getting bank loan for over valuation property

Dear all,

recently property prices had risen quick a lot causing property valuation to be lower than asking price. I had been eyeing a particular property which is priced about 70k above valuation. as banks are mainly offering 80% financing, i have to pay more than 200k cash for the property.

question is: is it true that because less caveat are being lodged, valuators cannot correctly value a property at its current price? what can be done to get banks to valuate higher so that i can get a bigger loan amount (and less cash over valuation payment)?

thanks!

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Originally Posted by deemarco69

Dear all,

recently property prices had risen quick a lot causing property valuation to be lower than asking price. I had been eyeing a particular property which is priced about 70k above valuation. as banks are mainly offering 80% financing, i have to pay more than 200k cash for the property.

question is: is it true that because less caveat are being lodged, valuators cannot correctly value a property at its current price? what can be done to get banks to valuate higher so that i can get a bigger loan amount (and less cash over valuation payment)?

thanks!

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They are the professional, they have to base on the market condition and the actual property worth.

No point value so high when the market can not support it. You may get yourself into trouble when the market down.:tsk-tsk: :tsk-tsk: :tsk-tsk:

Pay the real value....:2cents: :2cents: :2cents:

Simple. Tell the bank that you are willing to buy at the asking price and ask the bank whether they are able to re-value the property at that asking price or closest to asking price. Banks usually have several valuers and if they are keen in providing the loan to you, they will check with a few valuers and can grant the loan based on the highest valuation they can get from among the group of valuers. Banks also understand that in a rising property market, they have to be willing to do so other no business liao + granting loan in a rising market is less risky than a falling market. Similarly, in a rising market, if a buyer insist on buying at same PSF price as what they saw in URA, then either they will not get to buy the property or they most likely they have bought a lousier unit in the same estate (which explains why the owner is willing to sell in the first place as they know pretty well that their lousier unit cannot be compared to another better unit shown transacted in URA (since unit address not shown)).

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Originally Posted by deemarco69

Dear all,

recently property prices had risen quick a lot causing property valuation to be lower than asking price. I had been eyeing a particular property which is priced about 70k above valuation. as banks are mainly offering 80% financing, i have to pay more than 200k cash for the property.

question is: is it true that because less caveat are being lodged, valuators cannot correctly value a property at its current price? what can be done to get banks to valuate higher so that i can get a bigger loan amount (and less cash over valuation payment)?

thanks!

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Originally Posted by teddybear

Simple. Tell the bank that you are willing to buy at the asking price and ask the bank whether they are able to re-value the property at that asking price or closest to asking price. Banks usually have several valuers and if they are keen in providing the loan to you, they will check with a few valuers and can grant the loan based on the highest valuation they can get from among the group of valuers.

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Banks have long list of mortgage applications to shift through, approve and then process nowadays.... they hardly have the time to breathe, where got time to look, re-look and triple look at valuations?

In any case, all the acredited valuers are under SISV and their valuations will not and should not differ very drastically from each other one lah....

that is not correct, recently i ask for a few bank for valuations for one particular property. scb came back 850k, ocbc and dbs 1 mil, uob 1.1m. the spread from high to low is 250k.

I am very sure what you said below are just your assumptions whereas what I have mentioned about getting higher valuation is real-life experience. Whoever don't believe can just do what I mention and you will be able to verify whether what I said is true or not. The loan specialists will be very happy to help you request for multiple valuations if they know that you are a serious buyer (and not just asking for fun to know their current valuation).

There is a mis-conception that valuations will not defer much because the valuers are all under SISV but the truth is valuation is an art as well as science (because different properties have different facing, orientation, floor levels, interior layout etc) and hence they will be surprised that actually the valuations can be quite wide (I know of valuations as much as 20% difference between banks and between different valuers).

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Originally Posted by wreckwrx

Banks have long list of mortgage applications to shift through, approve and then process nowadays.... they hardly have the time to breathe, where got time to look, re-look and triple look at valuations?

In any case, all the acredited valuers are under SISV and their valuations will not and should not differ very drastically from each other one lah....

