Mr A. Nonymous purchased a property in Sydney for $1.7Mil in 2017 with the intention of knocking it down and rebuilding a new 5 bedroom home. Six months after purchase he engaged a well known building company to start his new home and signed a build contract for just over $1 Mil. The property had to be valued for lending purposes as an ‘on completion’ basis which is the value of the land and the building contract. With a few extras like a pool and landscaping, Mr A. Nonymous was looking to have the property worth $2.9 mil on completion (known as an ‘as is’ complete or TBE valuation).
The valuer came back with an ‘as is complete’ valuation of $2.25Mil, with the land value and building cost/value both being heavily discounted based on the valuers commentary of the building cost being out of line with industry standards. This valuation was clearly a huge problem. This meant that Mr A. Nonymous could not build his dream home, and was paying penalty rates to the building company for delaying the start date of the build as the finance was unable to be finalised.
On review of the valuation, we found a number of critical errors that impacted the analysis of the valuation. We launched a dispute of the valuation by highlighting the critical errors, provided additional evidence to support a higher valuation that was not considered in the valuers original analysis, and further supported the building costs with a quantity surveyors report. This resulted in the valuation being supported at $2,650,000 under our analysis. This cost the client less than $1,500 to get this outcome and the broker was now in a position to get the deal over the line when it had looked hopeless at one point.