The concern that I have is that valuers are being far too conservative in this tough market and this is causing immense frustration to many owners.
I highlight a situation where a property has been on the market for a considerable time and finally we rejoice because we have a buyer. We agree on a price that is fair and reasonable and a sale is imminent.
The bank is providing finance for the buyer and request a valuation...we all hold our breath because this has become a nightmare situation. Yes, you’ve guessed it—the valuation comes in well under the agreed figure. It seems that the banks criteria is now “tell us what the property is worth if we have to have a fire sale in three months”. The banks were the lenders who handed the money to people for ‘low doc’ loans - people who could struggle if they didn’t budget correctly. Why should this then distort all loan applications?
In recent years, we have seen a major downturn in the number of transactions across our Shire.
We can blame the Global Financial Crisis but I would also strongly ask the question: Why, with interest rates at all time low are we not seeing a buoyant market both for buying and investment? With yields at between 5%-8%, why are we not seeing investment in real estate?
If the valuation of a property continues to stifle the market, why would people want to sell? If an owner becomes aware that the people in their street have just sold because they needed to move on - this then has major implications for everyone else in the street who then have to consider their property in the context of this sale price. In the “old days” I thought a property was worth what someone was prepared to pay!
I wonder if valuers are fearful of liability. Does this keep them on the conservative side?
Are they frightened of being sued? If the bank is taking the risk, creating the guidelines and paying the valuation fee, they would unfortunately influence what is happening in the industry.
Over conservative valuations are a having a major effect on our market. Borrowers are paying high mortgage insurance premiums or unable to borrow. Double digit discrepancies in an agreed sale price and a valuation are in my opinion, completely unacceptable.
So where do we go from here? Anyone have any ideas about this?
