Property valuers just messengers in softer market: Greville Pabst

Larry SchlesingerDecember 8, 2020

WBP Property Group chief executive Greville Pabst says property valuers make easy scapegoats in a soft property market but says the vast majority do a good job and are only “interpreting the market”.

Pabst says it is very easy to blame someone when your home is valued less than what you believe it is worth because people form emotional attachments but says valuers “do not set the market”.

“Valuers are the obvious people to blame,” he tells Property Observer.

“But property values have fallen – we are only the messengers.”

Pabst says good valuers base their valuations on a plethora of historical sales data (sales on the same street, the street behind, in the suburb, etc) and by taking into account the features and characteristics of the individual property.

“Our job is to compare apples with apples and then discount for the bruises,” he says.

Pabst says valuations often come in under buyers' expectations with house-and-land packages bought on the fringes of the city as well as off-the-plan apartments, when contracts are exchanged sometimes two years ahead of settlement.

“You might have bought off the plan 18 months ago. It’s a package. You are buying the land, which has been discounted to reduce the stamp duty while the building costs have been maximised so the buyer can take advantage of the maximum rate of depreciation. Plus there is the developer’s profit and risk factored into the price, the marketing cost and in some cases elevated commissions.

“All this is factored into the price, but that is not the real value.

“Price is what you pay – value is what your get.”

 


 

He comments follow criticisms of the service provided by property valuers from Property Observer commentator Terry Ryder concerning how valuers determine their valuations and how – in Ryder’s experience – the valuations can be easily changed.

Pabst says buyers should keep in mind that valuations are legally binding documents that can be challenged. 

He does acknowledge that valuers who act on behalf of banks and mortgage insurers are  “conservative beasts” but says they are not in the business of employing “rogue valuers”.

He adds that valuers also have a duty to protect the banks’ interest and ensure that should a bank be forced to sell a property as mortgagee-in-possession they get their money back.

“The whole banking system has changed. Capital is scarce. There are far tighter controls and banks have become far more selective and more focused on managing their risk.

“They are the ones, after all, who are stumping up the money.”

“Banks lend money based on our advice. We act as the ears and eyes of the bank,” he says.

He also questions why so many buyers rely on the word of the estate agent, who is acting on behalf of the vendor.

“From the minute you walk in the door the agent is using every tactic they can to sell you the property.”

He says in most cases valuations  are done because of a statutory requirement: for the purposes of getting a loan, or  if a house has to be sold due to divorce or a business partnership being dissolved.

But he says buyer should consider using a valuer before they purchase to ascertain the true value and he says he is amazed that so many do not get any objective advice before making such a significant purchase.

“You wouldn’t make other investments without first seeking advice, so why not with property?”

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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