Valuation: 'as is' Market Value vs Projected Future value after development. Dispute
- Thread starter sharynl
- Start date
You might be happy with the "as is" valuation you have, but your brother has a valuation with quite a different end result.
That is why I think you should get him to get his own appraisal from a couple of agents as to what it is worth "now".
What do you mean when you say you have "offered two settlements"?
Believe me, I'd try to avoid lawyers. We've just been through that with a brother who had no case but once he lawyered up, we had to fight him anyway... not pretty (cost us a million - not a bad outcome for someone who had "no case").
I've just had a back Val on a property with subdivision potential and they valued it "as is", being a 3 bed post war home. It even has a DA approval on the subduvision and it still made no difference to the Val.
It seems obvious that the valuation is not a true Val otherwise the figure would've been much closer to yours.
It seems obvious that the valuation is not a true Val otherwise the figure would've been much closer to yours.
Tactically, let it go to auction but with a his reserve. If it reaches his figure great if not agree that you can purchase at $x above the highest negotiated amount (but still below his figure).
Remember that you only have to pay half not for the whole of the property.
Remember that you only have to pay half not for the whole of the property.
- He's got a valuation which is so out of the ball park as to be ridiculous - which is why I've been trying to find out if how they've passed it off is not legal or subject to a Valuer's code of conduct if they have one.
- When I say two settlements, it's because I got my conveyancer to draw up settlement docs when I got the loan, thinking after 6 months of busting my gut working over 50 hour week nightshifts to get the loan that things were on their way then he came back with his lawyer stating he wanted a much higher figure... so I responded by suggesting he gets a valuation (for his own purposes - I didn't want to see it) so that he could have a realistic understanding of what the place was worth and extended the settlement date by a month to give him a chance to do this.
- I'm avoiding lawyers - although I love the term 'lawyered up' ! in that I cannot afford one (I don't see how he can) and - could be wrong - but he only has two options??
1.Taking me to the Supreme Court which would mean if he won then trustees would be appointed who would auction the place (for market value and not potential value much as he wishes). I don't want this to happen as it would be an unnecessary cost to me but I may get the place for less. It may be the only way he can be gotten to accept market value.
2. Accepting my realistic and fair offer.
... actually three options, the third being him not doing anything and it just sitting there which would incur CGT which I think he is terrified of.
Ouch that you had such an experience with lawyers, Wylie. This is on a much smaller scale but the relative amounts would be as painful and it's so pointless!
Yes, there's no DA approval, nothing. I suggested to him at first when we inherited that we should develop it together and share the profit. No way. Maybe I could put you onto his valuers - they seem to be able to do "as is" based on potential.
Auction may be the only way he'll sell for market value - see my post to answer Wylie - but I think if trustees are appointed by the Supreme Court then they wouldn't allow me to set a reserve?
I will resist court action as it is so unnecessary. But then again I don't think he'll want it taken to auction because he must have been trying to bluff me with that figure and I don't think he believes it himself. Unless he really does, or he (his wife) is just wanting to cause trouble and it's not about the money. I'm not even sure anymore.
The brother (sounds like a pr$ck) has clearly instructed the valuation firm to value with the development potential included. Total bs. What about the cost to do the development preparations? Why is that not in their.
Youv'e really got no choice but to let a trustee sell it on the open market with a reserve set at your maximum price. Then when it doesn't sell you get first option maybe. Just need to make sure the agency agreement you have allows the property to be transferred without agents commission. Most want a 3 month contract.
Youv'e really got no choice but to let a trustee sell it on the open market with a reserve set at your maximum price. Then when it doesn't sell you get first option maybe. Just need to make sure the agency agreement you have allows the property to be transferred without agents commission. Most want a 3 month contract.
Oh and now you know why lenders insist on instructing the valuers themselves rather than letting customers use existing vals!!
Valuers are generally required to be members of the Australian Property Institute and be a CPV.
maybe the brother got the valuation done because someone had told him they wanted the property so they could make a mint and develop it. He's only protecting his interests to a certain extent. Not a nice way for family to behave, but I've seen and heard of much worse where money is involved.
This below scares me, why would you tell your brothers lawyer this information? I'd keep this information private, similar with what you wanted to do with the block.
This below scares me, why would you tell your brothers lawyer this information? I'd keep this information private, similar with what you wanted to do with the block.
