The new valuation process explained
Some of you may have seen some changes in the way that valuations are requested by your bank. For those of you that don’t know, the process now is you contact the bank for a loan, they then send a request via a website called property IQ, who then randomly selects a pre-approved bank valuer who is active and knowledgeable in your postcode.
The valuer will then contact you to inspect your property and once he has completed his report, he will e-mail that straight to the bank and a copy of course e-mailed to you the client. Most of the major banks have transitioned to this including, ANZ, ASB, and Westpac. SBS bank have also confirmed and word is the others are likely to follow. This may be around for some time.
Why are they doing this?
- The GFC – worldwide regulators have recommended in the aftermath of the sub-prime lending meltdown in America, that valuations required in property related lending transactions be completely arms lengths i.e you will no longer be able to use your bothers mate who is a valuer who may give you a friendlier assessment, and likewise a developer won’t be able to use an acquaintance that may give him a friendlier valuation. A variation of even 10% in assessed prices compared to real market value can be devastating to the real estate market and the economy in general if everyone suddenly needs to sell their properties and they aren’t worth what we think they are.
- Fraud – believe it or not, many people will doctor the valuations provided to them in order to obtain more lending from the banks I.e inflate market values themselves, or remove detrimental aspects of their property (weathertightness for example). By having the valuer send a copy direct to the bank at the same time you receive a copy, they are effectively closing this loophole.
In the long run, this will be good for the market as it may take some steam out from those who are unfairly topping up their properties to purchase more investments. It will also protect the consumer from developments that have been overpriced to improve profits. To throw a spanner in the works, a group of valuers are taking the banks to court for interfering with a free market the outcome of that case is probably some months or even years away.
For now we have to get used to the way things are, understanding why the process has changed may make the pill a little easier to swallow.
It is our job to keep our fingers on the pulse of property finance. Feel free to talk to us, we are knowledgeable, approachable and quite often our services are covered by the lenders.
Registered Financial Adviser