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07-09-2011

Some valuers are scaremongering about panel system: PropertyIQ

Landlords.co.nz

Property IQ says some valuers are scaremongering in suggesting the valuation clearing house system it is trialling with ANZ Bank will lead to a lowering of standards and inferior valuations.

Some valuers are arguing "desk top" valuations, which involve valuers using a data base on a neighbourhood, rather than visiting the actual property, will become common if the clearing house system becomes prevalent.

"The global financial crisis has convinced the banks they need more valuations, not less," says Property IQ spokesman Steve Langridge. "I think there's a bit of mischief being played here."

Property IQ has offered a "desk top" valuation product for about the past two years which is appropriate for use in low loan-to-valuation ratio (LVR) situations, Langridge says.

Such products are already commonly used when circumstances warrant it, he says. PropertyIQ also offers an even lower value product, E-Valuer, which is an automated valuation model based on Quotable Value's data which doesn't involve a valuer.

The ANZ pilot has been running since April and involves assigning a valuer to those seeking a mortgage from a pre-approved panel of valuers, rather than leaving it up to the mortgage seeker to chose any valuer.

The aim is to protect both customers and banks from fraud and third-party influence by ensuring valuers are completely independent.

New Zealand Institute of Valuers president Nicki Bilbrough says not all valuers are opposed to this system and her organisation is taking a neutral stance.

"We have to. We can't tell people how to run their businesses. This is a commercial contract that we can't tell them whether or not to enter."

Those members who object to the panel system "feel it takes away their ability to consult with clients. Obviously, valuers have built up client bases over their working lives."

Based on what has happened in Australia, where a similar but different system has already been introduced, "they feel - I can't say this will happen - it may reduce standards," Bilbrough says.

Some valuers have said the panel system will also force down prices.

ANZ Bank says it expects the overall cost of valuations will fall slightly but the key benefit will be an independent service and greater protection for home buyers.

It also dismisses suggestions "desk-top" valuations will become more widespread. "They will not be used in situations that would compromise the quality of valuation. Where a risk is identified, they will be escalated to a full valuation."

Source: Landlords.co.nz

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