22 Sep 2020

Loan applications are often reliant solely on the security valuation returning at a certain amount. With the current real estate market still volatile and some types of properties or some locations being affected more than others it’s important to get the valuation right.

A Valuation is not always “one size fits all”

A full valuation report includes information gathered about the subject property as compared to sales evidence against similar properties. It is, however, somewhat subjective as it is prepared by a person who at some level is also presenting their opinion – albeit based on information and sourced evidence. Each lender has a panel of valuation companies that they engage to deliver valuation reports, however not all lenders use the same firms, or may allocate your valuation to a different firm than another lender.

What does this mean?

As a valuation requires a human element there is the capacity for variances across different firms. For example, a report received from the valuer assigned from Lender A may be different from the report received from Lender B as the valuers preparing the reports may see them slightly differently. In theory there should be little difference, but it is not uncommon for valuations to vary from one lender to the next.

How to use this to your advantage

When you need the maximum valuation amount possible to be able to proceed with a new application there is the ability to order upfront valuations. Your mortgage broker can obtain several valuations from prospective banks to verify “where” you have the highest equity position. There are four different types of valuations your lender may request:

Full valuation: Where the bank requires the valuer to examine the property and provide detailed commentary about the property along with internal and external photographs.

Kerbside Valuation: Where the bank requires the valuer to attend the property but merely inspect it from the outside without gaining access.

Desktop Valuation: Where the valuer determines the valuation of the property by looking at the property description as against online evidence without attending the property or inspecting it.

Modelled Estimate: This is a computer-generated valuation whereby the property details are evaluated by a property estimator based on the property configuration against current sales evidence.

Your lender may initially request a Modelled or Desktop valuation which may return an unfavorable result. Your broker may then request that a Full Valuation be ordered if you believe the figure does not accurately represent the property. Sometimes renovations that have been completed or unique features that can only be verified by access to the property warrants a full valuation.

What if the valuer gets it wrong?

In the unlikely event that the valuer assigned to your property returns a figure that you categorically disagree with and impacts negatively on your application, there is the capacity to dispute it. It is an involved process that requires you to provide concrete evidence to warrant an adjustment of the valuation. While in theory there is the capacity to challenge a valuation, disputes rarely result in an amendment to the valuation unless its evidently clear that the valuer got it wrong.

Want to know what your property is worth?

If your equity position has been the mitigating factor in holding you back from proceeding with a new application remember your Blackburne Mortgage Broking team can order a valuation for you at any time. Let us know if you wish to get an idea of how much your property is worth because the value returned may not only be in the property itself but in what you may be able to save by a simple refinance.

Contact us at any time for more information.

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