Kieran Clair says property investors need to partner with property valuers, and adopt a valuer’s mindset, to successfully grow their portfolios.
The award-winning property journalist, who has over 20 years of experience as a property valuer and investor with one of Australia’s leading valuation companies, talked to KnowHow’s Bushy Martin on the Get Invested podcast about how professional valuers can help investors navigate a rapidly rising property market.
He explained the biggest advantage valuers can provide investors is the ability to detach any emotions from the property.
“An example of this is my parents asked me to value their house when they moved from Brisbane up to the Sunshine Coast. It was the house I grew up in, there’s a lot of tears and and laughter that went on in that place. I just could not fix it … so I actually said to my parents when they came to sell that we’re going to get someone from the office to do this for you without any input from me, because I can’t take the emotional attachment out of the property,” Kieran said.
“And this is sometimes where the tug of war goes on between the valuer and the property owner. The valuer is going to be very unemotional about your home, and quite rightly, a homeowner is going to be very emotional about that particular asset.”
Kieran also gave insight into the factors that can create a wide variation in valuations, but said most professional valuers should still be able to remain on target despite the circumstances.
“I say this all the time – no one is good enough to land on the dollar every single time they do a valuation. But most valuers will want to land, on a traditional house, within a 5% variance,” he said.
“You look at enough information to say, ‘well, it’s not worth any less than X and it’s not worth any more than Z, so I’m going to value right in the middle of those two, I’m going to go Y’. And I think that’s about the best you could do.
“Now throw into that shifting markets, emotional buyers and sellers, there’s a whole lot of little variations that can throw that little equation out of kilter. But a good valuer should at least be able to stay within a range of tolerance.
“So I think understanding the thinking behind how those figures are derived would go a long way to helping (investors).”
However, he said investors should be cautious in an accelerating property market, and work closely with valuers who specialise in suburbs.
“It’s hard to be right on the cusp of figures every time and I know there will be a lot of people out there whose contracts will fall over or who will have to tip in substantially more money to back themselves in a fast-rising market, because valuations can’t stack up to what’s being paid,” Kieran said.
“In 2003 when Brisbane’s market was rising, some locations had between 20 and 30% capital gain, and I happened to be doing a valuation in around the Kedron area. And a fellow from Melbourne had contacted us and said ‘there’s a house going to auction on Saturday, What should I bid?'” he said.
“I can recall doing the valuation of that property and saying to him, ‘look, comparable sales evidence under mortgage security rules, this thing’s worth 440K’. If I was being a little flexible on how I would assess the sales, knowing a little bit about what’s going on, I’d probably be up to 460K. However, knowing what I know about the last two weeks in this market, you will need to be over 480K to get it. That property sold for 492K.
“So this was a really good opportunity or a really good example of me being able to communicate directly with the buyer about how 2003 was a rocketing market, and people are saying that this one’s similar. Trying to keep up with values is really very difficult unless you are right at the front of that wave, and you know about each sale.
“This is why valuers specialising in the suburbs is a good thing. You’re walking into houses that are under contract. You have some idea, and by the time the 30 day contracts are done, the market’s gone up another 1%.”
Listen to the full interview here.
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