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Brokers raising serious concerns about valuations

by Nick Bendel10 minute read
The Adviser

More than half the brokers in a recent poll were unhappy with the valuations system, with concerns raised about collapsed deals, angry clients and extra paperwork.

According to a recent online poll conducted by The Adviser, 52.7 per cent of respondents said valuations are usually too low; 44.6 per cent said they are usually about right; and 2.7 per cent said they are usually too high.

Mortgage Zone director Patrina Chia said conflicting valuations affect her business significantly, since clients can become angry and time is wasted making multiple submissions.

Ms Chia told The Adviser that valuers cause her the most grief with apartments.


"They don't care if the apartment is in a block that is complete with amenities or built with better technology – they are still going to compare with an apartment in an established, old, run-down block," she said.

"What do you think the reaction of a purchaser will be if you tell them you can't lend them the money because the valuer has just downgraded their brand new asset by $100,000 or $150,000 or more?"

Mortgage Choice Brisbane general manager Matt Cunliffe called on lenders to stop being so reliant on Valex for their valuations.

"They want an independent provision of valuations, yet using a single provider is hardly independent, and that's probably my biggest gripe at the moment," he said.

Mr Cunliffe said doing so can make it hard to switch lenders when a deal falls over because of a low valuation.

"We, as brokers, are getting screwed in the foot a little bit there  especially those who deal in the off-the-plan market," he said.

Oxygen Home Loans general manager Alan Hemmings said managing the process around conflicting valuations is a more realistic option than trying to fix the problem.

Mr Hemmings said brokers and their clients could use upfront valuations or borrow through lenders that do not require a valuation.

He also advised brokers to research comparable sales, so they are prepared if the valuation does come in low.

"For refinances, again, using upfront valuations may mitigate some of the issues," he said.

"The second piece is the conversation with the client: how did they come to their 'value' on the property?

"Having the conversation with the client about a realistic value on their property may also help in overcoming some of the heartache if the valuation comes in short," he said.

[Related: Brokers urged to improve their valuation skills]