Hello, any lawyers or related field people could advice.

My auntie bought a house property that is priced at 600k, the bank approved the loan of 90% of 600k and signed all relevant documents and so on so forth. After all of those process and procedure, now the bank hired a valuation company to value the property.

This valuer went to the house, did some drawing and stuff, and the report came out that the house is valued at 600k. My auntie were shock as initially the bank itself value the property at 700k more or less. So at this point, would it affect the loan that is already approved or what will happen ? Because I heard the main purpose of the bank wanting to know the exact value of the property is so that they know they are not lending more money than they should, or saying they ( the bank ) later "rugi". Would appreciate any advice.

This post has been edited by Sotsotzaii: Mar 7 2022, 06:20 PM

The initial 'valuation' the bank gave is without viewing the condition and location of the property. That is the average figure subject to a proper site visit.

Loan % approval is base on a formal valuation report. If is 90% during the initial application at 700k, then is now 90% at 600k.

Any shortfall has to be paid by the buyer borrower to the seller if SnP is 700k.

This post has been edited by mini orchard: Mar 7 2022, 06:32 PM

Ohh ok understood. My aunt just told me her bank loan she got approved from the bank is 540,000, which is based on 600k, so does this means the bank approved the loan of 90% at 600k without the proper valuation of the property ?

600k is the formal valuation for the property.

The valuer's job is not to give you the market price of the property to be exact.
They usually follow bank's instruction. If you are taking a loan for 600k price property (snp), valuer's report will be following the 600k snp price as the value of the property, no higher / lower.

Correction.

Valuation report can be equal, more or less than the SnP price.

In the event that the borrower default and if the valuation report is more than the market price at the point of borrowing and the bank suffer a loss, the valuer can be sue by the bank and blacklisted.

The bank can lodge a report with the LPPEH and the valuer can be subject to disciplinary action.

If the valuer is conservative and give a lower figure, borrower can go to another bank.

Valuation is easier with a SnP and available data.

What happens if borrower wants to refinance ? What would the valuer figure then ?

This post has been edited by mini orchard: Mar 7 2022, 08:00 PM

I see, ok now I get a better understanding of how this whole valuation works. No wonder the bank ask my auntie to sign and approved the loan, the documents etc, and all the SnP is all done, THEN ONLY they hire the valuation company that is under them to go and value the property.

So that is why the bank KNEW to loan at 90% at 600k, because they instructed the valuer so the valuer is actually just following the bank's instructions, but the amount valued can be equal / more or less but not far apart ? Because I thought if the valuer value at 700k, then wouldn't we need to re-sign all the documents again because then the bank would have to loan 90% at 700k, for example.

My last property bought from a desperate seller at 615k and valuation report 700k .

I took a 400k loan. So it doesnt matter whether is 615 or 700.

No need to sign new documents.

I can change my mind and take 600k. Signing new doc is not a problem. If it has to be done for business, it has to be signed, unless the bank dont want, I can go to another bank.

This post has been edited by mini orchard: Mar 7 2022, 08:55 PM

TS, just FYI

if the fact that property bank value worth 700k. but your transaction price is 600k, then the new bank value automatic be 600k even your house worth 700k.

The valuer do the report based on the actual value and transaction price whichever is lower.

If that is the case, there is no reason for a valuation report by a registered valuer. Any person without a qualification can write such report equal or lower than SnP price to save his butt.

A valuation report or any professional reports should be unbiased and the opinion of the person reporting it.

Is up to the bank or any party who relies on it to decide how to act on the report.

I agree, but then again I'm thinking, what do these valuer based their value on ? I mean, I see this valuer went to the house, did some exterior drawing, very rough sketch that even I can draw, went in take a look inside, took pictures of the rooms, living room etc, then done.

I mean no offense here to him or anyone, but he doesn't seem well experienced, and there's the thing about the bank trusting them with whatever report they come up with, this whole valuation process just seems quite dumbfounded, at least in my auntie's case.

Like above post#5 forumer said, the valuer is conducting the valuation based on the snp transaction price.

The report will only mean whether the value match with the transaction price or not.

In this thread, TS, me and forumer post#5 all are in this case.

There are few methods of valuation depending on the subject property.

If is common property like terrace, normally is comparative method plus adjustments after inspection of the physical property .... condition, location (facing main road, T junction, field, longkang, sewerage plant, etc), renovation etc.

Your next door neighbour house price or value can NEVER be the same as yours.

The other methods are cost input plus comparative when is standalone building like bungalow.

Other methods include depreciation or combination of the above two.

Site inspection is just the collection of present data. To form an opinion, valuer need present and past data.

If two different valuers were to value the same property, 99% both will come out with different value ! The reason for 'OPINION'.

This post has been edited by mini orchard: Mar 8 2022, 10:04 AM

Valuation is an opinion and NOT based on SnP. Is like saying the buyer seller is doing the valuation and the 'valuer' sign the confirmation and collect fee.

Easy money though.

This post has been edited by mini orchard: Mar 8 2022, 09:52 AM

I bought a house recently 748k

the valuation report indicate the bank value = 748k exactly

Anyway, the valuer will gather the nearby similar property's transaction record via JPPH, compare the historical price against the target property's snp price

Honestly, can a valuation opinion be EXACTLY RM748k on the dot ?

Valuation is an ESTIMATION !



This post has been edited by mini orchard: Mar 8 2022, 10:20 AM

because the valuation objective is to justify the loan amount only.

Latest transaction value is 748k, its mean the latest market price is 748k, the valuer is conservative and not willing to risk himself for increase the value price.

That is not 'valuation' report. Is just formality to comply with bank need to have a 'report' to justify the loan.

Sadly, borrowers are forced to pay for unnecessary report

yes, i agreed.

That means they just wasted RM 1450 down the drain.

What a waste. Tsk

Basically, the banks want soneone to take responsibility for the loan disbursed if things go wrong.

And if things doesn't go wrong ? That money is indeed down the drain ?

Same with loan agreement legal fees paid by borrower. Anything goes wrong, the bank will hold the lawyer responsibile.

I don't think it works that way. Your aunt applied for 90% of 600k, bank approved the loan. The bank is not obliged to loan 90% of valuation price, as the S&P states 600k.