The days of people having to order a valuation from a registered valuer to get a mortgage to buy a property, or have their existing home revalued if they want to extend their mortgage, may be drawing to a close.
Increasingly it is the banks themselves that are ordering a valuation when a mortgage application is made, often requesting the valuation through a Valuation Ordering Service (VOS).
One of the main advantages of a VOS is that once a request for a valuation is received, the job is allocated at random to a suitable valuer that is part of a valuation panel.
Once the job is completed, the VOS sends a copy of the valuation to the bank that ordered it and the bank's client that has applied for the loan.
This means that neither the bank nor their client knows which valuation firm will be undertaking the valuation until they receive the valuer's report.
That anonymity in the system is designed to prevent collusion between a valuer and their client to provide a suspect valuation that suits the client's purposes.
This became a major issue during the last Auckland apartment building boom when some property spruiking outfits commissioned bulk valuations which grossly overvalued the properties being sold, resulting in large losses for the investors who bought them.
The main VOS in this country is operated by CoreLogic NZ, a company which is 40% owned by Quotable Value and 60% by multinational data company RP Data.
However CoreLogic's grip on the market is now being challenged by newcomer Data Insight, which has started a rival VOS called Valocity.
In a Double Shot video interview, Data Insight founder and managing director Carmen Vicelich said Valocity was being well supported by the valuation profession and the banking industry and the company had been doubling its business every six months.
She believed that eventually all residential property valuations for lending purposes would be conducted through a VOS, as is already the case in Australia.
Any valuers were able to join Valocity's valuation panel to obtain work through the service, she said.
Data Insight has also recently scored a coup through an arrangement with the Real Estate Institute of NZ, which will give Data Insight access to the REINZ's database.
This will allow the company to incorporate sales of properties into its reports as they become unconditional, rather than waiting for the sales to settle before obtaining the information.
When the sale of a property is settled, the conveyancing solicitor is required to forward details of the sale to the relevant local council, so that it can be used to update the rating valuation database.
It is at that point that valuers are able to access the information for new valuations, however that can involve a delay of a few weeks to a few months from the time the sale price was agreed.
In a fast moving market, whether prices were headed up or down, the market price of a property might have already moved on from the agreed price by the time valuers have access to the information.
Vicelich said that getting access to sales prices as they became unconditional, rather than weeks or months after the event, could help valuers and their clients get a more accurate picture of what a property could be worth.
----------------------------------------------------------------------------------------------------------------------------------------
Our new free Property email newsletter brings you all the stories about residential and commercial property and the forces that move these huge markets. Sign up here.
To subscribe to our Property newsletter, enter your email address here. It's free.
----------------------------------------------------------------------------------------------------------------------------------------
3 Comments
Property Institute responds to DataInsight’s comments on interest.co.nz [The Property Institute represents registered valuers. - Ed.]
The Property Institute’s view on ordering systems has always been consistent. We believe they have a place in the market with two important criteria; first that valuers shouldn’t be unreasonably excluded from the panel, and second that a client should not be denied the choice to use a particular valuer or particular ordering system.
The role played in the valuation market by ordering systems is a valuable one, and for the majority of home purchasers in areas with plenty of valuers going through an ordering system is a perfectly good option.
We completely disagree with Ms Vicelich though that ordering systems will inevitably become mandatory across the board. Rather, it’s important that buyers should be able to choose a valuer who they trust or with local experience and expertise – particularly important in areas with fewer practicing valuers.
All Registered Valuers are bound by a strict code of ethics that protects their independence, and the Institute is currently working with the Government to further improve regulation of the profession and ensure Registered Valuers remain New Zealand’s trusted, independent property experts.
David Clark, CEO, the Property Institute.
Today the borrower still pays the valuation fee regardless of the ordering system.
When we built in the 80s, the bank organised the valuer, who visited 3 or 4 times, took a personal interest, sent the reports to the bank for the progress payments, and the bank absorbed the cost. Since it was their majority interest. Then it became user pays.... But who is the beneficial user?
Banks still seem to look at the RV as a general guide, ie they will consider using the RV on loans not pushing the 80%.
Another house we bought in the 90s the Sale agreement was enough evidence of valuation for the bank. Trust has certainly gone now.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.