Are you unhappy with your property valuation?

One of the leading valuation management firms has come out requesting that customers stop challenging their valuations. ValEx, VMS and other valuation companies that work with the major banks receive high numbers of dispute requests however few are successful.

Additionally, a major bank that we work informed us that only 3% of people successfully challenge a valuation. In other words don’t bother challenging a bank valuation!

However, we disagree with Valex’s assessment that bank valuers are accurate as we regularly see differences of as much as $200,000 between the valuation figures for two different banks.

Valuers are only human.hey make errors and their personal opinion can effect how they value a property. The average difference we see between the valuations of two different banks is approximately 9%.

If you are refinancing then your valuation can make all the difference. If your valuation comes in low then the Loan To Valuation Ratio (LVR) will be higher, which may mean that you will need to pay Lenders Mortgage Insurance. This reduces the amount of equity that you can access and increases the cost associated with setting up your mortgage!

So what should you do if you receive a low valuation?

Find out why the valuation was low

The main reason that valuations come in low is that the valuer did not find any comparable sales to support the value that you estimated.

However there could be another reason. Some banks allow you to see a copy of the report which can help you to work out why you didn’t get the value that you expected.

Find comparable sales

You can use our guide on how to value a property to find recent sales of similar properties which can be used as evidence of the value of your home. When the next valuer comes out to see your property you can give them a copy of your sales evidence.

Forget your existing bank

If your bank has a valuation on file showing your property to be worth a particular amount then that is it. You can get a private valuation or a valuation from another lender however your bank will always use the lower of the two. Your only choice is to use a different lender.

Get an up front valuation

Don’t just put in another loan application! You’ll damage your credit score by having too many enquiries on your credit file. Some banks allow us to order a free valuation up front before submitting a loan application.

Talk to us for assistance

Do you need help to get a better valuation of your property? Call us on 1300 889 743 or enquire online and one of our mortgage brokers can help you to refinance using a new valuation from a different valuer.

Below is the article from Broker News:

Brokers need to stop disputing low valuations, as it will seldom lead to any change in the original assessment, industry valuation management firm ValEx has said.

Valuation Exchange general manager Michael Hooper has told Australian BrokerNews that while there may be a perception that valuers are being overly-conservative, their assessments are generally correct in the first instance. He said brokers and consumers need to accept the initial valuation of a property, regardless of whether they get the desired outcome.

“The honest truth is that brokers need to accept that valuation in the first instance. Generally speaking, valuation assessments in the vast majority of cases are correct, with only 1% or 2% of valuers actually changing the figure based on a dispute,” Hooper said.

Hooper does not believe valuers are being overly conservative. He commented that low valuations are naturally reflecting a stagnant or even declining market.

“I don’t think it’s a case of conservatism. If market conditions are stagnant or declining, then valuers will reflect this in their assessments based on actual sales that have occurred. I also think that given 70% of all lending relates to refinances, these customers have unrealistic expectations of the value of their properties,” he remarked.

These unrealistic expectations, Hooper said, can also extend to brokers.

“With brokers trying to consolidate debt and refinance, if the property value is stagnant, or has in fact declined, they can’t do business and it may mean the refinance can’t happen. Therefore, the customer stays where they are. No money for the broker,” Hooper said.

While Hooper said most lenders have dispute processes to challenge valuations, he dissuaded brokers from pursuing this channel.

“I wouldn’t promote this, as valuers get tired of getting disputes because the customer or broker is not happy with the valuation,” he commented.

Source: Broker News 15/09/2011

The Gillard government has announced that they will introduce a new program that will allow customers to switch bank accounts without the need to change details of billing, salary, mortgage payments and deposit accounts.

This is a great initiative as many people simply do not change banks due to the hassle associated with switching over their direct debits.

In practice this may be difficult to implement as the bank systems may find it hard to cope with such changes. We expect that there will be a lot of technical difficulties and lost transfers in this process. However should this work effectively it will be a big win for all Australians who are fed up with terrible service form their bank.

It should be noted that this program will only cover cheque and savings accounts. The switching process of credit cards and other accounts will still have to be completed manually.

We recommend that if you are going to switch lenders then it would be best to switch over your direct debits manually so that there are no lost funds or declined direct debits.

Since the governments ban on mortgage exit fees, there has been a slight increase in refinancing of home loans. Refinancing your home loan is now easier, more affordable and there is more competition between lenders allowing you to get a lower interest rate as well.

You can learn about switching banks on our refinancing a home loan page.

Below is the article from the Sydney Morning Herald.

“BANK customers who want to move savings accounts from one institution to another will no longer have to do the administrative heavy lifting of changing direct debit and credit details.

From July 1 next year, the Gillard government will introduce a new ”tick and flick” program which will allow customers to switch bank accounts without the added complication of having to change the details of billing, salary, mortgage payment and deposit accounts.

The move follows early signs that the government’s ban on mortgage exit fees has sparked a slight increase in refinancing of home loans, although most customers were still choosing to switch between the big banks than move to a smaller lender.

Under the new arrangements, customers will be required to sign just one form that authorises the previous bank, credit union or building society to transfer the details of all automatic transactions linked to the customer’s savings account to the new institution.

The Treasurer, Wayne Swan, will announce the new initiative today as well as the introduction of a mandatory one-page fact sheet that aims to help consumers understand the costs and benefits of lenders’ mortgage insurance when they take out a home loan.

Home owners will be able to compare quotes side-by-side, including the difference in premiums and rebate schedules.

Mr Swan will also announce a National e-Conveyancing System to provide a single online portal for property sales which is aimed at helping reduce the costs associated with loan applications, property valuations, settlements, property title searches, and registering mortgages.

The measures act on recommendations made by the former RBA governor Bernie Fraser who was commissioned by the government to report on the viability of bank switching for Australian consumers.

Mr Swan will today release the full report, Banking Services: Cost-Effective Switching Arrangements, and accept his recommendations in full.

The government intends to set up a Treasury working group who will investigate whether the ”tick and flick” service should be extended to small business customers.

The Treasurer said the latest measures were designed to help Australians get the maximum return from their savings.

”Between work and family life, it can often feel like you just don’t have the time to go through the hassle of moving all your automatic debits and credit,” he said. ”That can mean missing out on a better deal on your savings at a time when family budgets are tight.”

But the shadow treasurer, Joe Hockey, said increasing the regulatory burden on banks would see associated costs passed on to customers as higher fees and interest rates.

”Australians deserve a comprehensive approach to banking reform, instead of this knee-jerk, ad-hoc and piecemeal approach offered by the government,” he said.

”The Coalition repeats its call for a full inquiry into Australia’s financial system to deliver Australians more freedom, fairness and flexibility in their day-to-day banking requirements.”

Source: Sydney Morning Herald 21/08/11