that.

I had a low valuation with the first lender I had pre-approval with - about $70k too low which made things pretty difficult.

Bank came back with a maximum of 500k with the land being almost half of that already and the base cost of the house design being the remainder without a single change to the design/prestart modification or any site works I was already over the valuation. We challenged it but valuer sighted no recent sales in my suburb that high (incorrect) and refused to accept the sale value of the display village homes a couple of streets away half of which had lower specifications or cheaper build than my house! (3 of them were built by my builder or one of their other brands so they know exactly what the specs are) My part of my suburb is newly titled land with most of the near by streets only starting to get to plate height or roof cover now.. it's slab city so I can kind of understand how they came back with that even if it was ultra conservative.

Builder submitted evidence of several houses they are building within neighboring streets of mine which are valued around the same or higher than mine but the valuer wouldn't back down. My builder's own finance company had never ever heard of a valuation coming back that low on a build like mine in my area and thought the building consultant was joking when he asked! None of us could understand how they came to that valuation so it was completely frustrating and even my broker had never had a valuation come back so far under before.

I met with my BC and basically would need to select the a different house design and start again since there wasn't much that could come off the base that would get it low enough for that valuation.

I wasn't ready to give up on my house and ended up applying with a second bank (ironically another brand of lender #1) who didn't have any problems with the valuation and approved it for the full amount about a week later. My broker left the application with the first lender still in their system in case the second one came back the same or even lower leaving the option still open if I wanted it.

Moral of the story is don't give up and don't be afraid to try another lender if you can (or try a broker), luckily for me the second roll of the dice worked out.

We have just signed a contract to sell our property privately at an agreed price of $480k, the buyer was happy with that price and has signed the contract with subject to finance.
I have been contacted by heron todd white valuers who are coming out next week to value the property and the valuer has a reputation for seriously undervaluing properties in this area as there are no similar properties selling recently.
Theoretically if the valuer values our place at $450k what optuions do we have as sellers even if the buyer is happy to purchase at $480k?

If the bank won't provide the finance for whatever reason, as long as they have followed protocol (which it sounds like they have), I don't think there is much you can do. That is what the clause is there for, to protect the buyer.