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Topic # 166110 3-Mar-2015 08:28
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So we are looking at building a new house. The build price is $X. The bank wants a valuation of the floor plans so we get one done (at our expense). The valuation comes back saying the valuation is $X - $19K.

Now I totally get that with valuation's you win some you lose some and that its not always a case of comparing apples with apples.

From our perspective the valuation appears to be flawed. Several comparison properties in the report are not good comparisons, a previous smaller floor plan was valued at X - $10K and the proposed smaller house for the section next door was valued at X + $50K.

So I'm penning a letter to the valuer but I'm wondering what recourse (if any) I have in a situation like this. Obviously the valuer would want to stick to his numbers otherwise it would be admitting fault.

Any ideas?





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  Reply # 1250006 3-Mar-2015 08:55
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Why pen a letter when you could phone up and ask?

Floor plan size and value don't necessarily correlate.  Materials / quality of build matter too.

It doesn't surprise me if market value for a new house is less than build cost.  
If an $18k difference in reg. valuation is make or break on finance, then particularly if you're in either centre of the present "bubble" (Akl or Chch), you're sailing very close to the wind IMO.

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  Reply # 1250007 3-Mar-2015 08:58
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Valuations are a (partly) subjective thing.

They usually use sales data, but if you are building in an area without many sales, that data will be patchy.

 

Everytime I have had to get a valuation done for the bank, I have strongly hinted to the valuer what I have needed the place to value up to. Magically (or not) they have always come up to that valuation.

In your case, you could talk to the valuer and see where they got their figures from and ask them if there isn't a range in which your place could possibly sit, and see if they could possibly review (tell them why, you need a mortgage - the valuer doesn't work for the bank, they work for you).

 
 
 
 




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  Reply # 1250011 3-Mar-2015 09:06
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Mmm thanks guys. I will give him a call to discuss.

I think the predicament is that he has done the work but the Im not happy with the report (Edit; its not just me who thinks this BTW)

Usually if it was a some kind of other transaction you could argue that the work was unsatisfactory and work with the person on a remedy. In this situation you are really calling into question the valuers "honour" which they may take as a personal attack.

Or am I wrong here?

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  Reply # 1250112 3-Mar-2015 11:02
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Had the same issue when we built ours, but they are usually open to upping value if you provide them solid info (silly I know as you are paying for that service) but if it gets the house built then be prepared to put some of your own yards in.


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  Reply # 1250320 3-Mar-2015 15:05
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I think you need to be careful when saying you are unhappy with the quality of the work when what you seem unhappy with is the resultant value. If he had been 18k higher would you be complaining? As a valuer they take a lot into consideration inc build quality (normal bathrooms or tiled bathrooms, fancy kitchen with granite or laminate) as well as sales in area, when was last ratings done. 

 

The valuer has highlighted you may need to think again the numbers. One reason banks changed was the number of people overcapitalizing property. Both in terms of the sale value cap of an area and the potential sale value of the completed home. I built last year and this was all discussed with me and part of the reason I moved my earthquake rebuild from one location in East Chch to another in greater Chch. 



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  Reply # 1250435 3-Mar-2015 17:50
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Quinny, absolutely, this has been a learning experience for sure.

The thing is we aren't upset about the value arrived at but rather how it was determined. In a nut shell the sales comparisons were a stretch, certain negative "aspects" (e.g. lack of landscaping) appear to have more weighting than the improved spec of the kitchen, cladding etc.

Anyway the valuer refuses to budge on his figure so we are getting a second opinion.

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  Reply # 1250478 3-Mar-2015 18:21
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What sort of valuation was it? I have had several valuations done by a quantity surveyor, and they have always ended up being substantially more than the quote the builders gave. I am talking about substantial pricing differences. The problem with QS's is that they don't want to under-quote, and they also don't appear to price in quantity discounts, and it being cheaper per square metre for a larger house, than a smaller one. FOr example they look at how can power switches you have,and then price $150 per completed  fitting and wring. If you are going for a standard spec building design (eg a hipped roof typical house), rather than a bespoke designed one, the building company should be able to give you very accurate pricing.

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  Reply # 1250482 3-Mar-2015 18:37
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before you get a valuation always tell them your requirements. for just in case cases like this. he needs to pluck a number out of the sky and he has no crystal ball. some help required




Swype on iOS is detrimental to accurate typing. Apologies in advance.




