Why it is important to get high property valuations
Obtaining as high as possible valuation on property is crucial
when building a portfolio as ultimately valuations can affect outcomes and your
equity.
Why do we want the maximum valuation on a purchase? Firstly
we may have purchased the property at a screaming bargain. If we purchased a
property and paid $450,000 and receive a valuation of $480,000, we should be
very pleased!
The higher the valuation the more lenders will lend to us using
the property as security. Often the last and most difficult hurdle for
final approval of a loan is to obtain a favourable valuation on the
property. By favourable valuation, I mean a valuation that is at the
maximum reasonable level for that property. Generally lenders will lend
initially on the lower of purchase price, or valuation. However, it can help us
for subsequent valuations.
If we have obtained a favourable initial valuation, this should
help us when we come to get subsequent valuations. For example, if our
initial valuation was $480,000, in one year's time we might find out that the
property in that area for that particular type of property has gone up in value
ten percent. This can make it possible to refinance your loan to cover the
entire purchase price.
A valuer cannot, and should not, be expected to value a property
at a price higher than it is actually worth. All properties are unique, so
putting an exact valuation on a property is difficult. There is a range of
prices for any particular property. For example, a property may be worth
anywhere from $440,000 to $460,000. What we want to do is convince the
valuer that it should be valued at the upper end of the price range.
Successful investors understand how to get valuers to value
property at the high end of the range.
For
more information on how Momentum Wealth can help you find and evaluate
a great investment property, please contact Ray Chua on
1-800-000-159.
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