Sometimes valuers, brokers and lenders approach the subject of property differently to home-buyers.
Valuers, brokers and lenders think in terms of risk, whereas home-buyers usually think in terms of opportunity. For example, you may have found a little, tumbledown shack in a great location which you think would make the perfect renovation project for your first home. You have friends who are tradies and willing to go into it with you, and you have support from your family. You’ve made an unconditional offer and all you see is a great opportunity.
The lender, broker or valuer on the other hand, is thinking that this is a very “high risk” investment.
If the bank valuer decides that the buyer has over-paid then the valuation may fall through. Off the plan home purchases fall prey the most to such shady practices out of all types of property sales. Pre-auction offers, or private-treaty scenarios are less likely to encounter this issue, and it’s very rare when it comes to auction situations.
How thorough a valuation is needed is determined by whether a lender’s mortgage insurance is necessary and hinges upon the lender’s policy and buyer’s loan-to-value ratio.
1. All fine, no valuation is necessary.
2. Only a desktop valuation is needed. This pumps sales for comparable property listings in the same location into a computer-model to produce an estimate.
3. An in-person road-side valuation is necessary. This requires the valuer to drive past the property.
4. Complete valuation is needed. The valuer comes to your home, or property and performs a walk-through.