{"id":20645,"date":"2018-03-25T09:00:14","date_gmt":"2018-03-24T22:00:14","guid":{"rendered":"https:\/\/realestatetalk.com.au\/?p=20645"},"modified":"2018-03-25T09:00:14","modified_gmt":"2018-03-24T22:00:14","slug":"can-you-bank-on-an-agents-value-greg-dickason","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/can-you-bank-on-an-agents-value-greg-dickason\/","title":{"rendered":"Can you bank on an agents value? \u2013 Greg Dickason"},"content":{"rendered":"

Many people think that just because you get a real estate agent out who\u2019s going to give you a price on a property, that that\u2019s a valuation. Well, I have to tell you it\u2019s not. There is a big difference between a valuation that a valuer will give you \u2013 a sworn valuation \u2013 and a market appraisal price.\u00a0 Greg Dickason<\/strong> explains the BIG difference.
\nTranscript:<\/strong>
\nKevin:<\/strong>\u00a0 Many people think that just because you get a real estate agent out who\u2019s going to give you a price on a property, that that\u2019s a valuation. Well, I have to tell you it\u2019s not. There is a big difference between a valuation that a valuer will give you \u2013 a sworn valuation \u2013 and a market appraisal price.
\nBut let\u2019s have a look into this a little further. Greg Dickason joins me from CoreLogic.
\nI know you and I have spoken about this, Greg. Hello, welcome to the show.
\nGreg:<\/strong>\u00a0 Thanks, Kevin. It\u2019s a pleasure to be here.
\nKevin:<\/strong>\u00a0 Thanks, mate. There is a difference \u2013 isn\u2019t there? \u2013 between the two. Could you just tell me your perspective on the difference between valuation and appraisal?
\nGreg:<\/strong>\u00a0 Yes, absolutely. Appraisal is what a real estate agent will typically provide you, and it\u2019s really their opinion of what the property would sell in the market. Often, it\u2019s related to what they\u2019ve recently seen listed, what they\u2019ve recently seen sold, and also, to some extent, their belief in a marketing campaign and to what kind of buyers they can get in the market.
\nIt\u2019s a lot more belief-orientated. It\u2019s focused on some confidence, and generally, it might be the slightly higher end of the kind of price that you can get. In most cases, it\u2019s realistic. Real estate agents are professionals, but if you like, it\u2019s more optimistic than a valuation that you\u2019d get from a sworn valuer.
\nKevin:<\/strong>\u00a0 You talked about it there being optimistic. I think it\u2019s more forward-looking \u2013 isn\u2019t it? \u2013 what the agent believes they can get.
\nGreg:<\/strong>\u00a0 Correct. In a rising market, often, they\u2019ll get that or even more, and vendors can be very happy with the result. In a market that is flat or falling, sometimes there is a requirement for some realism to set in, and you might find that the appraisal that you get is maybe slightly higher than what you actually can get, especially if the market has turned.
\nI definitely think it\u2019s a very valuable tool, because you\u2019re getting a professional out to have a look at your property, but it\u2019s not necessarily done for the same reasons as what a sworn valuation is from an accredited valuer.
\nKevin:<\/strong>\u00a0 So, then, explain to me why a sworn valuation can be so different.
\nGreg:<\/strong>\u00a0 Generally, a sworn valuation from an accredited valuer is for risk purposes. If I am a bank and I need to understand the value of an asset that I\u2019m about to lend against, I need to be very sure that whatever the valuation that comes in is a valuation that I can get regardless of the market conditions. Assuming there isn\u2019t a massive drop in the market, but based in the current market, it\u2019s a very, very confident value that I can get.
\nGenerally, it\u2019s for risk purposes and it\u2019s a very realistic, even in some cases, pessimistic view of the price for the property.
\nKevin:<\/strong>\u00a0 They\u2019re sometimes called bank valuations. It is a sworn valuation, and they\u2019re sometimes perceived to be a little bit on the conservative side. You\u2019ve probably explained why that is the case there, Greg.
\nGreg:<\/strong>\u00a0 Yes, exactly. It\u2019s about risk management, and therefore, it is sometimes conservative.
\nIt also often comes with insurance. So, when a lender asks a valuer to do a valuation, often the valuer is insured, so if the valuation is too high and the lender has to sell and they make a launch, they can actually go and claim that loss from the valuer or from the insurance company.
\nKevin:<\/strong>\u00a0 Of course, there is another price that you can get on your property, and in recent times, we\u2019ve seen desktop valuations. Would you like to explain to us how they are generated?
\nGreg:<\/strong>\u00a0 Absolutely. If you think about the process, if I\u2019m a lender and I want to lend \u2013 say you, Kevin \u2013 I want to lend you money to buy property, I have to take into account the total risk that I\u2019m taking on. And that\u2019s not just about the property; it\u2019s also about the size of the deposit that you\u2019re going to put down. It\u2019s also about you, how much do you earn, how long had you earned that money?
\nIf I can take an overall, holistic view about that lending, I can then make a decision as to how much effort I want to put into getting a very accurate valuation to manage my risk. In some cases, if you have a good deposit and I\u2019m pretty sure you\u2019ll pay back the loan, I might go to what is known as an AVM, an automatic valuation, in which case I don\u2019t even go to a value; I simply use a model that\u2019s provided by a company like CoreLogic, and that\u2019s good enough.
\nIn other cases, I think, \u201cActually, I do want a valuer to have a look, but I\u2019m pretty confident in the property and don\u2019t need them to actually drive out to have a look at the property. But I want them to sit down in front of their desk and do a little bit of desktop research and come back with their opinion of value without having actually gone to the property.\u201d That\u2019s called a desktop.
\nThe benefit of that to the end customer is that that can be turned around very quickly. As you can imagine, a valuer sitting down in front of a desktop, they can turn it around in a couple of hours. If you want to buy a property and the bank accepts a desktop, it means that potentially, you get approval very quickly.
\nIf, however, they want to manage the risk a bit more, you want to lend a bit more very close to the purchase price so your deposit is quite small, they will also then send a valuer out, and then there are different types of valuation even then. There is what\u2019s known as a curbside where they don\u2019t go into the property, but they do drive to it and have a look at it. Then there\u2019s the full bells where they actually walk through the property.
\nThere are lots of those and they\u2019re all based on the risk profile that the bank is taking on and also how quickly they want to get a response back to the lender, to the borrower.
\nKevin:<\/strong>\u00a0 Very good explanation, Greg. Thank you so much for your time. Greg Dickason from CoreLogic. Thanks, mate.
\nGreg:<\/strong>\u00a0 Absolute pleasure, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

Many people think that just because you get a real estate agent out who\u2019s going to give you a price on a property, that that\u2019s a valuation. Well, I have to tell you it\u2019s not. There is a big difference between a valuation that a…<\/p>\n","protected":false},"author":176692471,"featured_media":20646,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,11,13,36,22,23,25],"tags":[101],"class_list":["post-20645","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-research-topic","category-selling-a-property-topic","category-sponsored-channels","tag-podcast"],"yoast_head":"\nCan you bank on an agents value? \u2013 Greg Dickason - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/can-you-bank-on-an-agents-value-greg-dickason\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Can you bank on an agents value? \u2013 Greg Dickason - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"Many people think that just because you get a real estate agent out who\u2019s going to give you a price on a property, that that\u2019s a valuation. Well, I have to tell you it\u2019s not. 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