Browse Forums Building A New House 1 May 20, 2015 7:11 am Hi everyone, Our worst nightmare came true today when we heard back from our bank. They've valued our house and land approx. $34k under our contract price. Has this happened to anyone else before? Does anyone have any advice on what we could do? Naturally I'm freaking out right now, because we cannot afford to make up this difference and I don't know what to do Re: Bank valuation WAY under 2May 20, 2015 7:57 am Ah what a pain. We were going through a broker who tried multiple banks and every bank had a different valuation. Some were under on house, some were under on land...We ended up just biting the bullet and going with the one that was closest, which valued the house at contract price and the land $13k under, and paid the difference. Luckily we were in a position to do so. My advice is to get yourself a mortgage broker. If you're really against them, just shop around - try a couple of different banks. Changing banks is a pain, I know, but if it gets you what you want... Don't give up just yet Jen (& Dave) Plantation Bronte, Ormeau Ridge, Gold Coast QLD 12/03/2015 - Commencement... 26/08/2015 - Handover! viewtopic.php?f=31&t=76446 Re: Bank valuation WAY under 3May 20, 2015 8:03 am Agree. Shop around. Pardon my ignorance - but does this mean they have reduced your loan by a set amount ? Surely house and land are worth more than the loan ? I'm not across loans and Banks lately. Re: Bank valuation WAY under 4May 20, 2015 8:10 am Saint Mike Agree. Shop around. Pardon my ignorance - but does this mean they have reduced your loan by a set amount ? Surely house and land are worth more than the loan ? I'm not across loans and Banks lately. In my case Mike, overall yes the house and land are worth more than the loan. But we are first home buyers so had no existing equity or mortgage history. And so we had to have a 10% deposit with this bank. So the loan for our land was for the land contract value minus the $13k difference minus our 10% deposit. Luckily, between our first home owners grant and our available funds for deposit we could still cover both the land and construction even after paying the $13k difference. But we had to sign a form for the bank stating that we understood they had valued the land lower than the contract was for. Ultimately it's not really going to matter in the long run we don't think. Jen (& Dave) Plantation Bronte, Ormeau Ridge, Gold Coast QLD 12/03/2015 - Commencement... 26/08/2015 - Handover! viewtopic.php?f=31&t=76446 Re: Bank valuation WAY under 5May 20, 2015 8:20 am Thanks Jen. Agree - value should go up and payments stay low for a while. Unfortunately it is hard - but as time goes on you'll find you slowly pull ahead. At least loan interest is falling - or low Re: Bank valuation WAY under 6May 20, 2015 8:44 am Thanks Ilaeria, We're using a broker currently. He arranged for our land loan about 6 months ago and the bank valued the land spot on. Now the house contract has been valued together with the land and it's $34k under Waiting to hear back from the broker today with some options (good ones I hope). Re: Bank valuation WAY under 7May 20, 2015 8:47 am This is quoted from another thread.. ( posting.php?mode=quote&f=9&p=885364 ) may be useful in some case: Stig I have seen valuations increase or decrease for some of the following reasons - Flood / Fire (With all the recent floods , I have seen a houses purchased at the top of the street which floods drop $100k after the most recent event (and the land/house didn't get any flood water . but due to location) - Down turn in local industry, recently a mining company moved out of a town and vals dropped 30% overnight - Down turn in the market , customers purchasing at the top of the market i.e. small beach front lots paying $350-500 for vacant land and then the market turns i.e. GFC , housing market slows . - Developers/ Receiver selling the remaining blocks cheaper or offering cashbacks . I have seen land sold for $230k+ at the start of the estate and then you could pick land up at $150 towards the end of the development. Or a developer offering the land at $150k and then paying back $20-30k in cash after the settlement to keep the land prices up (Banks and Valuers hate these deals) - Over priced building contracts , we had a friend building a 300m2 house and then valuation came in low , He gone a different quote from another building and the price dropped by $200 per square (same house plans , same finish and fixtures ) Saving $60k and guess what the valuation came in spot on land + cost to build – Market Value . I would recommend you - Ask for a copy of the valuation (the bank may not handed this over since they paid for it) - Ask who is the Banks Valuers , give them a call direct to ask why(The valuer may not talk to you , since it was ordered by the bank) . - Ask the bank who else is on the banks panel valuation group , and you may be able to select a different Valuer. Your lending maybe able to order a second valuation , Keep in mind that banks hate RISK and may not accepted the higher valuation. - Order your own valuation, to get your own report to see why the market has fallen. - Check you building contract - revise, amend or improve. Are you building a house which is similar to others in the area. Are you paying above the average per sqm2 ?? Maybe drop the $4000 bathtub and the second media room . Hope this helps Cheers Stig PS Quote: If you apply through a broker, they can order valuations for free before submitting applications, so no cost allocated at all. Ask before signing any paper work , most brokers have a cost to take your application and valuation cost if you don't proceed with them . Hopefully that helps a little. Which bank was it, if you don't mind me asking? Re: Bank valuation WAY under 8May 20, 2015 8:50 am snyde made a good point there in his quote about the finishings in the house - if you have made a lot of cosmetic additions or alterations, the bank won't take those in to consideration, so modifying your house contract to drop some cosmetic things that you can live without and do later may help. Jen (& Dave) Plantation Bronte, Ormeau Ridge, Gold Coast QLD 12/03/2015 - Commencement... 26/08/2015 - Handover! viewtopic.php?f=31&t=76446 Re: Bank valuation WAY under 9May 20, 2015 10:25 am The valuation was through Westpac. I didn't think we had made too many upgrades. Either way, their valuation doesn't even cover the cost of the essentials, like siteworks and bushfire. Re: Bank valuation WAY under 10May 20, 2015 10:39 am I say get a broker to shop around for you, and see if you can do a pre-valuation, or get a private valuation and compare the difference to try help argue your point. Good luck with it all! Re: Bank valuation WAY under 11May 20, 2015 4:43 pm I would suggest shopping around. We used broker(s) and did not get much success, went straight to talk to a bank and no problems! The key is talking to the right person at the right bank. Luck has also a bit to do with it. Good luck! Our Build Thread: The "Extended" Marina by Visionone Homes Our Inspirations: Frank Lloyd Wright | Houzz Re: Bank valuation WAY under 12Jun 02, 2015 12:45 pm We settled on our block of land in March; unfortunately at the time, we didn't have an HIA contract ready. Now it's June and we have a contract signed, however as you know, our bank undervalued our house. We've shopped around and have now been told by another broker that no other lender will re-finance the mortgage on our land until we've had at least 6 months re-payment history. So our choices are currently: 1. Take Westpacs undervaluation 2. Wait another 4 months until we have 6 month history, then we can shop around Has anyone ever heard of this before? My other broker has never heard this before. Re: Bank valuation WAY under 13Jun 04, 2015 12:10 pm hi, I had the same problem with my valuation. I ended up deleting everything I could off the building contract to get it under the valuation. Now I have to save and save to pay cash for those items after the build. The benefits of this is not paying the builders mark ups. We also plan to revalue the house on completion to borrow against it and get our money back for landscaping. How much are you ahead in payments compared to where the build is at? Have you fully drawn down the loan? 5 11933 Yeah mine about 9 metres long and 8 wide with slope of 25% at one point but the end point of the outlet is past the side of garage and if he concretes allowing for… 4 4547 4 9069 |