Browse Forums Building A New House 1 Sep 12, 2020 8:14 am Hi all looking for some advice...there may be some out there who have been in a similar position. Recently bought a block of land here in Perth, east of the city around 16km from CBD. Block is 527m2 in a new estate. Over the last few months been busy organising a building contract with Dale Alcock homes. Finally got that, submitted to the bank for a construction loan and while they are happy with the value of the land, they have valued the house component at about $100,000 lower than the actual build cost. This means I will have to come up with another $100,000 cash to keep it at 80% LVR - which I can do, but I'm going to have to sell some other assets that I wouldn't be super happy about. The house is decent size 4x2, about 220m2 and relatively high spec with upgrades that make it closer to the display home, so I always expected the valuation to come in under - but seeing now how much I'm left scratching my head and wondering if maybe I am spending too much on the build (total cost is around $370k including site works). Looking over the contract again thinking maybe I'm getting ripped by some of these line items. Is anyone out there in a similar situation or have been in the past? The whole thing has caused me to rethink the build and even wonder if it's worth building at all given I could probably find more value in an established property. What is the point of pumping all this cash into a new house if I will never get it back? I thought about looking at a more discount builder but with all the grant activity going on at the moment and rush of people building it's unlikely I would get anything done before the end of the year. Re: Low valuation for new build construction loan 2Sep 12, 2020 10:00 pm Hi Zoltaire, Which actual suburb is it? Re: Low valuation for new build construction loan 3Sep 13, 2020 9:26 am Hey Zoltaire Good to see someones thinking through the problems out loud All the data is supporting a building slow down, property price drops and variation rip offs Unfortunately, The battlers that get caught up in this rort in a boom/bust cycle will take 20 years+ to recover..that's if they recover OT, No doubt there's more of this coming Building Grant Charges Chris Designer,Engineer (Civil,Const & Envir),Builder,Concrete & Masonry Contract.Struct Repairs Re: Low valuation for new build construction loan 5Sep 13, 2020 10:08 am Check sales prices of new display home in the estate.. you're in for a shock Designer,Engineer (Civil,Const & Envir),Builder,Concrete & Masonry Contract.Struct Repairs Re: Low valuation for new build construction loan 6Sep 13, 2020 10:14 am StructuralBIMGuy Check sales prices of new display home in the estate.. you're in for a shock Yup - that was the feedback from the valuer....high spec ex-display homes on comparable block sizes at a much cheaper cost. My build has lots of upgrades, which obviously are not factored in the valuation, which I expected - I guess now it's no longer really an investment it becomes more of a lifestyle purchase choice. I could probably save at least $70k going to a cheaper builder, but I don't have the energy to go through all that again. I have a design I like the only issue is having to fork out more money to keep it at 80% LVR. Re: Low valuation for new build construction loan 7Sep 13, 2020 10:43 am Excessive Home loan repayments/ mortgage stress, followed by a forced bank sale, is not my idea of a lifestyle choice 30 + Years ago there was no internet, data and warnings Caveat emptor, choose wisely Designer,Engineer (Civil,Const & Envir),Builder,Concrete & Masonry Contract.Struct Repairs Re: Low valuation for new build construction loan 8Sep 13, 2020 10:43 am zoltaire StructuralBIMGuy Check sales prices of new display home in the estate.. you're in for a shock Yup - that was the feedback from the valuer....high spec ex-display homes on comparable block sizes at a much cheaper cost. My build has lots of upgrades, which obviously are not factored in the valuation, which I expected - I guess now it's no longer really an investment it becomes more of a lifestyle purchase choice. I could probably save at least $70k going to a cheaper builder, but I don't have the energy to go through all that again. I have a design I like the only issue is having to fork out more money to keep it at 80% LVR. I am Sorry to see you in this situation. I was in similar situation couple of years back. But I would suggest if you like the house then you may need to look into the decision of putting $$ from your side. I would say it would be a very personal decision. I was told by few people that banks usually are comfortable in the range of $10,500 - $11500 per Sq valuation range for a decent home. But again that's an approx range and it all depends upon the location. I am assuming yours is approx 24 Sq house so if bank has given you $270K as valuation then it comes out to be $11,250 approx per sq. But like I said this is a rough estimate and all depends upon bank to bank, location and personal circumstances. Think positive and stay strong ! Just my 2 cents. Re: Low valuation