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ValEx fires back at industry criticism

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Australian Broker | 19 Dec 2014, 08:24 AM Agree 0
ValEx has responded to recent criticism by industry associations and brokers towards its valuation platform, saying there is “no underlying systemic issue” with its valuation platform
  • GC | 19 Dec 2014, 08:48 AM Agree 0
    This response is typical of the arrogance of the valuation industry. If everyone (brokers and other professionals) are saying the same thing, an intelligent person would sit up and listen. His comments of +/- 10% variations are complete BULLSHIT. Read the brokers comments Hooper. You might learn something.
  • Mortgageguy | 19 Dec 2014, 08:49 AM Agree 0
    Did anyone really expect a different answer, he a Stats person, who does not understand or care what happens in reality. I would love to see him explain to a customer who has to pay 10k LMI because of an overworked, underpaid valuer. I do however believe that the problem lies with the banks, the costs and the limited centralised panel valuers who are from out of the area are the issue.
  • Mike | 19 Dec 2014, 08:50 AM Agree 0
    COS for $495,000 on property outside of regional town in Vic. Valuer (through Valex) values ppty at $465,000. Go to another lender, valuation requested through Valex again, and valuation this time comes back at $385,000???
  • barney | 19 Dec 2014, 08:57 AM Agree 0
    They are missing the point. When there is a low valuation there should be a clear, independent process to enable a new valuation to be ordered.
    Often their system (even with different lenders) would re-allocate a new valuation back to the same firm (for the same result). Or the earlier result is available to other member firms.
    The process of disputing a valuation is also a failure. The time taken alone means the process is not worth pursuing. Though valuers never revisit the result despite the evidence as it would require them to admit an error in the first instance. I would love them to report that statistic!
    I would also love the statistic for deals that valuers get low-balled yet brokers have the property re-valued with a different Lender (not aligned with Valex) for a better result. So independent vals OFTEN (I would argue 'mostly') works for an improved result yet the dispute system NEVER works for an improved result. Something is amiss.
    Valex is a big failure when it comes to reviews and does not offer an independent process.
  • John | 19 Dec 2014, 08:59 AM Agree 0
    Well Mr Hooper, there are a great amount of undervaluing.
    If you want to give me a call, I can show you a number of valuations that are so far out, that it become a bit of a joke.

    Two weeks ago, I requested a valuation, on the request form I put the amount the customer wished to borrow by mistake. The valuation came back at that amount. When I rang the valuer re this matter, he was adamant this was the correct amount??? Now one of his comparisons was the property next door, but the problem is, that property was 11 sg's less and sold for $330,000, my valuation came in at $325,000

    I can have three different valuation and sit the three people who completed them in a room and ask, who is right and who is wrong?

    The chestnut I keep getting back is, I have been in the area for over 20 years, or I have valued over 50% of this estate.

    Speak with the broker and lets see if there is a way we can bridge the gap
  • Veritas | 19 Dec 2014, 09:07 AM Agree 0
    GC's response is typical of the arrogance of the broker industry, many of whom seem to be experts on everything and generally see the world through the lens of their next commission.

    The International Valuation Standards council defines value as:

    "... the estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction, after proper marketing, wherein the parties had each acted knowledgeably, prudently and without compulsion."

    Note the term "estimated amount". The valuation is an estimation by the valuer, or in other words, an opinion of value. Just because it does not match the owner's expectation of value, or the purchase price, does not mean that it is wrong. And opinions differ among professionals in any industry, even brokers.

    I would add that valuers, unlike brokers, are required to have degree-level qualifications and are members of a highly regarded industry body (the Australian Property Institute), which cannot be said of members of the FBAA.

  • Vic Regional Broker | 19 Dec 2014, 09:08 AM Agree 0
    This reply with comparisons , actually confirms what the Brokers are saying , 10 % on purchase is NOT GOOD ENOUGH , it means 10% of all valuations on sale contract are being overruled by a valuers , 3-5% I can accept , 10% tells me there is a problem , no comment on that . Refinance is the real problem answer , does he comment on a solution -no . Brokers I know use the RP date websites to look at property values before they submit , many valuations are coming back UNDER the estimates , he is saying 69% estimates are accurate , does that include data from their web sites at RP data , if that is the case the RP data web site is no good . Will he comment on that . This reply confirms that the valex system is broken and the banks need another solution.
    No comment on how many valuations are returned to valex needing correction. IE 4 bedroom homes , 2 bathrooms , in valuation 3 bedrooms , one bath room( property had been extended and renovated since last valuations), that happened to me , the system is broken and brokers want it fixed Mr Hooper, not given stats saying how good valex is !
  • Brado | 19 Dec 2014, 09:19 AM Agree 0
    90% of valuations have a variance of up to 10%? Sounds like systemic failure to me!