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Originally Posted by teddybear

I am very sure what you said below are just your assumptions whereas what I have mentioned about getting higher valuation is real-life experience.

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I can confirm that as well as the same scenario happened to me. In fact, when I annouced to the bank that has given me a lower valuation that I decided to take up a loan from another bank, the banker called back later to match the valuation.

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Originally Posted by teddybear

I am very sure what you said below are just your assumptions whereas what I have mentioned about getting higher valuation is real-life experience. Whoever don't believe can just do what I mention and you will be able to verify whether what I said is true or not. The loan specialists will be very happy to help you request for multiple valuations if they know that you are a serious buyer (and not just asking for fun to know their current valuation).

There is a mis-conception that valuations will not defer much because the valuers are all under SISV but the truth is valuation is an art as well as science (because different properties have different facing, orientation, floor levels, interior layout etc) and hence they will be surprised that actually the valuations can be quite wide (I know of valuations as much as 20% difference between banks and between different valuers).

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U are assuming I make assumptions.... :tsk-tsk:

There are different modes of valuation namely indicative, desktop & formal valuation whereby the first two modes are probably like you mention, more art than science. This is why it may differ from valuer to valuer because it simply is a "chop chop" type of exercise. Since formal valuation cost $$ and customers love shopping around for rates, the mortgage sales usually just rely on indicative and desktop valuation in their initial assessment, hence the discrepancy from bank to bank.

However the actual credit decision will have to be backed up by a formal valuation whereby the valuer is to do a site visit to look at the actual facing, interior layout etc... When the formal valuation is issued, it really is up to the Bank to stomach the "risk" if the value is significantly lower than the purchase price and the customer is asking the bank to match. This really depends on the bank's risk appetite (amongst a whole host of other factors) at that point in time. If the bank at that point is already "over-exposed", they will not stomach this risk and there is not much point for them to do another formal valuation.

However sometimes when a bank is desperate or they value your business so highly, they may just decide to stomach the risk. It doesn' mean that the valuation has changed. It's a case that the bank has a bigger risk appetite at that given point in time.

Anyway this is my two :2cents:

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Originally Posted by deemarco69

Dear all,

recently property prices had risen quick a lot causing property valuation to be lower than asking price. I had been eyeing a particular property which is priced about 70k above valuation. as banks are mainly offering 80% financing, i have to pay more than 200k cash for the property.

question is: is it true that because less caveat are being lodged, valuators cannot correctly value a property at its current price? what can be done to get banks to valuate higher so that i can get a bigger loan amount (and less cash over valuation payment)?

thanks!

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Frankly my take is to hunt down a bank at this given point with either a big risk appetite or really desperate for business that is willing to stomach the risk to finance a higher quantum despite the gulf in the purchase price and valuation.

But what you end up is with a higher loan commitment, possibly a higher interest rates, longer lock-in and other uncompetitive terms compared to what all the other banks are offering. But if it is to help secure your dream home, then this might be a small price to pay... :rolleyes:

Just go to uob la, and ask them to try to match.

I know 2 friends who did. This is after uob gave them a valuation lower than the asking price but highest among all the other banks valuations.

On review, one friend got his offer matched while the other got it improved but still had to pay cash for the difference. Whatever the case is, it was an improvement from the high valuation that UOB initially gave.:D

Cannot understand what you trying to say as they seem irrelevant to the issue in discussion.
Firstly, We can disregard all theory on valuation since we are only interested in the valuation that bank accepts for granting the loan. In practice, banks do revise valuations based on customers request and this is fact whereas you are trying to tell us that this is not the case?
Secondly, whatever risks the banks want to take is their own concern and not the property buyers. The property buyers just have to do their sum and usually they want to minimize cash outflow as it makes sense to borrow at 1.9% per annum while employing the cash elsewhere to earn 5% or even more per annum. Can't really understand anybody who can't capitalize on this to make more money when there is such a good chance to do so now.

