Browse Forums Home Finance 1 Jun 21, 2012 8:16 pm Hi everyone. I am new to the forum and new to the whole property thingie. I would appreciate any discussion or help. I just bought a piece of land in an estate, SE of Melbourne. i'm building with a big reputable builder. The problem now is the bank has under-evaluated the value of the land by 75K!! This is such a big gap. Has anyone come across the same problems? Should i dispute or just go for other banks? Re: Bank evaluation problems? Anyone has been under-evaluate 2Jun 21, 2012 8:47 pm We were undervalued by $16,000 for our build, our mortgage broker tried to get the valuer to have another look at it, we even provided recent sale prices in the area with similar houses and block sizes to support our request to review, the valuer would not budge. We are currently in the process of applying with a different bank now. Fingers crossed for a better result. All the best on your next step, 75K is a massive amount. Re: Bank evaluation problems? Anyone has been under-evaluate 3Jun 21, 2012 9:03 pm I'd try another bank. Each check is recorded on your financial record though, if they are taking your details to provide a quote... Re: Bank evaluation problems? Anyone has been under-evaluate 4Jun 21, 2012 10:08 pm jpc We were undervalued by $16,000 for our build, our mortgage broker tried to get the valuer to have another look at it, we even provided recent sale prices in the area with similar houses and block sizes to support our request to review, the valuer would not budge. We are currently in the process of applying with a different bank now. Fingers crossed for a better result. All the best on your next step, 75K is a massive amount. thanks jpc, i've asked my builder to provide near buy sale prices coz all the lands in our estate are the same size and price, hopefully the bank would consider it. but meanwhile i'll just get my broker to try other banks~~~the most frustrating bit is the waiting bit, banks are slow as ...... gud luck to you as well Re: Bank evaluation problems? Anyone has been under-evaluate 5Jun 22, 2012 2:09 am mimiluvuu thanks jpc, i've asked my builder to provide near buy sale prices coz all the lands in our estate are the same size and price, hopefully the bank would consider it. but meanwhile i'll just get my broker to try other banks~~~the most frustrating bit is the waiting bit, banks are slow as ...... gud luck to you as well mimiluvuu, did you have a finance clause in your contract in case this situation arose? Just thinking worst case scenario in case you aren't able to obtain finance anywhere. Weird situation though, as you mentioned if all the other pieces of land were same price and size, others would have had to obtain loans for those values, if there was a problem with valuations on those, the builder would have heard about it (as in the same estate, builders do tend to do a lot of builds). In terms of other banks, I do know that ANZ do take contract of sale of as the valuation if its a normal property in a metro area. I don't know about vacant land though, never come across that with them. Re: Bank evaluation problems? Anyone has been under-evaluate 7Jun 22, 2012 7:57 am This will have a massive effect on your required deposit or LMI so I'd really try to work something out? Ps. ANZ undervalued mine by 10,000 in 2009. http://www.betterthansheets.com.au - Why use sheets for curtains in your brand new home use Better Than Sheets Temporary Paper blinds instead! Re: Bank evaluation problems? Anyone has been under-evaluate 8Jun 22, 2012 8:51 am A friend of mine had their property under-valued by the bank because their bank would not value the property higher than the highest previous sale price in the area: that is, not what other houses were being built for, but what existing houses are being sold for. That is what the bank is interested in because if you default they will be selling in the existing home market, not the new home market. However, there's obviously going to be a problem with a policy like this in new developments where all the houses are new and there are few sales of existing homes. Ultimately they didn't go through with the build, for various reasons. It can't hurt for you to talk to some other lenders, but in my completely non-expert, outsider opinion I would be concerned about a valuation that far under your contract price and would be suprised if there was that much difference between banks' valuations. But I'm often surprised Re: Bank evaluation problems? Anyone has been under-evaluate 9Jun 23, 2012 4:24 pm theanonyuser I'd try another bank. Each check is recorded on your financial record though, if they are taking your details to provide a quote... Do banks charge any fees if they don't approve the loan or if the valuation is low and you decide de not to borrow from them? Re: Bank evaluation problems? Anyone has been under-evaluate 10Jun 24, 2012 12:24 am Camber theanonyuser I'd try another bank. Each check is recorded on your financial record though, if they are taking your details to provide a quote... Do banks charge any fees if they don't approve the loan or if the valuation is low and you decide de not to borrow from them? It all depends on the lender and product. If they charge an upfront fee which is paid before commencing with the loan application, you won't get your money back. If the lender however doesn't charge any upfront fees (like on Pro Packs), you haven't parted with any money and apart from an enquiry on your credit file, I don't think the lender chases you up on anything. If you apply through a broker, they can order valuations for free before submitting applications, so no cost allocated at all. Re: Bank evaluation problems? Anyone has been under-evaluate 11Jun 25, 2012 7:52 am 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 . Re: Bank evaluation problems? Anyone has been under-evaluate 13Jul 03, 2012 1:35 pm plc mimiluvuu thanks jpc, i've asked my builder to provide