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Association calls for investigation into mortgage valuations

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Julia Corderoy | 16 Dec 2014, 08:16 AM Agree 0
A broker association has called on APRA to investigate how property valuations are calculated, as it believes home buyers are being disadvantaged
  • Mortgageguy | 16 Dec 2014, 08:51 AM Agree 0
    We recently had a property valued by 2 different valuers in Bargo NSW, purchased 7 years ago for $445. 1st Valuer put $520 on it and the 2nd $465, both used similar comparables. One of them left the seeing eye dog at home.
  • GC | 16 Dec 2014, 08:53 AM Agree 0
    It's about time this was done as the valuation process often borders on fraud because the valuers are trying to protect themselves and their insurance premiums. They are not interested in giving proper valuations. If we get back to the system of applicants paying for the valuations and the valuers properly remunerated then things might get back to where they were years ago and we just might start to respect valuers again.
  • Barney | 16 Dec 2014, 09:19 AM Agree 0
    Low Vals should immediately be independently assigned to an arms length firm. At the moment you can "challenge it" which takes days and has a 100% fail rate. Or you can order a new val and more often that not it goes back to Valex who either use the same firm or the firm they use have access to the original result. There is no independence. Valex should be shut down and banks should use their own panel valuers independent of one another with no data sharing. Low vals should be re ordered immediately - not after days and days of approvals and escalations internally.
  • Tony | 16 Dec 2014, 09:20 AM Agree 0
    Its an "opinion" isn't it? That what I'm always told.
  • Goran | 16 Dec 2014, 09:32 AM Agree 0
    Couple of years ago had valued my house through WBC and valuation come back at $540,000, four months later sold it for $679,000. Ordered valuation through AMP and it come $80,000 below switched to NAB and valuation come back at dollar.

    Valex and valuers - Please explain?????
  • Greg Morton | 16 Dec 2014, 09:59 AM Agree 0
    Valex has removed the independence from valuations. How can it be independent when one firm virtually controls the industry. Go back to lender panels and remove the central data base. That way it may get back to be independent.
  • Bottom Line | 16 Dec 2014, 10:02 AM Agree 0
    $500k by one firm that are always well under; $650k on the same house 3 days later by a more experienced firm.
    3 valuations in the end on another construction property of..$400k, $500k & $560k.
    Seems to run to certain firms; but it's luck of the drawer through valex as to who you get.
  • Andrew | 16 Dec 2014, 11:02 AM Agree 0
    The thing that is missed in a lot of instances here is that with access to multiple valuations - usually upfront - these variations in opinion of a properties worth also lead to the lender chosen for the client.

    Put simply if the client's first preference in suitability, features etc is not available because the valuation comes in low then we move onto another lender because the valuation is more useful.

    This is about avoiding or reducing LMI in some instances.

    I have seen enough valuations in the last 20 years to know that they aren't worth the paper they are printed on and if valuers can't even agree on Insurance replacement value, rent return, living area dimensions or comparable sales then why not just run with the report that gets the outcome desired.
  • Larz | 16 Dec 2014, 11:06 AM Agree 0
    Two things need to happen. Firstly Valex needs competition or should revert back to what its main purpose was which was to provide an interface between the funder and the valuer. It has taken on a life of its own and now effectively controls the valuation industry.
    Secondly the valuation fees need to increase. You cannot expect a quality service when you are paying next to nothing for a valuation. For the cost of a valuation you could not even get a plumber to come to your house.
  • Tim | 16 Dec 2014, 12:10 PM Agree 0
    Simple answer here is "Pay peanuts and get monkeys". The valuation system has been dumbed down over the years to the point where it is now atrocious.
    There is only one solution and that is for the clients to pay a full and fair price to get a full and fair valuation.
    I also believe that localised valuers must become a part of the system. Having a valuer come from one side of Sydney to assess a property on the other side of Sydney with no local knowledge makes a mockery of the system. This usually leads to the valuer using poor comparable properties when making his assessment.
    I understand there is pressure on them to turn around a report in just a few days but the system is broken and yes does need reviewing.
  • ML | 16 Dec 2014, 12:41 PM Agree 0
    VALEX = the biggest failure in the mortgage industry
  • Vic Regional Broker | 16 Dec 2014, 01:43 PM Agree 0
    The valuers are caught between a rock and the hard place . they get paid peanuts ( VALEX WHO CALLS THE TUNE) and are expected to do a great job , the lenders are getting what they are paid for . Yes if a valuers makes an error ( 3 bedrooms instead od of 4 ) jump on them . The valuers API are weak they should be saying to the banks pay us or we will not do the job you want .
    The ANZ are not concerned they will take a COS under most circumstances on a 90% LVR and in nearly all 80% LVR cases , providing its arms length and an agent sale . The other banks need to follow suit. With on line platforms , Valuers are becoming redundant in the case of Housing Finance, not the case in Rural Resi , Rural or Commercial
  • annonymous to save my job. | 17 Dec 2014, 10:24 AM Agree 0
    Valuers are at the mercy of Valex, we used to have independence and professionalism as forefront to our profession, Valex came in and destroyed that, replaced it with tick and flick valuations undertaken by large firms with no local knowledge, whom hire young inexperienced staff to run around doing 10+ valuation per day. The fee for a valuation has decreased in this time, CBA standard fees 15 years ago where around $350, they are now at $210. to make a buck the valuers are forced by their employers to do too many and there is no emphasis on actually getting the valuation figure correct. All the KPI s are around ticking boxes, there is no focus on the quality of the actual figure or the sales used, this is due to companies like CBRE working with Valex to ruthlessly turn our valuation industry into a factory, rather than a professional industry. Valuers need to live and work in their area to do a good job, and they need to get paid for their work so that they are not forced to undertake so many in such a short time.

