Example: Don's valuation nightmare
Don heads to an auction and is the winning bidder for a 2-bedroom unit, with a bid of $750,000. He pays a 20% deposit of $150,000, along with stamp duty fees. He is pre-approved for finance at 80% LVR.
Before settlement, Don's bank sends a valuer to the home. The valuation comes back at $650,000, meaning the bank will only lend Don a maximum of $520,000, leaving Don $80,000 short.
Don requests a second valuation with similar results. He is now left to either borrow the $80,000 from his family or try to secure a personal loan.
* This is a fictional, but realistic, example.
We have just received our bank valuation back for our house and land package and it came back much lower than we had expected. We paid $411k (including upgrades) and thought it would come back around $420k (given rapid growth in the area and it is a new estate). There are house and land packages with the same specs being sold around the corner from us for $460k.
Should we appeal the bank valuation or arrange an independent valuation?
It is super stressful knowing that we now have to find another $15k to get the loan over the line. We don’t know where to begin.
Hi Keir,
Thanks for your question.
Generally a bank valuation is less than the market value as they’re different things. Banks use a bank valuation to work out how much they might receive if they sold the property, whereas the market value is usually how much you get if you sold the property yourself. If you have any questions or concerns, please discuss this with your lender.
Cheers,
Shirley
if the house or apartment renovated with new kitchen, Bathroom , toilet and install air-condition total cost $20,000. Can I add this value to the property.?
Hi Bernard,
thanks for the question.
What a renovation costs might not necessarily equate to the same value. Some renovations might add less or more than their cost to the property’s value, so it’s always best to seek a professional valuation to see how much a renovation has effected the price of a property.
Cheers,
Marc.