Browse Forums Building A New House 1 Aug 17, 2012 2:55 pm Bad news received today. Bought the land 4 months ago and now that titles finally released and getting loan from bank, i was told its undervalued by $9000. My broker's told me i will have to add more for my downpayment which is a bummer. Has anyone ever experienced this? If you were in my place will you go ahead with it or withdraw? I have waited all this time and all plan are ready for building but with this issue im having second thoughts. Will it be a bad idea if i go ahead? Re: Land Undervalued by Bank 2Aug 17, 2012 4:49 pm It's seems to be common issue in my area the moment, having said that we didn't have our land undervalued but we did with our build. Where abouts are you building? what are blocks equvilant to the one you want going for? I know where I am land has dropped in value quite a lot of the last 2 months. 29/05/12 - Contacts Signed 18/06/12 - Land Settlement 03/07/12 - Building Approval 20/07/12 - Slab Down Re: Land Undervalued by Bank 3Aug 17, 2012 5:04 pm It happened to us too, by $20000.... We still went ahead with it. Blocks around us are selling for the same amount as ours only we needed to put more up at the start then initially wanted. Built a Hawthorne 31 with EB nessjeffdreamhouse.blogspot.com.au Building an investment now with New Living homes... We are at nearly finished... Just landscaping and driveway to go! Re: Land Undervalued by Bank 4Aug 18, 2012 12:30 am The land is in hammond park wa. Im quite frustrated as i spoke to the land agent and told that the other lots same size and price as mine didnt have issues with their banks. I guess im ok with paying a little bit extra but will it have negative effect on my propertynone day if i have it refinanced or i i sell it? Will that $9000 fall in the value reflect the selling price later on? I know it sounds stupid but maybe it does... Im no expert on this matter you see... Re: Land Undervalued by Bank 5Aug 18, 2012 12:43 am The only thing for certain is your home loan will be $9000 smaller! Which can save you a lot in interest over the life of the loan. In say 5 years time property prices may go up, or they may go down, don't matter what it's valued at today, in the future it's anyone's guess! We had a similar thing just recently where one bank under valued the house and land package (building) at $20k less than contract and another bank under valued by $6000, same block, contract the works, just different valuer! 2 Re: Land Undervalued by Bank 6Aug 18, 2012 5:50 am We paid 253k for unregistered land that took 12 months to be registered, in that time between deposit and settlement the exact same size blocks rose for others to 297k, even though we had ours valued close to settlement (12 months on) and there was blocks same size going for 45k more we only just had ours valued at the price we paid and not a cent over! A person in my street has just had their valuation done and needs to come up with 30k Personally i would look around and whats being purchased and sold locally and make a decision myself! My wife and i agreed that regardless of what the bank said we had found value in the finishes of the build and location of the land that meant we would proceed anyway and find the difference if there was one in valuation... What im saying is if you think what your paying is worth it then go for it, banks dictate our lives enough as it is, dont let them crush your dreams too! Last time i checked building wasnt getting any cheaper... Check out our blog below! We are using iDraft and Cozzcorp for our build http://ridgydidge1460.blogspot.com Plans: http://www.idraft.com.au Construction: http://www.cozzcorp.com.au Re: Land Undervalued by Bank 7Aug 18, 2012 8:45 am Thanks all for the reply, i think a load's come off my back reading what you're all Saying. My husband and i want to go ahead as we think we've waited long enough and if we have to do this all over again, it'll just be too much stress again plus money for the rent. If it means nothing to how they will value the property in the future then i guess we can deal with the $9000 now. And yes i wont hold off my dream just because of that bank valuer Re: Land Undervalued by Bank 8Aug 18, 2012 8:54 am Bear in mind that the bank also values the asset at a "fire sale" price - ie. it's the minimum they anticipate that they'll be able to sell the land for if they have to foreclose on the loan. Land sale offices with their "fixed" monthly price increases also muddy the waters on land valuation a little - just because they are charging $30k-$40k more than similar-sized blocks in the same stage/release that were purchased for at an earlier point in time, that doesn't mean that the land has appreciated that much in value over the same period of time. The same thing applies to house contracts and the regular price increases builders tack on for their designs - as the bank still values