for new build construction loan 9Sep 13, 2020 10:49 am Ozshaz zoltaire StructuralBIMGuy Check sales prices of new display home in the estate.. you're in for a shock Yup - that was the feedback from the valuer....high spec ex-display homes on comparable block sizes at a much cheaper cost. My build has lots of upgrades, which obviously are not factored in the valuation, which I expected - I guess now it's no longer really an investment it becomes more of a lifestyle purchase choice. I could probably save at least $70k going to a cheaper builder, but I don't have the energy to go through all that again. I have a design I like the only issue is having to fork out more money to keep it at 80% LVR. I am Sorry to see you in this situation. I was in similar situation couple of years back. But I would suggest if you like the house then you may need to look into the decision of putting $$ from your side. I would say it would be a very personal decision. I was told by few people that banks usually are comfortable in the range of $10,500 - $11500 per Sq valuation range for a decent home. But again that's an approx range and it all depends upon the location. I am assuming yours is approx 24 Sq house so if bank has given you $270K as valuation then it comes out to be $11,250 approx per sq. But like I said this is a rough estimate and all depends upon bank to bank, location and personal circumstances. Think positive and stay strong ! Just my 2 cents. Did you end up going ahead with your build? Re: Low valuation for new build construction loan 10Sep 13, 2020 10:54 am StructuralBIMGuy Excessive Home loan repayments/ mortgage stress, followed by a forced bank sale, is not my idea of a lifestyle choice 30 + Years ago there was no internet, data and warnings Caveat emptor, choose wisely Ironically it actually makes the repayments even more affordable - the mortgage becomes $500k instead of $600k, repayments under $500 a week which is only $100 more than the rent I'm paying now. I also am on a high income so there isn't any issues with mortgage stress. I guess my dilemma comes more down to the amount of extra savings to put in when perhaps that money might be better invested elsewhere. I'll be 40 next year, it's a family home in a nice area so if I was to go ahead would like to see myself settle out here at least for the next 10-15 years. Re: Low valuation for new build construction loan 11Sep 13, 2020 11:05 am zoltaire I guess my dilemma comes more down to the amount of extra savings to put in when perhaps that money might be better invested elsewhere. Ok, Buy an established house on a larger block, look at future subdivision and the potential growth closer to the city There are some real bargains out there being snapped up atm Designer,Engineer (Civil,Const & Envir),Builder,Concrete & Masonry Contract.Struct Repairs Re: Low valuation for new build construction loan 12Sep 13, 2020 11:10 am zoltaire Ozshaz I am Sorry to see you in this situation. I was in similar situation couple of years back. But I would suggest if you like the house then you may need to look into the decision of putting $$ from your side. I would say it would be a very personal decision. I was told by few people that banks usually are comfortable in the range of $10,500 - $11500 per Sq valuation range for a decent home. But again that's an approx range and it all depends upon the location. I am assuming yours is approx 24 Sq house so if bank has given you $270K as valuation then it comes out to be $11,250 approx per sq. But like I said this is a rough estimate and all depends upon bank to bank, location and personal circumstances. Think positive and stay strong ! Just my 2 cents. Did you end up going ahead with your build? Yes I did. It was a tough decision but i did my calculations and checked how much risk I could take that time. Later on I have done few upgrades like solar, battery, landscaping etc in the last 2 years which has brought the valuation higher to what I started with. But again every case is different and please take note of your personal circumstances. Re: Low valuation for new build construction loan 13Jan 16, 2021 12:46 pm Hey Zoltaire, We're in the same situation. Building in Harrisdale, ~230 sqm, builder quoted $315k, valuation came at $288k. Reasonably good spec which bank thinks worthless unfortunately. From the start we knew this could be a possibility but obviously disappointed. When we started visiting display homes in June we noted the prices, and by July pretty much every house we saw gone up by ~$20k. That explains our shortfall of $27k. We went back to the builder and they slashed $4k, and we maxed or LVR to get over the line. The valuators are being overly careful with the current inflated build prices I believe. Good luck. The biggest challenge will be if you take out a loan and then run out of money - you'll have an incomplete security and lenders do not like this so you can get stuck.… 2 19096 Those span tables can be pushed a little for a low deck if you dont mind a little flex. Last deck I did, I pushed it a little and it was still rock solid - no noticeable… 6 13757 4 6201 |