    Mr Hooper, a variance of even 1% is enough for a loan to not proceed and a client to not be able to purchase the property they want. Seriously, there is a problem, face up to it and work on a solution.

    It isn't good enough to lodge a dispute with a valuer and have more than enough comparable sales to confirm the value, just for the valuer to come back with "no, I am right". It isn't worth disputing them, as this is always the result...
  • ken | 19 Dec 2014, 09:21 AM Agree 0
    I don't normally submit any comments, however, by reading your post, i think I need to say something. I requested a Valuation done on a high rise property in Sydney CBD. it's one of the high end apartment, the contract price was 1.31m, first Val came back at 1.1m, second Val from different cal company came back as 950,000! Then I requested the third one, and it came back as 1.31m on contract price!!! And I spoke to the Val company to discuss the variance, and they didn't want to admit their first decision, and saying how experience they are etc. I think this would explain. Question: EVEN IN SYDNEY CBD!!!!!
  • Grahame Hale | 19 Dec 2014, 09:23 AM Agree 0
    I have had two valuations recently one took three days and the other took ten days. It took a week to write the report. Also the valuer should not be allowed to use contract price as the value, this means he is either too lazy to come up with a value or can not work one out. What if they get a good price, where is the equity?
  • Katrina Rowlands | 19 Dec 2014, 09:36 AM Agree 0
    Seriously don't start me on this subject on individual matters. Overall - I cannot understand how we are in the position in our industry where one company who pretty much rules ( they do rule as they very very rarely discuss or accept mitigants ) on a MARKET OPINION that affects every loan processed that requires valuation is considered a good process. How on earth did this monopoly occur and who thought it was a good idea ?????that would be like having ONE credit department and their opinion counted for all banks loans. For one entity to manage the whole market means they will manage their business risk also. Now consider- wanting all of market yet manage their risk ? I wonder how they may do this ????we as an industry are subject to one business opinion and one set of business risks to their company. I see much bigger questions to be asked here than individual valuation queries. Fair enough- this may be just my opinion but it doesn't waiver by 10% - I guarantee it.
  • Macarthur Broker | 19 Dec 2014, 09:37 AM Agree 0
    Veritas, I take objection to your comments about brokers operating through the lens of their next commission. This is slanderous at best and unhelpful to the debate. Like many brokers I carry out my own AVM report which I pay for, to manage the client expectations. I would very rarely challenge a valuation for a refinance but I sure as hell will challenge a valuation if it varies significantly to a contract of sale unless the valuer can provide a logical explanation.

    And no, I do not have a uni degree but have over 30 years experience in all aspects of mortgage finance, not just broking. Your derogatory comments about our industry kind of justify our concerns.
  • Tim | 19 Dec 2014, 09:40 AM Agree 0
    Hey Veritas your personal attack on the broking industry is uncalled for and unprofessional.
    With over 34 years in the mortgage industry I have seen my fair share of valuations and to say the system now is better than it was even 10 years ago is just not right.
    The constant push by lenders for quicker turnarounds and lower costs has in my opinion led to poorer standards in the valuation industry. I actually feel sorry for the poor valuers with the pressure they are under to complete so many reports to make a decent living in the limited time frame they are given.
    We brokers only complain because of the glaring differences (sometimes exceeding 30%) that occur as detailed by many brokers in this forum over the past week.
    Yes opinions differ but when there are variances like that detailed in Mike's comment in this thread you must query how this can occur.
    If I as a broker said to my client I can get you a loan at 6.0% and another broker said to the same client I can get you 4.8% you would have to question why such a significant variance.
    Forget the personal attacks, take the emotion out of it and look at it for what it is, a very confusing system that needs to be explained better than "One valuer had a different opinion than the other".
  • RY | 19 Dec 2014, 09:42 AM Agree 0
    Yeah I don't understand sometimes how they work the valuations. I had a variance in valuation by the same val company but different banks by about $80K. When I approached them they were really confused how this could happen.
  • John Robbo | 19 Dec 2014, 09:47 AM Agree 0
    You keep telling yourself hat Mr Hooper. Enjoy the land of delusion. I recently had two valuations done a month apart on the same property for different lenders after the first application was declined. The first one came in at $870K and the second came in at $640K. BOTH were done through Valex. When we challenged the second val we were told by the valuer that it doesn't matter what we say or how much evidence we produce - they will not change their valuation and the loan as a result fell over - yet Valex still get paid - TWICE! Both vals can't be correct. Valuers almost have a vested interest in a loan falling over as that means that this valuation will never result in a potential claim on their PI insurance.
  • RY | 19 Dec 2014, 09:50 AM Agree 0
    Barney I agree with you. I had a variance in valuation by the same val company but different banks by about $80K. When I approached them they were really confused how this could happen. Valex cancelled the higher valuation by the other lender and adopted the lower. I recently disputed a valuation for a 3 bed apt 1 park, waterfront in Elizabeth Bay as val came in at $1.5m. comp apt sold next door 2 bed, 1 pk sold $1.9m. it took 2 months and they just amended to $1.6m go figure.
  • Ross | 19 Dec 2014, 09:56 AM Agree 0
    Is it possible the comparison system Mr Hopper has used to justify his view point may need to be reviewed.

