Controlling the Valuation Process
Editor
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Unlike residential property, when investing in commercial property an investor has much greater control over the valuation process.
For commercial property, banks will usually allow you to pay for a valuation yourself (which you will receive a full copy of) that can later be re-assigned to the bank (if your offer on a property gets accepted and you decide to proceed with a purchase) and used for finance purposes.
This way you will know what a property is worth from a valuer’s point of view (which is pretty important given their role in the finance process), and this can be used to help you form your offer.
Clearly, doing so on every property you are interested in may not be financially viable, but when you are starting off and before you are able to come up with a reasonable estimated valuation on a property yourself, engaging a valuer to do so initially can be very good for its educational value.
And even if you do this only after your offer is accepted, it gives you the opportunity to seek an alternative valuation if you disagree with the chosen valuer’s valuation, and helps you reduce your risk in case finance is not likely to be accepted because of an unfavourable valuation.
One way to do this is by asking your bank for a list of valuers currently on their panel of valuers, and engaging one of these valuers to do the initial valuation.
Alternatively, you can use the Australian Property Institute Property Professional search facility to find a valuer with experience in the specific type of property (eg. office, retail or industrial) and location that you are looking at.
You can then ask the valuer chosen if they are on the panel of the bank (or banks) you are likely to use before engaging them.
Once your offer is accepted and you decide to proceed with a purchase you simply have to instruct your bank to instruct the valuer you chose to do the valuation – and what happens here is the valuation you initially ordered just gets re-assigned to your bank for finance purposes (though sometimes there can be an additional fee on top of the initial valuation fee for this).
Nicola Cerini - September 16, 2016, 6:27 PM
Thanks, that was helpful!
Editor - September 19, 2016, 1:32 PM
Glad you found it helpful, thanks for your comment!
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