Browse Forums Home Finance 1 Dec 19, 2013 7:21 pm Just wondering how valuations work. We just purchased a waterfront block of land in an established area for a steal- 246,000 790sqm. The valuer has had problems finding properties to value against as two other waterfront blocks on the same street have also sold within the last few months- one for 315,000 and 313,000 (a bit bigger). We said why don't you just value it higher and give us the equity? and we were told that it does not work that way, but after settlement we should have it revalued. My question is, after settlement can we get a new valuation and will it only be valued against our purchase price or will the comparable blocks be taken into account? If it is valued higher, can we use that equity as part of our deposit for the build? Thanks in advance!!! Re: Valuation Questions 2Dec 19, 2013 8:57 pm Hi Lakehouse. We had a bit of a similar problem. We bought 11 months ago and the land settled about 6 months ago. The valuers valued the land for exactly what we paid... which is apparently standard practice. However, when we went to get the construction loan, the valuer came in with the same figure that we were to pay all up for the land and house. No problem we thought. However, he listed the value of the house as $30,000 more than we actually paid (a fair call as similar blocks are now selling for $70 000 more than we paid.) Problem was, the bank was not prepared to accept that the land had increased in value (we were told that 12 months had to lapse since purchase before they would consider any increase in value). They then adjusted the valuation by taking away $30,000 which effectively then of course meant we were going to be undervalued. We argued this, and three valuations later by the same bank, finally the valuer wrote the figure for the land as what we had paid, and the cost of improvements to reflect what we were to pay. Finally we were approved but definitely simply valuing the land at the price which we were paying was not in our interest!!! My Building Thread:https://forum.homeone.com.au/viewtopic.php?f=31&t=66153 Re: Valuation Questions 3Dec 20, 2013 1:45 pm That's the issue with valuations for a lender. They always take the lower of purchase price or valuation. So even if it is worth much more than you bought it for, they will take the price that you paid for it. Then most lenders won't allow you to revalue it for around 6 or so months because they will always fall back to the purchase price in this time frame. There is the option of refinancing to another lender after purchase where they won't care about the contract of sale and will work off a valuation. However when they get a new valuation done, the valuer will look for comparable sales and what is the most comparable sale? It would be the block you are trying to refinance that was bought at a low price, so the valuer will have a hard time arguing a different valuation so you will most likely be stuffed anyway. Cheers Tom Re: Valuation Questions 4Dec 20, 2013 2:15 pm Yes valuations are always going to be that way. From an accounting standpoint unless fiat value is elected, it would normally be the lower of cost or net realizable value. Banks will also use this when assessing collateral and risk. Re: Valuation Questions 5Jan 20, 2014 9:36 am We are in the process of applying for a house and land package,....and have just been told today that the land has been valued at 50 grand less than what we need to pay for it...and the mortgage broker has told me the only option is to make up the difference in price or to apply through another bank where they may value the land differently...I guess my question is...if we decided to use most of our deposit applying for the land separately and then build later on and apply for the construction load later on...could we also then be faced with the same problem...where they value the land as less...it is so annoying as there are a total of 4 blocks all in a row and the 3 other blocks have sold for the same price as what they are asking for ours...but apparently the valuer has not used any of those sales figures to work out his valuation...as they are not available apparently yet as it can take months for them to be added to the valuation site/program they use...we are just worried that if we attempt to get the land first..then we may still encounter problems getting the finance later to actually build the house...any thoughts would be greatly appreciated Re: Valuation Questions 6Jan 20, 2014 9:47 am KarenP27 We are in the process of applying for a house and land package,....and have just been told today that the land has been valued at 50 grand less than what we need to pay for it...and the mortgage broker has told me the only option is to make up the difference in price or to apply through another bank where they may value the land differently...I guess my question is...if we decided to use most of our deposit applying for the land separately and then build later on and apply for the construction load later on...could we also then be faced with the same problem...where they value the land as less...it is so annoying as there are a total of 4 blocks all in a row and the 3 other blocks have sold for the same price as what they are asking for ours...but apparently the valuer has not used any of those sales figures to work out his valuation...as they are not available apparently yet as it can take months for them to be added to the valuation site/program they use...we are just worried that if we attempt to get the land first..then we may still encounter problems getting the finance later to actually build the house...any thoughts would be greatly appreciated we had the same problem, though thankfully it was only $10k difference, not $50k. I assume the problem is the new blocks are private sale from the developer and might not EVER appear in their calculations if all they go on a figures reported by Real Estate agents who had nothing to do with the land purchase. However someone with more knowledge may be able to confirm that. Re: Valuation Questions 7Jan 20, 2014 10:37 am Not sure if the other 3 blocks used a real estate agent or not...but we are in the process of using one to purchase the 4th block...Just cant understand how the most recent sales don't seem to be used in the valuation calculation at all Personally, considering your layout (study/work desks in bedrooms), I don't think you have any other option but to leave NW windows and make them as big as possible e.g.… 7 10455 We had this happen to us last year and got charged a variation. Try and give away as much as you can that is usable to charity otherwise if you are in Sydney I have a… 1 4477 Not sure what council area you are in. 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