    Veritas comment "I would add that valuers, unlike brokers, are required to have degree-level qualifications and are members of a highly regarded industry body (the Australian Property Institute), which cannot be said of members of the FBAA".

    I would respectfully suggest this is part of the problem. Arrogance doesn't assist anyone, it only clouds the possibility of a solution.
    The solution lies in the decision makers listening to the end users and accepting perhaps there may be an issue. I'm absolutely certain every broker has had valuation issues of some description but there concerns continually fall on deaf ears.
  • GC | 19 Dec 2014, 10:05 AM Agree 0
    Veritas, My opinion is certainly NOT based on my next commission. It is based on nearly 20 years in the finance industry and having created a reasonable personal property portfolio.
    If you actually read some of the comments you can clearly see that valuers are not doing their job, have the "arrogance" of indicating purchasers paid too much for the property and proceed to undervalue it - thereby screwing over the client. If you were all doing your job properly then the valuation industry wouldn't be in the mess it is and multiple valuations against the SAME property would not have variations of the size noted in these comments.
    As I stated if EVERYONE is saying the same thing then something must be done.
    PS: Simply having a piece of paper stating you have a "degree" doesn't mean you can do the job. It just means you have read the appropriate books and passed an exam. Experience counts........
  • John | 19 Dec 2014, 10:08 AM Agree 0
    What does a uni degree have to do with it?
    I have one, in fact I have two. It comes down to common sense.
    I just want to know what it is like to be right all the time Mr Hooper??
  • Michael | 19 Dec 2014, 10:18 AM Agree 0
    Have even heard of a valuer submitting a completed valuation to his superior for sign off and he reduced it by $50k without explanation. Only reason I can think of is protecting themselves against PI claims. Surely if a price is negotiated between unrelated parties allowing for reasonable marketing time frame (etc) that has to be what the place is worth!
  • SA Broker | 19 Dec 2014, 11:00 AM Agree 0
    Mr Hooper my 20+ years in the industry tell me trying to dispute a valuation is a frustrating and usually fruitless processes. This would be a similar experience of most brokers, hence your low dispute rate. Our solution, find a lender who does not use ValEx and move forward. Case in example: Purchase of vacant land for a build. Valuer would not accept the 10 other sales in the same subdivision as they couldn't verify that they were "on market" transactions, so instead they use "comparable sales" of a home in the same suburb which had been destroyed by fire and had now been approved for subdivision and was listed for sale (note: not actually sold) plus 2 x vacant land in inferior suburbs. The valuer could not see the issue and would not budge. The deal would have died had I not found another lender who could order a valuation without using ValEx, but not to worry, you still got your fee and your stats look good.
  • Tony Thompson | 19 Dec 2014, 11:08 AM Agree 0
    Veritas, my opinion is also not based on my next Commission, it is based on working with my client and having a knowledge of the area.
    To insinuate that all we, as brokers look at, is Commission is outright offensive. How about you make the same comments under your own name instead of hiding behind an alias.

    We sometimes get valuations in lower than "Customer Estimate" where we look at the comparable sales used, and then do some homework in the area, and see that the estimate was unfounded.

    However we do get valuations back that are just totally incorrect. One recent valuation was brought in at $950,000. we disputed the valuation with evidence and after 2 months, the "Degree Qualified" Valuer increased the valuation to $960,000.

