Toll Free
1.855.PURVIEW

When Sales Comparables Matter to You

pfl2

When a mortgage broker or branch brings forward a deal and the underwriting process takes place, one of the most important things you will look at is the property’s value. This, however, can also end up being a major area of contention that leads to disagreement. It is also something that is often under- or overestimated, leading to missed opportunities.

Especially in hot urban markets like Toronto and Vancouver, it can be really difficult to know what a property is worth. Of course, all can be resolved by ordering an appraisal, however appraisals cost money and there are steps you can take before ordering an appraisal to drill down on the property’s actual value. Here are a few of the things you can look at:

Sales History:

When was the property purchased and what was the purchase value? If the property was recently purchased and there is a huge discrepancy in value, in the absence of evidence of a major renovation, this can present an issue. With that said, if the property is in a hot urban centre, was purchased a couple of years ago and there is a significant increase in property value, it could be legitimate.

Comparable Sales:

One of the best ways to assess the value of a property is by looking at what similar homes in the area have sold for. In situations where the client has done a major renovation, such as finishing a basement, adding square footage, adding a bedroom or bathroom, selecting post-renovation comparable sales will help you see how those improvements may have improved the property’s value.

Automated Valuation Model:

An Automated Valuation Model (AVM) generates an estimate of a property’s value based on an analysis of public record data, property location, market conditions and real estate characteristics at a specified date. After entering the street address of the subject property, the system in turn identifies the property, checks its location, size and other key features and searches its systems database for the best set of comparables or indices to generate a value for the subject property.

Reviewing the sales history, comparable sales and automated valuation model will give you a concrete idea of what a property is worth and enable you to show your broker or the deal originator that you have done everything possible to validate value. In instances of disagreement where the value isn’t there, they will appreciate that you have put forward all your best efforts on their behalf.

At Purview For Lenders, we have the tools that make validating property value quick and painless.

Find out more by visiting https://lenders.purview.ca/.

 

Facebooktwittergoogle_pluspinterestlinkedinmail

Related Posts