Liz
Member of DD Central
Posts: 2,426
Likes: 1,297
|
Post by Liz on Jun 10, 2016 16:24:14 GMT
I really think Savingstream should give us purchase prices and skin in the project, and not just valuation report LTV's.
A valuation is just a valuation by 1 person, usually in an optimistic situation. And when we need to call in security, its a sub optimal(distressed) situation, so the valuation wont hold up.
if a purchaser buys a property for 900k, valued at £1.35m, and borrows 950K, it has a 70% LTV. But if it they couldn't refinance and the property was resold, my guess is the 900k figure is the best case figure.
|
|
cooling_dude
Bye Bye's for the PPI
Posts: 2,853 
Likes: 4,298
|
Post by cooling_dude on Jun 10, 2016 16:31:37 GMT
I really think Savingstream should give us purchase prices and skin in the project, and not just valuation report LTV's.
A valuation is just a valuation by 1 person, usually in an optimistic situation. And when we need to call in security, its a sub optimal(distressed) situation, so the valuation wont hold up.
if a purchaser buys a property for 900k, valued at £1.35m, and borrows 950K, it has a 70% LTV. But if it they couldn't refinance and the property was resold, my guess is the 900k figure is the best case figure.
I think (or I'm afraid) that the reason that SS are and will be reluctant to provide the actual price paid for security (in the situations where the loan is used to buy the said security) is because the price paid is close to the 100% LTV mark. As the garden centre loan shows, SS are all too willing to offer loans to cover 100% of the capital required. Personally, I think SS should only lend a maximum 70% of the capital required, but then I do have to wonder how big the loan book would be...
|
|
|
|
Post by dualinvestor on Jun 10, 2016 18:04:12 GMT
Agreed with both of you 100% finance is usually bad in any situation, but in what is effectivly speculative pawn broking, I cannot believe any regulator or detached person can think it sensible. Most others suicidal., but when it's OPM?......
|
|
lobster
Member of DD Central
Posts: 636
Likes: 467
|
Post by lobster on Jun 10, 2016 21:52:15 GMT
However, it does depend upon WHEN the purchase was made, and how average prices of similar properties have fared between the purchase date and the valuation date. There are probably other things to consider too, but it's getting late and I've just downed my 3rd can of beer  |
|
|
|
Post by earthbound on Jun 10, 2016 21:59:23 GMT
Agreed with both of you 100% finance is usually bad in any situation, but in what is effectivly speculative pawn broking, I cannot believe any regulator or detached person can think it sensible. Most others suicidal., but when it's OPM?...... Is this a reason why we very rarely see a 90 day sale valuation in the valuation docs??
|
|
|
|
Post by harvey on Jun 10, 2016 22:31:34 GMT
It's a fact that the actual price paid for a property is the best evidence of its market value unless of course it was sold off market in a transaction that wasn't at Arm's Length or subject to special circumstances.
But generally if a property has been marketed and purchased by somebody in the recent past that is good evidence of market value.
Normally what we see on saving stream are valuations based on assumptions of things happening in the future that haven't happened or on the basis of things that haven't been proven by the necessary tests and costings. In other words rather speculative 'hope' valuations.
This enables saving stream to adopt a high value for the asset and to keep the LTV down to 70% when the real world LTV is actually much higher.
If a property has a realistic potential to get planning permission for some form of development then it is reasonable for some element of Hope value to be included in an estimate of market value but nothing is certain in life and what I find I see is valuers being asked to value on things actually happening in the future that may or may not happen due to all sorts of unknown circumstances.
The valuers are following their instructions and providing the valuation that has been asked for but it is sometimes based on special assumptions that have been given to them because they lead to a higher value and enable the loan to go ahead at 70%
|
|
|
|
Post by dualinvestor on Jun 11, 2016 3:48:40 GMT
However, it does depend upon WHEN the purchase was made, and how average prices of similar properties have fared between the purchase date and the valuation date. There are probably other things to consider too, but it's getting late and I've just downed my 3rd can of beer I think you miss the point. The valuation of PBL 20 was £2.43m the purchase price considerably lower. Apparently SS advanced the whole or substantially the whole of the purchase price so as to effect the purchase. So, in this case and most other instances, the "WHEN" is simultaneous to the advance, hence as C_D says the real LTV was probably in excess of 100%. harvey IMO in a situation where a borrower is prepared to pay more or less 20% there is enough risk already I do not think there is any place at all for "hope value". Further the valuation and loan documents should reveal any interest that the platform has is in the borrower.
|
|
|
|
Post by dualinvestor on Jun 11, 2016 16:23:24 GMT
Agreed with both of you 100% finance is usually bad in any situation, but in what is effectivly speculative pawn broking, I cannot believe any regulator or detached person can think it sensible. Most others suicidal., but when it's OPM?...... Is this a reason why we very rarely see a 90 day sale valuation in the valuation docs?? To be honest I have never seen anything other than OMV and IMO if you are relying on a valuation for security purposes that is the most inappropriate one. If you (being the borrowers collectively and the platform) have to enforce the security it is almost always going to be under forced sale conditions. FS is usually lower than 90 day.
|
|