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Originally Posted by wreckwrx

U are assuming I make assumptions.... :tsk-tsk:

There are different modes of valuation namely indicative, desktop & formal valuation whereby the first two modes are probably like you mention, more art than science. This is why it may differ from valuer to valuer because it simply is a "chop chop" type of exercise. Since formal valuation cost $$ and customers love shopping around for rates, the mortgage sales usually just rely on indicative and desktop valuation in their initial assessment, hence the discrepancy from bank to bank.

However the actual credit decision will have to be backed up by a formal valuation whereby the valuer is to do a site visit to look at the actual facing, interior layout etc... When the formal valuation is issued, it really is up to the Bank to stomach the "risk" if the value is significantly lower than the purchase price and the customer is asking the bank to match. This really depends on the bank's risk appetite (amongst a whole host of other factors) at that point in time. If the bank at that point is already "over-exposed", they will not stomach this risk and there is not much point for them to do another formal valuation.

However sometimes when a bank is desperate or they value your business so highly, they may just decide to stomach the risk. It doesn' mean that the valuation has changed. It's a case that the bank has a bigger risk appetite at that given point in time.

Anyway this is my two :2cents:

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Perhaps the valuers are really giving you the TRUE value of the properties? I think you can't really compare the asking prices of the brand new units cos there may be other factors involved that allows the banks which frequently tie up with these develops for the launches to loan up to the developers' asking prices, otherwise, how to sell?

So maybe you might just want to take the cue from the valuations and insist on the price? If even after going around asking for valuations and all the banks do not match the asking price, chances are other buyers may have the same problems too, then no one will buy the resale unit. So why worry?

Valuation has absolutely no relationship to true value of property (believing this is just like people believing in efficient market theory for stock prices).
If valuation gives true value of property, simple analogy will tell us that banks will not give any loan during the 1997 property peak and 2007/2008 property peak since properties are over-valued during that period.
Property buyers just have to do their own assessment and rely on themselves, not on others to tell them what is true value.

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Originally Posted by echotrain

Perhaps the valuers are really giving you the TRUE value of the properties? I think you can't really compare the asking prices of the brand new units cos there may be other factors involved that allows the banks which frequently tie up with these develops for the launches to loan up to the developers' asking prices, otherwise, how to sell?

So maybe you might just want to take the cue from the valuations and insist on the price? If even after going around asking for valuations and all the banks do not match the asking price, chances are other buyers may have the same problems too, then no one will buy the resale unit. So why worry?

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So centro at amk, a 99yr lease hold is worth $1100 psf. :doh:

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Originally Posted by echotrain

Perhaps the valuers are really giving you the TRUE value of the properties? I think you can't really compare the asking prices of the brand new units cos there may be other factors involved that allows the banks which frequently tie up with these develops for the launches to loan up to the developers' asking prices, otherwise, how to sell?

So maybe you might just want to take the cue from the valuations and insist on the price? If even after going around asking for valuations and all the banks do not match the asking price, chances are other buyers may have the same problems too, then no one will buy the resale unit. So why worry?

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Originally Posted by teddybear

If valuation gives true value of property, simple analogy will tell us that banks will not give any loan during the 1997 property peak and 2007/2008 property peak since properties are over-valued during that period.

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why wld banks not loan buyers especially when buyers are cash rich & only take less than 60 or 70% loan ~

Did banks ONLY give 60 or 70% loan in 2007/2008 or 1997 and not 80% or even 90%? Did banks give much lower valuations than transacted price at that time? If banks only give 60/70% loan & not more, and give much lower valuations to properties at that time, then may be you are right to say that property valuations reflect true value of properties. Unfortunately, the answer is NO.:scared-2:

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Originally Posted by august

why wld banks not loan buyers especially when buyers are cash rich & only take less than 60 or 70% loan ~

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many thanks for all your advices...

its true that a property may only be worth as much as the buyer thinks.. i think the asking price is still reasonable and within my budget.. therefore would take some of the suggestions to go around asking for banks to match the valuation. ;)

only went to 2 banks (SCB and OCBC) so far and seems SCB is really lower in valuation. will try UOB as suggested..