11 Jun Getting the best bank valuation – Andrew Mirams
Just how much can you manipulate or influence a bank valuation? My thinking was always very little, but maybe not. How can you get the best bank valuation? Our finance guru – Andrew Mirams – sets me straight on that issue.
Kevin: Just how much can you manipulate or influence a bank valuation? My thinking was always very little, but maybe not. How can you actually get the best bank valuation?
Andrew Mirams, I want to ask you that question. Andrew is of course a regular contributor and also from Intuitive Finance.
Andrew, is it possible to manipulate a bank valuation? And how do you go about getting the best one?
Andrew: Hi, Kevin. Yes, great question. I’m not sure “manipulate” is quite the right word, but certainly, to get the best outcome and try to manage to get the best outcome. There’s a whole range of tips and tactics you can use and employ. Some of them are going to sound pretty similar and pretty basic, but it’s often the little things that matter when it comes to just getting the right result.
Kevin: I think I’ve come up with a better word than “manipulate,” because you’re right, it’s not the best word. But “influence” is probably a better word. Let’s go with that word, “influence.” So, how do we go about doing it? What are some of the tips you’ve got?
Andrew: Okay. The first one… And again, like I said, it’s going to sound silly, but just be nice to the valuer. They cop a raw deal from time to time, and everyone says they’re always conservative. But the reality is valuers are often out on the road, battling traffic, being in and out of houses all day. They might do anywhere between four and eight valuations in a day.
The harder you make it for them and the less helpful you are in terms of booking in and helping them with their schedule, it’s just those little things. It’s a natural thing that we all have feelings, so just try to be a little bit nicer to them right from the outset. It just doesn’t hurt. It’s not going to necessarily help, but it certainly won’t hurt.
Then when they get there, you know the old saying, first impressions last? Just clean the place up. Mow the lawns, tidy the garden. You basically want to have your house or property as if you’re going to sell it, so as if it’s going to go to auction tomorrow and you’re trying to impress all those buyers out there.
So, tidy things up. Neat entry, vacuum, clean. Don’t leave dishes in the sink. Don’t leave clothes lying around. Just make sure the bedrooms are made up and the beds are made. Because I can tell you the amount of valuations we get back when a figure will come in a little bit lower, and guess what the photos show? All of those things. They’ll highlight the things that don’t quite look right.
Similarly, when it looks spotless and immaculate, the photos look fantastic and it’s easy to get a much better result. So, again, a couple of little basic things.
The next one now is if you’re preparing or trying to improve your property, a lick of paint and things like that, and just having your kitchen and your bathroom up to date. You don’t have to spend a lot of money. If you’re preparing for a sale or you’re trying to do a cosmetic renovation, go to where it matters.
A lick of paint on the outside will look fantastic, the house looks brand new. And the kitchen and the bathroom, it might be just a new splash back, something simple like updating your tapware. And similar in the bathroom, you don’t have to completely gut it and redo it; just make it look modern, clean, and functional.
Another great one is lighting. If you think about the lighting in all sorts of properties, they all have different aspects. So, in the southern states, as we enter our winter months, lighting is really key – the natural light you can attract and things like that. In the northern states where it’s light, then it’s probably getting the right light and not being too warm.
And a little thing, like just in the southern states, having a fire on and burning and just trying to add to the ambiance of the property can make an incredible difference to just the warmth of the place and the feeling as a valuer walks in.
Remember, again, they are human, they do have feelings. Some people might argue that, but I know a lot of valuers, and they’re looking for the way that they can give you the best outcome.
The other thing, and the final thing, I think the most important thing is just be realistic. Valuers aren’t market makers; they’re market assessors. So, do your homework, get some comparables, have an idea.
And the comparable is not the mansion at the end of the street that compares to your one-bedroom apartment; a comparable is if your house is a three-bedroom house, get some local sales data. Just do some research and then be realistic – not what you think you might get if you’re going to resell, but where does it sit in with the rest of the other options there, Kevin?
I think that being realistic is a really important thing, because often, people will put a really high figure on their property because they say valuers are always conservative, and what we often see is they’re so far removed that it can come in at a much worse result.
Kevin: You make some very valid points. I want to ask one or two very quick questions. You’ve answered one of them, and that is about supporting material. Is it okay if I do some research on my property and get a bit of understanding, keep my feet on the ground? If I say to the valuer, “Look, I’ve had a look around. These are some recent sales. How do you think mine compares to this? Are they comparable?” In other words, ask his opinion. Is that acceptable?
Andrew: Absolutely. One of the first things we’ll do is we always ask our clients is “What do you think your property is worth?” And the reality is some people genuinely don’t know. It doesn’t matter that much to some until we’re going to do a refinance or we need to look at the equity or they want to buy another property or are looking to sell.
So, if they don’t know, we’ll often recommend they get in touch with a local agent and just ask them to give you an appraisal, but also backed up by three comparable sales. So, it’s not just an arbitrary figure thrown up in the air, pie in the sky stuff, but let’s try and get some comparables that actually give a realistic figure to what we think the property may or may not be worth.
The figures that an agent might say and a valuer might give you will always normally be different, because agents are on the ground day to day; they know exactly what the market is doing and what that assessed value is. Valuers actually assess sometimes about 3 to 12 months in arrears because they’re actually looking at the analytical data, not what’s happening right now today.
Kevin: Yes. I always say that valuers tend to look backwards, they look at the history, whereas real estate agents become a little bit more ambitious and probably think about where the market is headed, so that’s why you get that big difference.
Andrew: Absolutely, because the valuer’s job is to look at fair market value, not what they think you might get a premium at.
Kevin: That’s right, exactly. Mate, can I ask you one other quick question? Say the valuer turns up, we offer them a cup of tea or coffee or whatever – which I think would be a nice thing to do – and then you say, “Look, I have a few things I’d like to quickly talk to you about. I can do that at the end or at the start.” So, set the agenda. But when they’re doing their work, leave them alone. Don’t follow them around, because I find a lot of valuers get very upset when they have someone looking over their shoulder all the time. Fair comment?
Andrew: Yes, great point, Kevin. They’re there to do a job, not to make a new best friend. So, just being courteous and offering them a cup of tea, a coffee, or water or whatever it might be is absolutely not going to hurt your cause, but their job then is to walk around your property, take some measurements, take some photos, and be able to get a feel for its fair market value in the current market. So, yes, I think that’s a great point.
Kevin: Excellent. Always great talking to you. Andrew Mirams from Intuitive Finance. We’ll catch you again soon, mate.
Andrew: Pleasure. Thanks, Kevin.