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  Reply # 1250691 4-Mar-2015 08:26
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mattwnz: What sort of valuation was it? I have had several valuations done by a quantity surveyor, and they have always ended up being substantially more than the quote the builders gave. I am talking about substantial pricing differences. The problem with QS's is that they don't want to under-quote, and they also don't appear to price in quantity discounts, and it being cheaper per square metre for a larger house, than a smaller one. FOr example they look at how can power switches you have,and then price $150 per completed  fitting and wring. If you are going for a standard spec building design (eg a hipped roof typical house), rather than a bespoke designed one, the building company should be able to give you very accurate pricing.


mattwnz, the house is pretty standard design/spec apart from a few things (up specced kitchen, bathrooms etc). We supplied the full spec sheet (eg with number and type of power points) to the valuer. With the section he said that the section was worth what our offer is which really only leaves in question the house. By his calculations the quoted build price wasn't worth the cost of materials/fitting/labour etc which I find very odd.



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  Reply # 1250694 4-Mar-2015 08:26
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joker97: before you get a valuation always tell them your requirements. for just in case cases like this. he needs to pluck a number out of the sky and he has no crystal ball. some help required


Thanks joker97, this is a good tip.

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  Reply # 1250695 4-Mar-2015 08:28
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again i maintain 18k can be easily plucked out from the air. ask him politely to revise it, or to alter his magical "range". 
if he gives you a single figure accurate to the cents i propose you get a full refund as that suggests he is in possession of a crystal ball.




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  Reply # 1250699 4-Mar-2015 08:38
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Quinny: I think you need to be careful when saying you are unhappy with the quality of the work when what you seem unhappy with is the resultant value. If he had been 18k higher would you be complaining? As a valuer they take a lot into consideration inc build quality (normal bathrooms or tiled bathrooms, fancy kitchen with granite or laminate) as well as sales in area, when was last ratings done.  The valuer has highlighted you may need to think again the numbers. One reason banks changed was the number of people overcapitalizing property. Both in terms of the sale value cap of an area and the potential sale value of the completed home. I built last year and this was all discussed with me and part of the reason I moved my earthquake rebuild from one location in East Chch to another in greater Chch. 


valuations are like guessing how many weetbix is in the trunk of a wagon. I'd love to be a valuer in boom times.

the banks need to protect themselves as it has no idea what you are buying. it doesn't care if your house is 18k more or less than the valuation. what it wants to know is that you are buying what you think you are buying. for example, if you sign a 100 page document saying you are buying a 1mil apartment but all the apartments sell for 100k the bank has no idea, as ... it doesn't exist to know that fact. but if you buy a 1 mil apartment and everyone's apartment sells for 900k and you have a 100k deposit, the organisation of the bank [not a single person in particular] knows that you are in the ball park, and will take a gamble to making money off your sorry wallet.

if your valuation is 850k and you have a 110k deposit it does come up short, and the alarm goes off and it gets directed to a human to see whether you wallet is deep enough to ransack. if you're a doctor, pass no probs. if you have no fixed income, it depends on the risk the bank wants to take, but if the weetbix guesser adds a few more weetbix to the box the alarms don't go and the bank is happy. it makes billions of dollars, 18k loss is definitely worth the gamble, no matter what the weather forecast, as long as your sorry wallet has the proven ability to regenerate. a 20% deposit is such proof. anything less nowadays, humans get involved. but if your 100k has been there for 10 years it's also proof even though it's not 20%.

a bit like a 200mil loss on the NZ super is just a sneeze really. a lot to you and me, but these guys deal with mvoement of  billions every hour. sickening as it sounds, that's the reality of the financial world.




Swype on iOS is detrimental to accurate typing. Apologies in advance.


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  Reply # 1250762 4-Mar-2015 09:35
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tchart:
mattwnz: What sort of valuation was it? I have had several valuations done by a quantity surveyor, and they have always ended up being substantially more than the quote the builders gave. I am talking about substantial pricing differences. The problem with QS's is that they don't want to under-quote, and they also don't appear to price in quantity discounts, and it being cheaper per square metre for a larger house, than a smaller one. FOr example they look at how can power switches you have,and then price $150 per completed  fitting and wring. If you are going for a standard spec building design (eg a hipped roof typical house), rather than a bespoke designed one, the building company should be able to give you very accurate pricing.


mattwnz, the house is pretty standard design/spec apart from a few things (up specced kitchen, bathrooms etc). We supplied the full spec sheet (eg with number and type of power points) to the valuer. With the section he said that the section was worth what our offer is which really only leaves in question the house. By his calculations the quoted build price wasn't worth the cost of materials/fitting/labour etc which I find very odd.


Given the extortionate cost of building materials etc in NZ, I'm not that surprised (and I was a qualified valuer in the UK in my former life).

After all, we are expected to pay $800k for what amounts to a wooden shed here.

At the end of the today, a valuation is the valuer's opinion on the day and so of course two different valuers will not have exactly the same answer. I would have said $19k in the average house value is a rounding error just about. 





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