Borrowers 'victims' of low valuations
By
Adam Smith
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27/10/2011 5:00:00 AM
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4
comments
An online lender has joined a growing chorus of brokers expressing concern over falling property valuations.
A recent Loan Market poll found more than 60% of the company's brokers had seen falling valuations in the September quarter. Now, online lender MyRate has claimed conservative valuations are disadvantaging borrowers.
The lender has claimed a trend in valuations coming in below borrower expectations, with some cases of valuations coming in below the purchase price for recently purchased properties. In a statement, MyRate said valuers were becoming increasingly cautious and producing more conservative valuations.
"If valuers 'get it wrong' they will often find themselves being sued by Lenders Mortgage Insurance companies who may be out of pocket after selling a property to recover funds lent on a loan that went bad," the company stated.
Australian Property Institute president Philip Western previously told Australian BrokerNews that valuers faced mounting PI costs, which exposed valuers to increased liability and ran the risk of eroding professional standards. MyRate claimed that a consequence of this is valuers feeling pressured to bring in more conservative valuations.
"Unfortunately, borrowers are the victims of this situation," the company said.
Related stories:
Brokers report falling valuations
PI crisis could erode valuation standards
Latest Comments
Total:
4
comment(s)
Ozboy on
27 Oct 2011 10:22 AM
It's a conservative market of course they are going to be conservative. Wake up after 5 consecutive quarters of prices going down what do you expect them to do. Time to take some responsibility for your inability to understand the basic structure of the market you are in.
Neil Williams on
27 Oct 2011 10:57 AM
While these low valuation outcomes are frustrating for all involved, it is a clear advantage that brokers have. We know which lenders to avoid in this market, and which (usually) non-bank lenders will consider refi's in a high lvr situation. I say to the majors "keep spending your marketing millions". The brokers are more relevant now then ever before. These are the good old days.
bradq on
27 Oct 2011 11:09 AM
I see how valuers are useful for a construction, as they are qualified engineers... but for a purchase and even a refinance, seriously, what does a valuer kow about property prices? nothing i tell you. This is a very bad situation with valuers being sued by LMI, then lowering vals so that they dont get sued again. No one wins
SteveMc on
27 Oct 2011 11:48 AM
Oh yes, the valuers are quick to quote cases of horror stories where someone has been sued. But they can't actually identify a case that a valuer has lost, even though the valuer demonstrated dilligence, professional standards, proper research and conclusions. I'm thinking most of the cases before courts lack one or two of those elements, but would be keen to read of an exception. So, when the horror stories are cited as a defence, is that really code for inefficiency, or an inability to be efficient at the prices that the valuers are paid? My guess is that valuers are under-paid and they respond with a conservative tick & flick report. Not an excuse, but the reason.
Meanwhile there's a client that suffers the consequence of that system, that they are really paying for.