Valuations and New Build Properties

Disclaimer: The below guide is general in nature and do seek individual financial advice to see how this applies to your situation. Our experienced advisers are on hand to help at no cost to you (T’s and C’s apply)

Why might I need a valuation?

Nearly all lenders require a valuation in order to lend against a new build property. A new build property is anything that have received council code of compliance in the last 12 months.

If you want to know if your application would work with the one lender that might not require a valuation, get in touch with our team.

Your adviser will be the one to order these valuations for you at the correct time, your only role here will be to pay for the valuation to be done.

Typically these will be around $1,000 for the first valuation and $350 for the second valuation.

Lenders need this to ensure that the property they are lending against is worth what we are paying for it. If the valuation comes out lower than our purchase price, then we have a number of tools available to us. Speak with your adviser and solicitor around this.

Why do I need 2 valuations?

First valuation

The first valuation on a new build property is based on the plans. The valuer will go over how many bedrooms the property has, the floor area, the property location and anything else that may affect the overall value of the completed home.

Based on this, they will give us a value, let’s say for our example $700,000.

This valuation will then last for up to 12 months, so if there is a chance that construction will not be completed within the next year, accounting for any minor delays, it can be worth postponing this.

We strongly recommend getting your valuation done as soon as you are within 12 months of completion.

Second valuation

This is not strictly a valuation, the correct term for this is a ‘final valuers certificate’. What this does is confirm that the home has been build to the specifications on the first valuation and that therefore the previously given valuation still stands. The valuer will usually visit the property to do this.

At this point, the valuer is not giving a new valuation - it will not come out higher or lower than the first amount. it is merely confirming the first valuation. In our case, $700,000.

Help - I agreed to a much higher price and now my valuation has come out lower than expected

This is a bit of a pickle - but don’t worry, we have been here before.

We have worked with solicitors who are highly skilled at negotiating these issues and relationships with lenders and a knowledge of how best to navigate this side of things.

Sometimes the builder renegotiates, sometimes we can rework the lending situation, sometimes vendor finance is involved.
The key with these situations - it can be very tempting to bury ones head in the sand but we really do stress, get a team around you to help with this as soon as possible.