Tuesday, January 16, 2007/
What’s it worth? Be wary of figures put up by a bank’s valuer.
What’s it worth?
The word “culture” apparently was enough to make infamous Nazi Hermann Goering reach for his revolver. The word “valuer” is having the same effect on real estate agents across the country. Property investors, whether buyers or sellers, would do well to consider these almost identical tales from opposite ends of Australia.
“Prue” of Brighton, in bayside Melbourne, was close to landing a buyer happy to pay the $675,000 asking price for one of her units. Then the official “valuer” hired by the purchaser’s bank spoilt the party by declaring the apartment (blue-chip building, beach and bay views) was worth just $550,000. No amount of gnashing of Prue’s teeth nor threats to the valuer’s nether regions from her lawyer could persuade him to increase his appraisal.
Up in Cairns, meanwhile, an alarmingly similar scenario: a local solicitor who has been buying and selling property in the northern town for 20 years offered the asking price of $760,000 for a house in uber-trendy Edge Hill.
The valuer, working for Westpac, put a $600,000 tag on the house, even though a smaller neighbouring property had fetched $755,000 two months earlier. The Cairns solicitor took matters further than Prue: he simply asked Westpac whether they wanted to lend him the money or not; if not, he’d find a bank whose valuer had a full complement of brains.
Valuers say they are under pressure to be more conservative, and afraid of being sued by lenders if borrowers default. At least two of my local bank managers deny this indignantly, saying timid valuers are depriving them of lending opportunities by scaring off buyers and sellers.
Regardless of who’s zooming who, it’s worth remembering a couple of important points when it comes to the “official” value of your property. For instance, if you have a house you want to do up and sell, don’t go spending thousands of dollars on landscaping the garden.
Valuers are size queens: a garden of 1000 square metres filled with gorgeous plants and water features will be “officially” worth exactly the same as a 1000 square metre sand pit next door. A swimming pool is “officially” worth $15,000, no matter how much it would look at home in Hollywood.
And a drop-dead view is worth … wait for it … a big fat zero.