Not all Valuations are Created Equal
Have you ever felt like you’re not sure what you need from a valuation? How about that feeling after you’ve already had one, but it didn’t really fit your brief? You’re not alone. This is a common theme among our recent clients too.
You will often hear of people that are trying to wing it on their "passion for property".
It’s a bit troubling really. I know if I was going to get an operation, I wouldn’t be looking for a GP with a "passion for surgery". Wouldn’t you be looking for a specialist surgeon too?
Not all valuations, and valuers are the same and a five-minute phone call can often tell you how suitable someone is for the job.
Valuations for different purposes, vary greatly. Different assumptions and even vastly different definitions of "market value" are common. Some of our clients are surprised to hear that we will happily tell particular customers that there is work we don’t do yet we do our best to refer you to someone that can assist in these specific instances. We specialise in the difficult, obscure and unique and our clients seem to agree that we have created a pretty good niche out of it.
In the next few minutes, we’ll go through a couple of examples of valuation types and some of their similarities, as well as some of the reasons why you could be short-changing yourself if you don’t start with the right valuer.
Quickly, we’ll cover the first two valuations that we don’t do at Titan, just to keep us honest. The remaining three are certainly more difficult, and are just some examples where a lot of our clients discover the most benefit working with us.
These are the valuations you get when you plan to secure a mortgage against property. The bank is the instructing party here, so the valuer works for them, not you. Mortgage valuations have to be completed in accordance with the ABFI Residential Standing Instructions. Titan does not work in this space and if you need a mortgage valuation, you will be best serviced by some of the larger valuation companies in the industry.
As well as the technical requirements, the valuation company that does the job also needs to be on the approved panel for the bank you are getting the valuation through.
Business Valuations are generally calculated as a multiple of profit and are often conducted by Forensic Accountants rather than valuers, however there are the odd valuers dipping their toes in this space. This is another sector of the industry that we do not work in but have strong industry contacts that we can refer you to if required.
Specialist experience and models are used to complete this work. Sale transactions are also often subject to confidentiality agreements which means unless you are involved in the transaction in some way, the evidence you get in the report may not be accurate or current.
This is one area we have a lot of exposure in and work on behalf of landowners and acquiring authorities regularly.
Valuations for Compulsory Acquisition (under “Just Terms”) are completed in accordance with the Land Acquisition (Just Terms Compensation) Act 1991. In particular, Section 56 talks about Market Value with other factors that may be included as part of an acquisition including costs for legal and valuation, relocation costs and what can be best described as sentimental value to the owner. There is also extensive Caselaw that talks about all of the Heads of Compensation are treated. We have an article that you can read if you want a bit more information here.
Getting someone that doesn’t know their way around the Act can, and often does cost you money. Whether it’s a result that doesn’t maximise the compensation, or knowing when to take a deal with extra costs in litigation. Expert legal advice is equally important for work in this space. Your local cut price conveyancer won’t cut it unfortunately.
Land Value Objections and Appeals
Land value for Rating and Land Tax Purposes are completed as an unimproved land value. All the valuations are done on 1 July of that respective year (also known as the “base date”).
The relevant legislation in NSW is the Valuation of Land Act 1916. The rabbit hole starts at the Land Value based on Section 6A, with differing provisions for heritage properties, contaminated land, extractive industry, crown land, stratum property and the list goes on. Detail on the VG’s policies on each of these can be found here. We also have an earlier article about lodging your own objection here.
Apart from the intricacies of the Valuation of Land Act. The requirements have changed in recent years making it much more difficult to have an objection accepted. We know exactly what needs to be done to lodge an objection that has merit and will tell you from the outset if an objection has a poor likelihood of success so you aren’t spending money unnecessarily.
Easements are valued under Section 88K of the Conveyancing Act 1919. There are also hundreds of judgements which guide the valuer as to the current state of play based on caselaw. Instead of waste your time with all the details in a short blog post, I will save your time with this: try searching “easement” as a keyword on the caselaw NSW website. As you can imagine, experienced legal advice is crucial when you are involved with a situation like this.
These are just a few examples that we see with our clients daily. As you can imagine there are many more. They all are similar in the fact that they are all completed by a valuer but the application of methodology varies on a case by case.
Our work is bespoke and we are selective about what work we take on to ensure that we provide value for our clients every time. The key takeaway is that the valuer completing a valuation of your home for the bank may not have ever done a valuation for any other purpose. Furthermore, they may not be confident to step into a courtroom to have their opinion pressure tested. Are you comfortable not getting the best value and advice for your money?
Why not find out from the start if the valuation you are getting is worth the paper it's written on. If you value quality advice, call the team at Titan.