proving value of land??

sha · Apr 21, 2008 12:38 am

Hi Everyone, can you help? We currently have a mortgage over a block of land we bought 13 months ago. Currently owe approx $130,000. We had it valued by a bank recently, and they valued it at $150,000. We have seen on RP DATA the same size blocks in nearby suburbs sold recently for $180 - $200 000. The bank admitted it didnt know the nearby areas, as it is in Melbourne ( and we are in QLD) - bank was large, well-known bank, so unsure why they didnt use valuer up here. Anyway, now we are wanting to get finance to build, we would like to prove the true value of the land, so we have more deposit. Does anyone think the banks would listen , if we provided RP DATA files when we apply?? We are unsure which bank we will be using.
thanks
-Sha

Adrian B · Apr 21, 2008 8:49 am

Perhaps a local agent could provide you with a valuation? Where abouts in Melboure is the land?

to_do_list · Apr 21, 2008 9:15 am

Put yourself in the bank's position, they want to ensure that if it all goes pear shaped they can sell all the properties and cover all debts (what can we get for this property at a fire sale). Therefore they will value properties conservatively, and won't use market value.

Having just gone through the refinancing/bridging finance route with the purchase of a new house I can tell you that the bank valuation of the house we sold was 10-15% below what we sold, and a land valuation was similarly below what the market is fetching for similar size blocks (not that we've managed to sell it

).

Coming into a what maybe a slight downturn in the market banks may be being even more conservative.

sha · Apr 21, 2008 7:18 pm

thanks for the replies Adrian and Mike.
The land is in Coominya, QLD.

I think the only thing to do is to go to a bank and see what they say.. maybe a couple?
Will see how we go

Thanks again..
-sha

Jane · Apr 22, 2008 10:25 pm

Hi Sha.
I have found the best way to address this situation is to commission my own valuation. Don't let the bank tell you the value of the property. You tell the bank what it's value is. It is best to retain an independent registered valuer who is contracted by banks to provide valuations in the area of your property. The valuer does not need to be contracted to your particular bank. When instructing the valuer provide the written proof of the sales you know of near your property. This helps in two ways. Firstly, it shows the valuer that you know what you are doing. Secondly, it saves him some work finding this info himself. You therefore influence the outcome in your favour. Also, provide the information and give the valuer time to complete his due diligence. Don't pressure him. You then have a an independent sworn valuation that you can take to the bank. If your current bank doesn't like it you will soon find one that does. It may cost a few hundred dollars but the pay off is a loan for a few tens of thousands more. Not a bad return on the few hundred dollars!
Good luck
Jane

al780 · May 05, 2008 12:51 am

Hi Sha......just as an idea...the people we used for our loan offer a valuation service as part of the home loan, which we intend to make use of.

Might be worth checking out as an option to get a valuation done......they also offer other add on services such as ongoing workmanship quality inspections during building and help making sure the building contract is ok etc.

stonecutter1309 · May 05, 2008 8:43 am

I was of the understanding that independent valuers put little value on the previous sales in the area when determining a property's value.

When we sold our apartment - the buyer's bank sent an independent valuer - I chatted with the guy - owned his own business. I asked what the process was - he said they look at the area & amenities, construction method & materials - but don't pay great attention to the recent sales in the area - looking more at the long-term (10 yr) trends.

Jane · May 05, 2008 8:43 pm

Every valuation I have commissioned or I have seen commissioned by a lender has contained comparable sales. Valuers include them to substantiate their valuation calculations. Going back to Sha's original post she stated that she was aware of sales of amounts higher than the valuation she received which was commissioned by her bank. I have found the most effective way to use sales information is to commission my own valuation and provide written evidence of the sales I am aware of to the valuer. To date I have not been disappointed by valuations when I have provided this information. I always provide my own sworn valuation when applying for finance and to date I have always obtained the amount of finance that I was seeking. The last time this happened was for a loan I had approved three weeks ago. To minimise my risk I never rely on a lender to commission a valuation when I am seeking finance.

stonecutter1309 · May 06, 2008 8:20 am

Jane - how much do you pay to commission your own valuation?

'chelle · May 06, 2008 1:19 pm

Hi Stonecutter,

We have had our block of land valued twice by an independant valuer (for CGT reasons). Once it cost $385 and the last time was $495. The last time was a bit more complex as it took into account the subdivision and so he had to provide valuations for the induvidual blocks as well as the whole block.

I don't know how that will compare to where you are but it might give you a guide.

Jane · May 06, 2008 3:17 pm

Hi Stonecutter,

For a residential valuation I typically pay $450. For commercial vals its horses for courses. The last one cost $2,200 for a projected 29 lot subdivision.