Vendors, buyers must acknowledge lower valuations

Simon Parker

Agents must ensure vendors and buyers are aware that an increasing number of property valuations are coming in lower than expected, a Brisbane-based agent has said.

Director of sales and general manager for the PRDnationwide offices in Kippa-Ring and Kallangur, Ric Mingramm, made the comments in response to a poll undertaken by Loan Market, which found more than 60 per cent of its mortgage brokers had seen valuations fall in the September quarter 2011.

Loan Market chief operating officer Dean Rushton said borrowers are facing increased costs as the valuations on their properties are coming in lower than anticipated due to a more conservative approach by valuers.

Mr Mingramm said values were currently hard to gauge in northern Brisbane, although he estimated they were down by around five per cent. As a result, he encouraged both vendors and prospective home buyers to have valuations and/or building and pest reports undertaken prior to sale to ensure they had an accurate gauge on the property’s value.

“If [sellers or buyers] are worried about the value, get the reports done,” he told Real Estate Business.

To help combat the uncertainty around valuations, he said a mortgage broker that his office had ties with was providing prospective home buyers that were serious about a particular property with a bank-backed valuation.

This valuation was provided free by the lender, as long as it ended up securing the borrower’s business.

Mr Mingramm added that some agents continued to allow vendors to believe they had properties worth more than the market, and banks, would pay.

When asked ‘what type of movement have you seen in valuations in the past quarter compared to the previous quarter?’, 30 per cent of respondents to the Loan Market poll said they were more than 10 per cent lower.

Thirty two per cent of the 148 respondents said valuations were up to 10 per cent lower, while 31 per cent said there was little change and two per cent thought they had increased.

“Valuers have been trending on the conservative side when assessing what properties are worth, and with many industry analysts forecasting some short-term softening in the market, there will be an impact borrowers need to be aware of,” Mr Rushton said.

“If someone is purchasing a property for a certain dollar value and the valuation comes back and says the market price is actually less, then this impacts on the deposit required and the LVR.

“A consequence here is that borrowers may have to pay Lenders Mortgage Insurance (LMI).”

Mr Rushton said borrowers need to keep sight of their long-term goals when entering the property market. He said purchasers should ensure they have room to move on their LVR if the value is reduced.

Simon Parker

Agents must ensure vendors and buyers are aware that an increasing number of property valuations are coming in lower than expected, a Brisbane-based agent has said.

Director of sales and general manager for the PRDnationwide offices in Kippa-Ring and Kallangur, Ric Mingramm, made the comments in response to a poll undertaken by Loan Market, which found more than 60 per cent of its mortgage brokers had seen valuations fall in the September quarter 2011.

Loan Market chief operating officer Dean Rushton said borrowers are facing increased costs as the valuations on their properties are coming in lower than anticipated due to a more conservative approach by valuers.

Mr Mingramm said values were currently hard to gauge in northern Brisbane, although he estimated they were down by around five per cent. As a result, he encouraged both vendors and prospective home buyers to have valuations and/or building and pest reports undertaken prior to sale to ensure they had an accurate gauge on the property’s value.

“If [sellers or buyers] are worried about the value, get the reports done,” he told Real Estate Business.

To help combat the uncertainty around valuations, he said a mortgage broker that his office had ties with was providing prospective home buyers that were serious about a particular property with a bank-backed valuation.

This valuation was provided free by the lender, as long as it ended up securing the borrower’s business.

Mr Mingramm added that some agents continued to allow vendors to believe they had properties worth more than the market, and banks, would pay.

When asked ‘what type of movement have you seen in valuations in the past quarter compared to the previous quarter?’, 30 per cent of respondents to the Loan Market poll said they were more than 10 per cent lower.

Thirty two per cent of the 148 respondents said valuations were up to 10 per cent lower, while 31 per cent said there was little change and two per cent thought they had increased.

“Valuers have been trending on the conservative side when assessing what properties are worth, and with many industry analysts forecasting some short-term softening in the market, there will be an impact borrowers need to be aware of,” Mr Rushton said.

“If someone is purchasing a property for a certain dollar value and the valuation comes back and says the market price is actually less, then this impacts on the deposit required and the LVR.

“A consequence here is that borrowers may have to pay Lenders Mortgage Insurance (LMI).”

Mr Rushton said borrowers need to keep sight of their long-term goals when entering the property market. He said purchasers should ensure they have room to move on their LVR if the value is reduced.

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