Hi,

Just want to ask how does a bank evaluate a property? Do they check in their system for the last buyer who purchase a property of that area?

Others tell me that they have an external source. Where does this external source come from? According to one of my banker, she said that her bank has an external source, hence are able to evaluate the property I want to purchase for a higher price (the price the seller wants to sell and still not exceeding my budget). Meanwhile, other banks are evaluating at a price too low, so low that I'm unable to go ahead with the purchase.

So where does this external source come from? Real estate companies?

Do share. THank you.

the banks have a panel of valuers on board to decide the property price

All banks use Profesional Valuar Firms to get the valuation.

One Bank can also base the value on their internal syetem, though they can also use external source

Check with different bank can get different value depending on:

1. Which valuer conpany on their panel
2. How familiar the individual valuer is with your property location
3. How much details you provide to the Mortgage Sales person
4. How hardworking is your Mortgage Sales person to check with many valuers

Also for one bank, the property value you get may depend on your name

Strange but true...

When I call a bank to request for an evaluation done on the property I wish to purchase, they just quote me something based on their system. A couple of bank did the same so I thought it wasnt going to change until I met a young hardworking man who manage to get me the proper evaluation value.

Bank evaluation and market evaluation is different, is it not? People could have bought them for X price but bank still evaluate it as X-1.

Panels of valuer or professional valuer, ar an external source. Any example of an external valuer?

When there is prospective borrower, bank (normally sales officer) will call their panel valuer to check indication of the value (usually referred as INDICATION). This is by desktop checking of which this valuer will estimate the value without doing the inspection, just based on their data (i.e recent similar transaction, precedent similar cases, asking prices in the market).

In valuer perspective, all INDICATION are rough estimation. The indication value is not confirm as Fair Market Value (FMV). Confirmation of actual FMV is when the formal valuation report is done, which is after inspection and seeing the property.

Meanwhile, in bank perspective, they take this INDICATION as good to use as confirm market value as they need to approve the loan first and will conduct formal valuation after the borrower accepted the Letter of Offer (LO)

Some cases, indication and formal valuation value different. Valuer will access the FMV based on actual inspection. Any changes on site will effect the value. Bank normally will based whichever is lower. If the indication is higher than actual FMV, the bank have the right to amend downward the loan amount or pull back the facilities.

So don't think you got your LO, you are safe!! you are wrong dude!

This is not the best practice actually, however mostly the banks in Malaysia practice this. Maybe due to the stiff competition to get acceptance from borrower, so who ever issue the fastest Letter of Offer (LO) and give lower interest rate will get the client!

There is a local bank practice that prospective borrower will be required to bring a formal valuation when applying the loan. The prospective borrower have to select from their panel valuer list and appoint them to conduct valuation. The panel valuer will go for an inspection and prepare the formal valuation report. When the formal valuation report completed, borrower bring together with the application form and submit to the bank and wait for the approval. Valuation cost is bared by the borrower upfront. I personally like this way..it more safe. Although it will delay, the approval process, as to prepare formal valuation report normally takes about 2 weeks, it sure give me peace of mind, and as property owner, i can know my current market value of my property.

As valuer is guided by their professional enactment and also valuation standard, the different of value opinion between valuers is not much, plus minus is still within the same range.

There is a lot factor contributing to different opinion of value :-

1) Price and value

Price and value is different. You may purchase it higher or lower from market prices.

2) Information

Information given during the indication of value is insufficient. The valuer might not get the true picture about the property, especially about the additional factor that can attribute to the value such as i.e renovation details, extension, renovation cost, location of the site near playground or near oxidation pond?

It is advisable that we give proper information about the property, you should also attached photos external and internal, floor plan, renovation cost details and etc.

Established private valuation firms such as Jones Lang Wooton, CH William, Colliers..full listing of private valuer you can get in Board of Valuer Malaysia website..

But frankly, I haven't heard value is based by name...by internal record..it might possible as a cross check reference with indication...



This post has been edited by nasb76: Jul 7 2010, 06:07 PM

nicely done

Hong Leong Bank check value base on customer name...

cheers..

just my 2 cents.

This post has been edited by jimmylim.uob: Jul 7 2010, 10:32 PM

can you elaborate more? how do they check values on customer name?

---

Added on July 7, 2010, 11:48 pmi was trying to understand jimmylim's statement till i read this one. LOL

yes there is this one particular bank who practices a rather different approach, they check the value of the property based on the name of the customer...

or to be more specific, they categorized the initial of names to certain valuers, ie Tan, Lydia, Mohd, Ranesh etc.

Valuer A runs A-D, Valuer B gets E-K, Valuer C checks for L-T and so on.

seems to be a good way to control the traffic and spread the valuation work equally among their valuers, but somehow i find it rather... unreasonable.

This post has been edited by merce: Jul 7 2010, 11:48 PM

weird, any reason why? it means they give higher price for a certain customer name? or do i get it wrong way?

yup you correct ..there is banks practice this in their valuation management framework. To control the allocation of cases to panel valuer. Hope this is what jimmy is coming from...

This post has been edited by nasb76: Jul 8 2010, 05:50 PM

Guys,

Clarification: Once we get the Letter of Offer (LO), is it safe to assume that we will be getting that amount?

I am purchasing a new property - subsale. I have not paid any deposit. I asked the owner and he gave me a copy of the title for my loan approval.

Once my loan approved, the banker would give me the LO right? Will there still be risk of changes to the amount offered?

Depends on how confident the valuer with the indication value...

If your house is standard building, establish / matured location, got people sell and buy (transaction),

then your LO is quite safe (sebelah kaki sudah selamat)....

To know the value is safe or not, I would recommend to get the banks to check with as much valuer as possible, say from 3 to 4 different valuers. If the indication values are consistent say +- 5% ..it should trigger safe...

if the values inconsistence, you might need to take precaution measure..give more details of the property or photo..or might need to ask (minta tolong) valuer to drop and check the house from outside..

Hi,

If you don't mind, send me your property details, i check the best value for you.

Have a nice day.

KennyFow(EON Bank)
017-3901 802
fcpkenny_1983@hotmail.com

well is just a external appointed valuer, and normally is base on last transacted price, however if the property is exclusive, then probably panel will be needed.

valuer can usually be influence, if you want to borrow more, ask them to value higher=) (minta tolong) is probably unethical so dont do it=)

I was told that if I sign the Letter of Offer (LO), only will the bank send the valuer to physically evaluate the property. I dont lose anything if I dont sign the Loan Agreement. Is this true?

P/S: I have not paid any deposit to the agent.

r u sure you dont have to sign the LA before they instruct the valuer for a proper appraisal report?

as far as i know, instruction letter are only send out after LA is signed.

can any1 confirm this?

Yes you are right.

Sheesh, I got mix information between my bankers and my board of advisers (you guys in LYP.net, thank you!)

Dont matter, I will sign the LO and get them to do a proper evaluation report before the Loan Agreement, see if it's possible. I will update more on this and see how it turns out later.

This post has been edited by Pennywise: Jul 13 2010, 07:48 PM