    We went through another Bank, with a different valuer and with no prompting, coercion, under the table payment, just a plain and simple valuation request, the new valuer brought the property in at $1,350,000 closer to the estimate of an unqualified broker and customer.

    we have evidence of 3 valuations on the same property giving a 25% difference in values.
  • GC | 19 Dec 2014, 11:13 AM Agree 0
    Here's a thought.
    How about valuers / companies only get paid when a valuation has been used / accepted by the bank, broker for the successful settlement of the loan.
    This may stop the absurd valuations / opinions put forward to all concerned as we have seen for some time. Might make the valuers realise what we have to put up with......
  • Steve Broker | 19 Dec 2014, 11:27 AM Agree 0
    This key issue at stake here is NOT about managing client value estimates or expectations.
    It is the growing problem of significant and usually unsubstantiated variations that occur between valuation reports on the same property! And we are not talking about large time lags - the conflicting reports are usually done within days or weeks of each other.
    Then, as if to add insult to injury, this occurs too often from within the same valuation firm.
    Explain that one to me.
  • Lets think about this | 19 Dec 2014, 11:31 AM Agree 0
    Vertitas, Be careful throwing stones my friend.. Not all Valuers have a degree and not all have been to University. Stating that Brokers are only in it for the next commission, oh my friend do you really want to start that argument... Your biting the hand that feeds you on this one.
    If your an educated man can you tell brokers and myself why valuations are not released to clients, as soon as it is mentioned that a client would like to see the valuation brokers are told that they cannot release the valuation to the client and that it was written for the lender, yet it is the client that pays for the valuation.... What are we hiding behind here? If a Valuer or a Valuation company or Portal is so admit that the valuation that they are presenting is accurate why can the client not get a copy of something that they paid for? I am sure you don't need your degree to come back with an educated response on that one.
  • Dianne | 19 Dec 2014, 11:33 AM Agree 0
    I have been in the industry for 20 years and also worked in a bank understanding the requirements set forth by the bank, but Val X have some major issues when recently I had $160,000 below contract for duplex to be built! Valuer did not look at headworks or costs but went to another suburb and pulled up sales. I did my research and found comparative sales in the same suburb which were not used and would not waste my time disputing as LVR worked. I believe it is the time given to complete the valuation and the price paid by the banks that is influencing poor results. I also question the credibility of ValX when in South East Queensland 30% of valuations are being given to CBRE!! Is this an unbiased system??
  • Steve Broker | 19 Dec 2014, 12:31 PM Agree 0
    This key issue at stake here is NOT about managing client value estimates or expectations.
    It is the growing problem of significant and usually unsubstantiated variations that occur between valuation reports on the same property! And we are not talking about large time lags - the conflicting reports are usually done within days or weeks of each other.
    Then, as if to add insult to injury, this occurs too often from within the same valuation firm.
    Explain that one to me.
  • ML | 19 Dec 2014, 01:12 PM Agree 0
    I have been in the industry for 'only' 7 years, and it coincides with the rise of Valex. Ever since Valex, the whole 'workflow management system' has gone backwards, with the brokers unable to contact valuers and valuations aren't getting done on time. If you try calling/contacting Valex, you are getting unhelpful answers from irritated, 'I am smarter than thou' staff. The valuation industry are now lacking accountability as everyone is hiding behind the 'system'.
  • GC Broker | 19 Dec 2014, 09:07 PM Agree 0
    Hey Veritas, recent valuation through Valex (refinance) customer estimate $450,000 Valex $390,000 pulled the deal and went to another bank who do not Use VALEXXX Customer estimate $450,000 bank valuation $450,000 go figure...... Suffice to say deal still proceeded and we got paid our commissions for persistence. Unlike the valex valuers, get paid whether the loan proceeds or not!!!!
  • Valuer | 19 Dec 2014, 10:08 PM Agree 0
    I am a valuer in Melbourne with 7 years experience. I always check the customer's estimate of their property's value when inspecting a property. So odd that half the time the estimate given by the broker is $100,000 or more above what the customer states they have informed their broker. My dealings with very senior members of your industry has convinced me that there is a "cultural" issue here. Yes, there are certainly quality issues at times but continuous misrepresentation from brokers confirms the lack of professionalism and regulation in your industry. Low bank fees for valuations certainly does not help valuation quality, but the majority of the valuers in my firm (a major) do their absolute best to remain consistent in their approach and we have excellent quality control systems. As for CoreLogic, they are collecting our data for their own use despite denying this. Why were they allowed to enter the Australian market considering the US experience? Complete conflict of interest that they collect our valuation data and then re-sell our information for their own profit. Hooper should hang his head in shame...
  • Ed Ridge | 20 Dec 2014, 08:11 AM Agree 0
    All I will say is previous to Valex we had the ability to talk logically with the valuer and we never had anywhere near the amount of valuation disruption we have today. Veritas your "trolling" is disappointing and shows why a Uni Degree doesn't make you professional. Why don't you put up your name and firm I am sure there are a couple of people here who would be more than willing to take time out of their day and call into your office and discuss this matter with you face to face.
  • Sensitive topic Melbourne | 22 Dec 2014, 08:35 PM Agree 0
    Well said Veritas. Your quote below says exactly what 'valuers' don't do. So many excuses that a low valuation is based on a quick sale for bank purposes etc etc. Nowhere near what this statement implies and what happens in the real world.
    The International Valuation Standards council defines value as:

