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Jessica Darnbrough
The flat property market is proving a concern for brokers, with many valuations falling short and blowing out settlement times.
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Speaking to The Adviser, Aussie broker Matthew Rogers said he had two valuations fall short just this week.
“Sometimes you can go months without an issue, but I have had two fall short this week by up to $70,000,” he said.
“I think it is a reflection of where the market is sitting at the moment. There seems to be a correction going on in terms of property prices, which means valuations are coming in lower than expected.”
Mr Rogers said this issue would be significantly reduced if all lenders provided brokers with upfront valuations.
“I would say less than 50 per cent of banks offer upfront valuations. With one lender, you have to pay for an upfront valuation,” he said.
“If you can’t complete an upfront valuation, you often find the property is valued at less than what the client thought it would be – this is particularly the case in refinances. If we could know what the property is valued at before putting all the time into completing an application, we could act accordingly and not get the client’s hopes up. We can adjust their expectations and also get them a loan approved faster.”
NAB Broker’s general manager distribution John Flavell agreed that upfront valuations are crucial to the ongoing success of a broker’s business.
Speaking to The Adviser, Mr Flavell said one of the reasons the lender decided to remove its segmentation model at the end of last year was so that it could offer upfront valuations to all of its broker members.
“We can’t and a broker can’t change the value of a property,” he said.
“But, we can get an accurate valuation of the property before the loan is submitted. By doing this, brokers and their clients know what they are dealing with and they know how much head room they have in terms of LVR.
“Some loans might not progress on the back of a valuation, so it is better to know this before hand, rather than complete all the work and submit the loan, only to have it fall down on the back of a valuation.”
Mr Flavell said some suburbs were tracking sideways in terms of property prices, while others are falling, which is ultimately having a negative impact on valuations.
“I believe all brokers should have access to upfront valuations. Property prices are soft, which is a sign of the market. And while there is nothing we can do about this, we can arm brokers with the right tools and information to make sure they are doing the best job by their client.”
