EXPOSED: How Banks Manipulate Property Values

Posted on April 1, 2015 by | 1 Comment
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by Brian White

I’ve been involved in the property industry for 25 years (as a mortgage broker, real estate agent and investor). In recent times,flawed valuations have become a significant source of complaint, with manyagents advising that valuers are routinely undervaluing property and causing contracts to fall over. Buyers also accuse builders and developers of overpricing property, resulting in low valuations and contracts being terminated. While these scenarios do occur,the hidden culprit is often the type of valuations that lenders demand which can disadvantage both buyers and sellers.

Read on to discover the secret tactics used by some lenders to manipulate property values, protect their backsides and boost profits…all at your expense.

As you are probably aware, if you buy a property which requires financing, the lender will usually insist on having a valuation done. This is a sensible precaution to take when hundreds of thousands of dollars may be at stake. The lender needs to feel confident that should you default on the loan, a forced sale will yield sufficient funds to pay out the loan balance, plus accrued interest, agent’s commission, lender’s legal fees and advertising costs.

While no one objects to lenders fairly protecting their interests, some of the methods used to value residential property are intentionally secretive and deceptive.Most people innocently assume that when a valuation is conducted for mortgage security purposes, it is done on the basis of Market Value.

So what exactly does Market Value mean?


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1 Comment

  • Property markets are playing actually crucial roles in real estate valuation methodologies, but the flawed forecasts are giving adverse impacts on the accuracy of valuations. Like you, I am also in the property industry since being trained by in Sydney. As an agent I believe that estimating the value of a property is very important. It’s never easy to convince people to buy property because they are going to invest their money which is earned by hard labor. You have to present actual facts with updated information about the return of their investment. Only that way you can persuade people to purchase a particular house or apartment. Hence while estimating the value of a property several things should be taken into considerations like economic and social trends, government controls and regulations and environmental conditions also. You have presented very useful facts which I believe will be very helpful for new agents in this industry. Thanks for the useful post!

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