… is very common with Land + Build scenario. I expected one and I did get one. Our broker is looking to another lender at the moment, but in general there are 3 options if this happen:
- Challenge the valuation - unlikely to deliver results unless there are significant inaccuracies in the valuation
- Look for different lender that use different valuer - make sure you have a good broker
- Borrow more - last resort
Things that are mentioned in my valuation document (always ask for this document):
No provision for landscaping and fencing – as the valuer looks at the “on completion valuation” of house and land, house with no fence and basic landscape will likely sell less compared to the completed house in the area.
Total building cost is considered to be unreasonable and not in line with current market. Yep. Building cost is the main culprit for my low valuation with almost 40K below.
For the next time:
- I obtained fencing quote + full land contract instead just the front pages (we have front landscaping included, mentioned deep in contract), so I hope it helps.
- If I ever build again, I might consider finance clause in the build contract
Now just crossing my fingers.
We are waiting for our build valuation to come back this week. We are worried for the same result.
ReplyDeleteWe know we have over capitalised so really not confident that the banks will be kind to us!
Fingers crossed you get a good valuation!
Fingers crossed yours will be all good. I had second val and it is still below but better :)
DeleteThanks for sharing your experience. Can you please elaborate on adding the finance clause in the build contract - what would this clause specify?
ReplyDeleteHi Tom, I'm not a legal person so best to talk to a solicitor, however finance clause usually a clause that allow you to get out of building contract if you can't obtain finance. This need to be negotiated with the builder as well so it might or might not be possible
Delete