Low valuations that don't reflect rising markets are killing deals.

Valuations sometimes come in thousands of dollars below the price that buyers and sellers have agreed upon, which is in fact, the actual market value!

Some valuers are failing to acknowledge the recovery in real estate values underway in suburbs that have recently bottomed out and turned the corner. When a sales person or agent has done a sterling job in selling a home or maybe when multiple bids push a house price above what the seller is asking; which is not unusual in neighbourhoods where demand is particularly strong, valuers are still coming in with values below the agreed-upon price.

 Valuer’s reluctance to recognize these price increases is becoming a significant cause of complications in the sales process. Since the GFC, banks have considerably tightened their lending criteria making it more difficult to borrow the funds to complete a purchase. At the same time, valuers also became a lot more conservative in their approach to residential property as they unfortunately are stuck with having to compare only sold properties of a comparable nature during the last six months. So what they are now doing by default is creating the market, not comparing the market! The market locally WANTS to recover but is being held back to this degree by the actions of a few still over cautious valuers.

 The banks have now started to relax some of the lending criteria in an effort to stimulate activity in this sector (because they have noticed their profits falling – NOT) but it still needs the assistance of the valuers to see this process to fruition. It is still a difficult enough proposition to successfully sell a property to one party, let alone then have to resell the VALUE of the property to a professional valuer well enough, that they can then sell that number to their client – THE BANK!

 This problem not only inhibits the sale of new and existing houses, but it also impacts on maintenance, improvements or renovation of existing homes. Home owners often decide not to improve their existing house when they are considering the sales process for fear they will not get their money back when the house is sold. Most of the reason they will not get their money back is that valuers still do not assign fair and proper value for new or improved construction, much less aesthetically sensitive renovations.

 So the circle continues, buyers will not pay the extra because valuers keep the "value" underrated when doing a pre-purchase valuation or the buyers find themselves in the position of being able to renegotiate the purchase price with the seller’s agent because their bank will not lend them enough to complete the contract on previously negotiated terms due to an under valued property.

WHO EVER SAID SELLING A PROPERTY IS EASY?

Chris Marsh has an excellent knowledge of the Cairns region, having moved here from Sydney in 1980. Real Estate has always been a passion as well as a profession and his integrity and drive have established him as one of Cairns leading licenced agents, sought by vendors for his outstanding results.

About The Author

Chris Marsh

0427 278 473

Licenced Real Estate Agent

Chris Marsh has an excellent knowledge of the Cairns region, having moved here from Sydney in 1980. Real Estate has always been a passion as well as a profession and his integrity and drive have established him as one of Cairns leading agents.

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