BANK VALUED LOW – REBECCA TO THE RESCUE
Navigating your way around the local property market seems like a piece of cake, and that anyone could do it. What happens behind the scenes though? Sometimes things can be a little stressful.
I want to share a short story with you this week. This really does happen in local Real Estate, so we can call this a true story.
After years of training and hands on experience in the local property market, I can confidently say I know how to value a home here. Like any market around the world, there are property high’s and low’s and valuing the home is more than asking what the homeowner would like to achieve. Anyone in their right mind would want top Euro, right? But it is my job to make sure the property is priced exactly where it should be within the current market.
You can ask whatever price you want for your own home, and if you are lucky enough to sell to a cash purchaser, then the real value of the property doesn’t really come into the equation. It’s just depends on how much someone is prepared to pay for it. However, what happens when you sell to someone that needs a mortgage? The bank will send out their independent Valuers, to make sure the property values up to the figure the buyers have agreed, therefore allowing the bank to lend a percentage of that amount, using the property as collateral. Sounds good, right? Sounds easy, right? Straightforward, right? Well, yes as long as the Valuer knows the local property market.
So this is my story: There was a home we had sold and the buyers needed a mortgage. No problem, we had done this thousands of times before. The property was a great buy and I was extremely confident there would be no issues with the valuation. The bank sent out their independent Valuer. All good? No! The bank had actually valued the property far lower than the average similar home on the market.
How could this possibly happen? I had done my research. Used my experience and expertise to market the property for the correct price. This wasn’t the biggest problem though. The bigger problem was that the sale was completing in just two weeks time, and the mortgage was still not approved! Staring at my reflection in the mirror, could I see a new grey hair?
After having many, many conversations with the bank proving their Valuer was incorrect with his pricing, they finally agreed to send out another Valuer. Days passed. Still no news.
Eventually came that phone call. Eventually came those words…
“Rebecca, you were right!” Said the Bank Manager. “Excuse me?” said I, “can you say that again?”
“The second valuation came in 40% above market value!” Laughed the Bank Manager in amazement. Yes, even he was shocked at the price difference.
It turned out the first Valuer was not local to our area, and had no real clue on property values, but without us pleading our case, this would have been a very cut and dry scenario. Bank valued low = won’t lend enough = no sale for the vendor, and no new home for the purchaser.
The moral of this story is, by using a reputable Real Estate Agent, providing they have priced the home correctly, will be able to prove to the bank when mistakes are made. Valuers are only human, and we can’t blame them if they aren’t familiar with every local property market. But banks will listen to influential Agents more than individuals, and this proves it.
Update: The completion went through without any problems. Sellers moved out and buyers moved in. Now they are on the road to living there, Happily Ever After!
Oh and what happened to my new grey hair? What grey hair? ;-) Ha! ha!
Selling your home? Enjoy the journey!