    To make matter worse, banks are using desktops more often, these are even worse as there is no inspection undertaken and the figure is not independently arrived at. its a bull shit figure with no legitimacy, yet this is a cost cutting exercise by the banks to yet again pay Valuers less and cut their cost to make extravagant profits. Valex is at the forefront of this decline in quality, decline in professionalism and decline in industry standards and the API hasn't the balls to stand up to them. On another issue, Valuers are working so hard to meet the Valex requirements and make a basic income that they have to work 13 hours a day on average. this is an OH&S issue and someone should be standing up for the rights of valuers, and the interests of brokers, which on this issue is the same. brokers need quality advice and quality valuations, valuers need to get paid appropriately to allow them to do that.
  • Paul Wilson | 17 Dec 2014, 12:16 PM Agree 0
    1 Property 3 Valuations and Market Chaos is going to be the name of one of my next blogs.

    A Real Life Current Example"
    The property:
    Land Price $189K Build Price $303K Combined Price: $492K. Rent: $580 per week (yes this property makes money)

    1st Valuation March 2014:
    Land $137K Build $303K

    2nd Valuation upon completion Nov 2014:
    Land $170K an increase of 25% in 8 months.

    BUT

    The building is now only valued at $220K how can this drop by $83,000 in the same time as the land has increased by $33K

    3rd Valuation one week apart from the last also in November 2014: Land $145K (dropped by $25K in one week) Build $295K (increased by $75K in one week)

    In all cases despite the combined valuations being between $390K and $440K and the build value being $303K, $220K and $295K the replacement insurance required is $365K on two of the valuations and $315K on the $220K valuation.

    The banks are actually willing to lend the buyers are willing to buy, all transactions are arms length and based on real costs supported by bill of quantities. There are a lot of people who spend weeks of commercial hours who end up not receiving any commercial income due to the unsupported valuers being provided on comparable properties that are in most cases 20 years or more old. I fully support a review of the valuation system and from what i hear, so would the banks themselves as they actually do want to lend money but this system is not supporting them to do so. I have many other similar examples where one valuer values at full contract price and another on the same property values at $40,000 below contract price. This system is inequitable.
  • Michael Kent | 27 Feb 2015, 03:53 PM Agree 0
    Valuations are doing my head in!

    Recent examples - Lender one valuation comes back at $485k happy days loan under 80% / lender two valuation done one week late $450k loan now OVER 80% deal dead.

    What is the damn value of the property??? Is it $485k or$450k? How can two valuers be so different?

    Example two - commercial property. Valuation two years ago $700k valuation different company this week $500k when applicants bought the place for $680k 6yrs ago!

    It's a joke and a major flaw in our lending system and nothing is being done about it. The body I am in (who will remain nameless but it has to be either MFAA or FBAA anyway) do absolutely nothing about it even though I have made several complaints.

    It is pointless calling these guys (valuers) as they are so stubborn and won't even discuss these issues.

    It is ruining this industry!!

    The only time I feel safe is when I have to do a 50% lend because at least then there is room for little surprises.

  • CharlieX | 02 Mar 2015, 11:57 PM Agree 0
    lenders put too much weight on LVR, which V is a subjective variable supposedly derived by a professional?

    isn't it at the end of the day, the borrower's ability to repay the loan regardless of the LVR? the borrower's serviceability is where the cushion needs to be?
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