FBAA calls for APRA to investigate property valuations

The Finance Brokers Association of Australia (FBAA) will ask APRA to investigate how mortgage valuations are calculated, as it believes buyers are being disadvantaged by valuations that are too low.

FBAA Chief Executive Officer Peter White said brokers across the country have reported huge variations in valuations for the same property, sometimes by hundreds of thousands of dollars.

“This is not good enough. Valuations should reflect the true value of a property and incorrect valuations can in some cases prevent buyers from being able to purchase the home they want.”

Mr White said increasingly, lenders were using valuations based on computer-generated market averages, yet this doesn’t take into consideration the individual property.

“In the majority of cases, no one is physically visiting the property anymore, so valuations are being provided sight-unseen.”

“Every property is different in so

many ways, which is why individual

assessment will always be more

accurate than a formula.”

A recent Queensland property

purchased through an FBAA

broker was given a valuation range

of $350-$460K by a bank, however

when the same property was

assessed by three other online

valuation companies, the valuations

were $533-$643K, $537-$605K and

$617-$695K.

“How can a property of this price range receive

valuations ranging $345 from the lowest to

highest?” Mr White asked.

He said it was time for the banking regulator to step in,

and that the FBAA would be requesting that directly.

“APRA needs to investigate the Valuation Exchange (ValEx),

as well as the arrangements between valuers and banks and

how the data is calculated.”

ValEx has previously told brokers not to bother disputing

low valuations as “only one or two per cent of valuers

actually (change) the figure based on a dispute".

“It’s time to review the model used for valuation

assessments and allow a more effective dispute

procedure.”