Association calls for investigation into mortgage valuations

by Julia Corderoy16 Dec 2014
The FBAA has called for APRA to investigate how mortgage valuations are calculated, as it believes home buyers are being disadvantaged.

FBAA chief Peter White said brokers have reported huge variations in valuations for the same property, sometimes by hundreds of thousands of dollars.

“This is not good enough. Valuations should reflect the true value of a property and incorrect valuations can in some cases prevent buyers from being able to purchase the home they want.”

Lenders often rely on computer-generated market averages, without any physical assessment of the property, says White.

A recent Queensland property purchased through an FBAA broker was given a valuation range of $350-$460K by a bank, however when the same property was assessed by three other online valuation companies, the valuations were $533-$643K, $537-$605K and $617-$695K.

“How can a property of this price range receive valuations that differ $345K between the lowest and highest?” White asked.

White says it’s time for APRA to step in and regulate how property valuations are calculated. 

According to the association, ValEx has previously told brokers not to bother disputing low valuations as “only one or two per cent of valuers actually [change] the figure based on a dispute".

“It’s time to review the model used for valuation assessments and allow a more effective dispute procedure,” White said.
 

COMMENTS

  • by Mortgageguy 16/12/2014 8:51:56 AM

    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.

  • by GC 16/12/2014 8:53:06 AM

    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.

  • by Barney 16/12/2014 9:19:01 AM

    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.