near buy sale prices coz all the lands in our estate are the same size and price, hopefully the bank would consider it. but meanwhile i'll just get my broker to try other banks~~~the most frustrating bit is the waiting bit, banks are slow as ...... gud luck to you as well mimiluvuu, did you have a finance clause in your contract in case this situation arose? Just thinking worst case scenario in case you aren't able to obtain finance anywhere. Weird situation though, as you mentioned if all the other pieces of land were same price and size, others would have had to obtain loans for those values, if there was a problem with valuations on those, the builder would have heard about it (as in the same estate, builders do tend to do a lot of builds). In terms of other banks, I do know that ANZ do take contract of sale of as the valuation if its a normal property in a metro area. I don't know about vacant land though, never come across that with them. according to our broker, anz now doesn't even need to evaluate a property if it's under 1 million, so we applied for anz last week. now they come back to us saying that there is no need to evaluate under the condition that it's bought through a real estate agent, which we didn't; we actually bought it through the builder's sales (not to mention their name, but a big one, which we hope is reliable). However, they were not considered as the agent according to the banks, so again, we are waiting for the evaluation. And according to the builder, they didn't hear any problems like this from the other buyers, one had a problem with the bank, but all sorted, they didn't mention what problem. Re: Bank evaluation problems? Anyone has been under-evaluate 14Jul 03, 2012 1:38 pm monkeypantz A friend of mine had their property under-valued by the bank because their bank would not value the property higher than the highest previous sale price in the area: that is, not what other houses were being built for, but what existing houses are being sold for. That is what the bank is interested in because if you default they will be selling in the existing home market, not the new home market. However, there's obviously going to be a problem with a policy like this in new developments where all the houses are new and there are few sales of existing homes. Ultimately they didn't go through with the build, for various reasons. It can't hurt for you to talk to some other lenders, but in my completely non-expert, outsider opinion I would be concerned about a valuation that far under your contract price and would be suprised if there was that much difference between banks' valuations. But I'm often surprised A friend of ours had a problem with the evaluation as well. The first bank they went with valued their property at 800K, which they weren't happy with, then the second bank valued it at 1.2million a few days later. I wonder what the banks rely on, just their subjective feelings??? Re: Bank evaluation problems? Anyone has been under-evaluate 16Jul 03, 2012 1:43 pm 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 . Thank u 4 ur infos Stig!I understand that at the moment the economy is down, etc......and by reading thru the posts, a lot of people have been under valued, but 70k under is a lot. This is actually just on the land, coz at that time the contract for building hasn't been signed yet. Now i'm trying the other banks with both the land the building, hopefully, showing them what will be built on the land is gonna increase its value a bit? Re: Bank evaluation problems? Anyone has been under-evaluate 17Jul 03, 2012 2:26 pm You need to stop being emotional about it and take a long hard look at what you are paying and the debt you will be getting into. I am not saying your house is worth what the bank has valued it at, but what if they are right and it really is only worth that? Our place was under valued in the first instance and after careful consideration we felt that they had under valued it. Its our opinion that the property will be worth more than our mortgage in a few years time so we continued with the build and asked the bank to do what they had to do to make sure they were right. They ended up getting some independant valuer to value it all and he agreed that it was worth at least the money we were borrowing. The last thing you want is to be in a situation where you need to sell only to find out that you cant sell the place for enough and you are still left with some sort of debt and nothing to show for it Re: Bank evaluation problems? Anyone has been under-evaluate 19Jul 04, 2012 4:18 pm Hi I am having same problems,I already have land loan from St george and valuation was ok and loan was approved but when I submitted for construction loan they said total valuation come $16k short of what I am willing to pay (land + construction). I am in limbo because I already have a land loan and I don't have $16K to pay from my own pocket. I beleive I can't switch to another bank because I already have a land loan.I already ask for valuation report but bank said if I agree to apply for construction loan than they can send me valuation report, which I don't want ot do as in that case I have to pay 16k from my pocket. Please advice what should i do.......... Re: Bank evaluation problems? Anyone has been under-evaluate 20Jul 04, 2012 4:43 pm Unless something was written into the land loan contract you can borrow the money from who you want to borrow the money. I would first take a read of what i posted above and then speak to your bank. didnt you speak to them about the value of the construction loan required prior to even borrowing the money for the land? Hi everyone, building a duplex with my brother and we will then subdivide the land with council. Each duplex will be 360m2. The frontage of the house is West facing and… 0 3397 Hello everyone, I have a question regarding moving a chandelier after it has been mounted. 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