Litigation a ‘wake-up’ call for valuers

by AB10 Jun 2014
A shift in the banking sector is prompting the bar to be raised for increased rigour around the valuations demanded by lenders.

Western Australia valuations firm Herron Todd White has been building up its quality assurance team in the wake of a number of recent legal cases involving GFC valuations.
Other valuation firms that do not ramp up their quality assurance measures will struggle to compete with growing demands from banks for greater rigour – and if they fail to change, may find bank panels closed to them, the firm said.
HTW WA quality, training and development manager Stephen Miller – who until recently worked in risk management with Bankwest – warned increased litigation has meant it is more important to manage risk within valuation firms.

“Banks are requiring quality assurance of valuation reports and they are looking for greater internal risk management around valuations at the valuer’s end,” he said.

“The valuers who are managing risk and improving quality will survive and will continue to be appointed to large bank panels, but the valuers who don’t address that requirement will find their opportunities for bank panel appointment will be impacted and possibly diminish.”

With rising fees for professional indemnity insurance for valuers – and a recent spate of legal action against valuers in Australia and abroad – Miller said the lending and insurance sector were “acutely aware” of the risks of inaccuracy.

“It’s been a wake-up call and another driver for banks, lenders and valuation companies to understand the need for rigour around risk management control,” he said.

“It is a win-win situation for a valuation company protecting their own risk but also it is important for the banks that firms have really good risk management practices as it gives them a lot more comfort.”

The Australian Property Institute has reported professional indemnity insurance premium   rises of 30 to 50% for valuers in recent years, with some valuers refused insurance by insurers even with claim-free histories.

Miller said he is one of a strong ex-banking team at HTW which has detailed understanding of the requirements for valuations for mortgage and security purposes.


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  • by Melb Broker 10/06/2014 9:54:32 AM

    If ever HTW needed another reason to undervalue, they have just found it. I cringe when my valuation requests are submitted to HTW.

  • by Brisbane Broker 10/06/2014 10:50:06 AM

    Story 1): valued my home through WBC back in 2009 and HTW valuer give me $550,000 after giving him all evidence around what have had sold similar to my home, 3 mths later sold my home for $680,000.

    Story 2): was organizing a loan for one couple that both a investment property (construction) and HTW valued $35,000 less, 2 weeks later one of my client went and both a house directly thorough a builder in same area for $30,000 less then other client and HTW valued it again $35,000 less again.

    Please explain????????

  • by Regional Broker 10/06/2014 1:41:40 PM

    I find this to quite incredible , the banks want to pay a minimum for a short report but appears to be saying if you do not get it right you the valuers will be sued. what an insult , my question to the banks is are you are getting what you are paying for , a short report is a cut price job , how can a valuer inspect , measure and do proper comparable sales for 150.00 , simple they cannot do this for the fees being paid . The valuers professional body and standards body need to stand up for the valuers .