the house based on its size, configuration/fitout and location, not how much the builder charges you for it. Some people apparently have nothing better to do than comment on other people's sigs. Re: Land Undervalued by Bank 9Aug 18, 2012 8:23 pm Since the economic crisis of 2008, all bank valuers valuations come in very conservatively, so if values fall, the bank won't be stuck with a debt higher than the value of the property. My DH is a mortgage broker and has this issue many times with his customers. The home valuations mostly always come in lower than the market value. We also had this issue when we purchased our land, but the 2nd bank value came in better than the first bank we tried, so we went with the 2nd bank. We had enough cash to cover the difference in the valuation and market value. Different banks use different valuers, so it may not hurt to try another bank. Another problem can be if you are borrowing more than 80% - in that case you usually need mortgage insurance, but some banks will lend to 85% (or some a bit more) before insurance is required. If you do need mortgage insurance, then the insurer will also value the land, which may or may not come in lower than the bank value. In this case the valuation conducted by the mortgage insurer will be the one the bank will use to lend. I think $9K is a small difference in valuation, I've seen some valuations come in $50K lower than market value. If you are planning to live in your new home for quite a few years, 10+, then $9K is a small price to pay in the long run. We built the Wisdom Majestic 40 - moved in! Our blog - http://ourwisdommajestic40.blogspot.com.au/ Our H1 thread - viewtopic.php?t=54156 Re: Land Undervalued by Bank 10Aug 28, 2012 7:54 pm Ive just done a search as my house and land has just come in under for the mortgage valuation and found this thread my issue is that its $30k less than what we are paying for the house, land, landscaping and stratco verandah The valuation had 3 houses, two were in my new development area and reflected the price appropriately given the blocks were a bit bigger the prices were slightly higher the other was in a cheaper, older, less nice development area and thats the valuation comparison they used ... the house is over 3 years old and the fact the area its built in is approx. 20k less on average is a concern whats my rights here? any ideas what we can do since the valuation is so low, are they obliged to use the houses in the actual development area first, or have some sort of average between the three? thanks in advance Re: Land Undervalued by Bank 11Aug 28, 2012 8:00 pm Unfortunately Danni I think they take the lowest valuation as that is indicative of the property market. Built a Hawthorne 31 with EB nessjeffdreamhouse.blogspot.com.au Building an investment now with New Living homes... We are at nearly finished... Just landscaping and driveway to go! Re: Land Undervalued by Bank 12Aug 28, 2012 9:48 pm I suggest trying another bank or going thorugh a mortgage broker. Different banks can use different valuation firms. The 2nd bank we tried used a different valuator to the 1st one which gave us a more realistic market price on our land, so we went with them We built the Wisdom Majestic 40 - moved in! Our blog - http://ourwisdommajestic40.blogspot.com.au/ Our H1 thread - viewtopic.php?t=54156 Re: Land Undervalued by Bank 13Aug 30, 2012 7:29 am thanks guys we have a mortgage broker.. my partner asked his friend who works at a bank and the company our bank used have a pretty bad name apparently, might be worth getting another valuation we spoke to our builder and they've sold 9 houses within 500m of ours that are about the same size but have much smaller land, only single carport and are standard (we did upgrades with landscaping, stratco veranda etc) these houses cost $25k more than the older house they used in the different area and reflect the market value much better in our development i feel so we are going to see about using those also Land Undervalued by Bank 14Aug 30, 2012 7:55 am I agree trying another bank! Bank 1 for us undervalued house and land by $50k!!! But after 3 months of them pfaffing around, we jumped ship looked at our options and both Bank 2 and 3 valued spot on!! Re: Land Undervalued by Bank 15Aug 31, 2012 11:35 pm Hmmm that is a good idea cinderella, who did eventually go through. And a bit off topic, but do i know you? Pm me your details.maybe we can hook up 2 How much are you ahead in payments compared to where the build is at? Have you fully drawn down the loan? 5 11916 Yeah I don't know why I came to a forum. Place is full of wierdos/pedos thought internet may help but I suppose I'll try my luck with someone in person. Cheers. I tried… 0 6442 Need advice on the backyard plan above. Should I excavate and cut all of the dirt to level with the house slab or semi-excavate as per photo above? Both left and right… 0 24863 |