HOW TO INCREASE THE LIKELIHOOD OF A HIGH VALUATION

I believe it is very important for my customers to understand the valuation process to minimise your risk of a low appraisal and increasing the likelihood of a high one.

The valuer searches for completed sales of comparable properties within the past 6 months at most. The valuer will consider things like location, size of land, size and condition of property, any special features and so forth.

There are three main types of valuations:

Full: Involves the valuer conducting an internal inspection, taking measurements of the land and internal living area, and taking photos inside.

Kerbside: Involves the valuer driving past the property

Desktop: Involves the valuer collecting comparable sales data based on a description of the subject property.

Generally, a lender will request a full valuation when there is mortgage insurance involved. Any finance request by you that avoids mortgage insurance, a kerbside valuation may be all that is required. A desktop valuation will be ordered by a lender (to save on costs) when there is sufficient equity in the property and plenty of comparabe sales available.

A low valuation might occur because there are very few comparable sales to assist the valuer in their estimate. Unless the valuer has the sales to back themselves up, they'll be conservative. This is because they don't want to get sued by the lender.

There are a few things you can do in increasing the likelihood of a high valuation:
Most importantly, do some research into comparable sales? Start by talking with some of your local real estate agents. You should then drive by some of the comparable properties to ensure they're actually comparable.

You could order your own valuation; however, expect to pay up to $500.
When estimating the value of your properties on a lender application form, you may want to provide a high estimate.

Some properties will benefit from a full valuation, particularly if the inside is in excellent condition or recently renovated. In this case, in your original request for finance apply to borrow more than 80% of the proeprty's value. Once the valuation is completed, you can adjust the loan amount down to < 80%.

If you consider the valuation to be low, you can challenge it. You will need to provide the lender with new evidence to support your estimate of value.

You can ask the lender to order another valuation, however, more than likely at your cost.

The last option is to consider using a different lender. It's possible a different lender might use a different valuer or be less conservative with their valuations.

Now that you understand the valuation process, all in all, market research is the key.