The Australian Valuation Standards Board provides technical and professional policy advice to valuation principals as related to the Australian Property Institute.Greg Cummins represents ACT Division Council on this board.
At the last meeting in August 2013, several items concerning residential mortgage valuations were discussed. These included:
- Settled sales;
- Restricted valuations;
- ‘As if Complete’ valuations; and
- Valuation management companies.
1. Settled Sales
Banking standing instructions and Property Pro supporting memorandum requires that a minimum of three sales that have been settled be used in valuation reports. The Board was asked to consider a submission from API Victorian Division acknowledging that to only have recognition of sales that have been settled may not be a true reflection of the market at a particular point in time. If the market is rising or falling steadily and sales may be 90 days or longer before they are registered as sold they may be out of date before they are able to be used. The API legal representative has been asked to redraft the sales evidence section of the reports to provide a greater clarity.
2. Restricted Valuations
The Board was asked to review the Restricted Valuation Supporting Memorandum. After discussion it was determined that;
- Restricted valuations should continue only to be used for first mortgage valuations;
- Only to be used for single residential dwellings and vacant land;
- It did not support the minimum requirement of photographs be included of the sales evidence of the property;
- It did not support the provision of a single figure with a confidence level range attached; and
- There should be no requirement for a supervising valuer to sign off on this product, though it recommends that a form of quality review consistent with the firms’ practice be included.
3. As If Complete Valuations
A draft ‘As If Complete’ supporting memorandum has been discussed with the intention of incorporating it into the Property Pro supporting memorandum. Among other things, it was agreed that a limit of $1 million to apply with respect to check costs and progress inspections and it was appropriate to valuers to comment if progress inspections/draw down schedules were in line or otherwise with local industry standards. However if they are considered to be out of line it was not appropriate for the valuer to conduct progress inspections.
4. Valuation Management Companies
The Board reviewed a paper for the International Valuation Standards Council (IVSC) related to the increased use of third party valuation companies. I expect that this discussion will be ongoing for some time and has also been passed onto the National Council for their comments.