Valuation of property for mortgage

kildon

Hi,

When a valuer is valuing a property for a mortgage, are they using the average of asking prices of similar properties in the same area (i.e. comparables) or are they using what they really think the value is (i.e. asking price minus 10/20% or the amount that a similar property sold for)

What has people's experience been?

K

p.s. not asking about house prices but rather the methodology behind the valuations used

gigino

during the boom I know of one property which sold for twice the expected price by auction - two mad bidders - and the valuer for the bank mortgage just valued it at the auction price. Should the valuer have done that - I do not think so. Mad or what ?

foxy06

I got a house valued for a mortgage last year and the valuation was exact same as asking. Coincidence?

Senna

When we bought our house the valuation was 25% higher than the the sale price. The valuer said the cost to rebuild the house were higher than selling price.

kildon

thanks for the responses

say the asking prices for 3 houses in an estate range from 330 (2 houses) to 450 (1 house) and the price of the same type of house in other estates in the area are 330(ish), and you've agreed a price of 250k for one of the houses where the asking price is 330, approx. what would the valuer put down as a valuation? in the peak these houses sold for btw 600 and 650

gigino

kildon wrote: »

thanks for the responses

say the asking prices for 3 houses in an estate range from 330 (2 houses) to 450 (1 house) and the price of the same type of house in other estates in the area are 330(ish), and you've agreed a price of 250k for one of the houses where the asking price is 330, approx. what would the valuer put down as a valuation?

I would have thought 250k, if thats what one can be bought for today. Asking price is meaningless, in my humble opinion.

Think of another hypothetical situation :
During the boom, if 2 bidders at auction went mad - say a farmer on each side of a field for sale - and the field was worth say 20k if it was anywhere else similar, but because 2 mad neighbours let pride get the better of them and they bid at auction up to say 100k for the field - what would you value the field at ? 20k which is what similar fields in the locality sold for, or 100k ?

Doop

foxy06 wrote: »

I got a house valued for a mortgage last year and the valuation was exact same as asking. Coincidence?

If it was lower, the bank wouldn't of released the funds to you...

As long as the price agreed is a fair price in the current market the valuer will generally value it at the agreed price. (after taking into consideration comparable s)

It does happen that valuers value houses lower than the agreed price... which then leads to the proverbial s**t hitting the fan. I have done this in the past, and needless to say you are not a popular person afterwards.
Agent, purchaser and vendor, all want the sale to go through.

In the boom times tho, many valuers barely looked around and just scribble down what ever value was agreed.