He got the valuation done because of greed. SIMTR, if they bought the property to develop it there is no way they would pay higher than what I will pay. Equally if someone wanted to buy it and fix it up, they would pay what I'm offering. Nobody pays projected value after fix-up/development and then pays in $ and time to do all that work as well.
- In response to you saying I should have been keeping it to myself about what I want to do with the place - well this started out amicable - I thought. I was honest and open and seriously had no idea the ill-will he had towards me. But all I've really said is that I want it to fix up. Even I am not sure what I will do with it. It would take a few years. It's a pretty average block with a very rundown house and these are around for investors everywhere. The benefit, and this is only a benefit to me so does not increase its value is that I already own half of it with my name on the title.
I've advised his lawyer that as he has already threatened me with Supreme Court action ... then if he won (at unnecessary cost) then it would be auctioned and it would not get projected value, but the true 'as is' value.
- I've definitely told the lawyer this information because they seem to have thought a lawyer letter in legal jargon would terrify me and I see no point in them continuing with that misunderstanding. Apart from being hurt again on a personal level, my reaction was laughter at the letter. I don't think there is any harm letting the lawyer know they have not bluffed me. It saves me the bother of reading more letters like that.
The options he has are to actually DO IT - take me to the supreme court - which would mean appointment of trustees and auction and a result of 'market value' not the inflated price he wants.
OR Take my offer
OR Drag this out and sit on it so long in the hope I get desperate for money (which I won't) and then he will be up for CGT (which he is terrified of) if this drags on for over two years from inheritance.
So telling his lawyer some of this doesn't seem to work against me - please let me know if I've missed something though?
I can see this now! Somehow I used to think independent valuers were a pillar of integrity. Sadly let down.
Thanks Marty - yes he is!! (Yet another thing I can see clearly now).
This is how they've done it "We have received written instructions by ..... to conduct a valuation of ....... to determine market value for family transfer purposes as of the date of valuation being 10th of July 2014" [Short description of 'dated' dwelling and allotment]... "The highest and best use of the site would be to subdivide the property into two allotments. The subdivision would potentially create a vacant allotment... and the dwellinig would remain on [the same size site].
"We have therefore undertaken a hypothetical development of the site.
After determining a Gross Realisation ... and deducting all associated costs we have arrived at a residual value of $..."
"In our assessment we have made the following assumptions:
- Gross Realisation incl. of GST $
- GST on vacant allotment 10%
- Selling costs 2.0% of Gross Realisation
- Profit/Risk Margin 5%"
NO costs to do development preparations or fix up the existing house.
They then hand-pick 'comparable' properties "By necessity we have had to consider sales with slightly different accommodation attributes. We note that by necessity that some sales may fall outside a six month time frame and 15% value range.."
That's how they did it. Now I wouldn't mind (a lot of the calculations and reasoning are out though!) BUT they have the GALL to put this figure and this $ figure only on the front of the valuation and call it 'AS IS' value!!
The API is industry funded from what I can gather - working for Valuers rather than the public.
They are THE industry body - a pretty hard task master but any one who isn't a member just doesn't get much work.
It is not obligatory to belong to the API however when valuing mortgages, insurable values, leases, market rents etc they require that the valuer be a CPV.
Office of fair trading regulates valuers however they are reliant upon the API for the standards of practice. The API has links to RICS (UK).
Ignore the front page of the valuation, the valuation at the rear is the valuation certificate and may be different to the front summary.
It is not obligatory to belong to the API however when valuing mortgages, insurable values, leases, market rents etc they require that the valuer be a CPV.
Office of fair trading regulates valuers however they are reliant upon the API for the standards of practice. The API has links to RICS (UK).
Ignore the front page of the valuation, the valuation at the rear is the valuation certificate and may be different to the front summary.
All fair enough, just not the way i would handle it. Would rather keep all my cards very close. I just don't see the value in giving unnecessary information to a lawyer that works for your brother. To me that seemed a bit emotional. the brother does seem to be a crafty character, best of luck with the settlement and hope it turns out best for you.
Hi,
There is only one figure quoted as the valuation unfortunately. Possibly though I have been given just a select part of the total although it looks complete and is about 15 pages long. Thankyou for the food for thought though on whether something is withheld.
My brother ordered the valuation. I haven't discussed it with the valuer because I'm fairly sure that they would brush me off and say I'm not their client so they won't speak to me. See below