    "... the estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction, after proper marketing, wherein the parties had each acted knowledgeably, prudently and without compulsion."

    Majority of brokers actually care about their client, their clients dreams of home ownership, their dreams of starting again or of building their dream. Without stereotyping 'valuers', their main concern is to watch they don't get sued and risk their PI insurance.

    Best is to really call them 'Bank Estimators' as this is their job to protect the Banks who pay them.
    Unfortunately nothing much will change with the Big Bank & CoreLogic's Monopoly however they can be more honest and transparent with the process
  • CJ | 08 Jan 2015, 10:48 AM Agree 0
    Gee Veritas. Bold statement. I had a valuation done after an auction. 5 bidders, my customer won. Valuer came in $30k under the Auction price. That was after as you say "...between a willing buyer and a willing seller in an arm's length transaction, after proper marketing, wherein the parties had each acted knowledgeably, prudently and without compulsion."

    Valuers have got real issues at the moment. I had another done through them where in a comparable sale they used a property that was in a different suburb & the land was 3 times the size. How is that 'comparable' ?
  • Tassie Valuer | 18 Feb 2015, 09:57 PM Agree 0
    I am a valuer with a fair bit of experience - firstly can I say I personally would only ever not support a contract in 1 out of 50 valuations. The Bank systems require you to input the EXACT contract amount for everything to go through (provided it is supported) - in that 1 out of 50 scenario, I would readily explain the situation (two-tier marketing, damaged property, etc).

    Also if the mortgage industry hates Valex, you should see what the valuation industry thinks of them - universal hate. Bring on a Lehman Brothers style collapse I say.
  • Michael Kent | 19 Feb 2015, 10:49 AM Agree 0
    One of the problems is a lot of these so called "Property Investment" companies are making $40-50k commission per sale and that has to come from somewhere. Usually it is added to the price of the house and land package or property.

    The poor punter cops it and so the $470,000 contract price is inflated and the property is actually only worth $420,000.

    Happens all the time and there is no point arguing with valuers. What they hear is "mate you don't know how to do your job properly" and they then dig their heels in and get defensive.

    Working for a powerful big bank (who shall remain nameless) helped me. I could call valuers and get low values changed to a higher amount as they feared losing business from such a big player.

    Now that I work for a smaller unheard of business if I question values they don't even return my call.

    It is a MASSIVE problem. I just had one this morning, COS price $320,000 valuation $305,000 - deal dead.
  • Michael Kent | 19 Feb 2015, 01:12 PM Agree 0
    Valuer (in Melbourne with 7rs experience) - In response to your comments, why do you think brokers inflate the property value when we order the valuation?

    Because the valuations always come back low, we are going around in circles here.

    If that didn't always happen we wouldn't have to inflate the value. $100k is extreme but I certainly add at least $50k to what the client thinks their property is worth.

    A lot of valuers think they are royalty and won't even call you back if you want to argue a low valuation.
  • former valuer | 20 Jul 2015, 11:58 PM Agree 0
    Ladies & Gents,
    Regarding rubbish valuations your issue is the money the valuer is paid. Your typical residential valuer straight out of uni, (any one other than a mature age student would not still be in the industry at 30, at a stretch 40) is paid $80 a valuation. Your median value home in Oz costs, say $500K. (that is $500K in liability for 14 years from contract date for $80 bucks) You need to value 5 homes a day to make a living of $70K a year. This is a poor return for 6 years study, 4 years uni, 2 years cadetship until can apply for registration as a valuer with Australian Property Institute. In a perfect world to inspect, physically measure, gather the information required for each unique property would mean say 2 valuations a day. If you want industry change property brokers should be asking for better pay for valuers. I have no interest in the debate as at 40 years of age after 15 years as a valuer I retrained.
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