Bank Valuation Only Half Of Market Rate

Source : The Straits Times, Jan 15, 2008

I AM currently selling my freehold semi-detached property, which is in brand new and move-in condition. Based on the transacted rate of $720 per square foot (psf) in October last year for another house in the vicinity, and the conservative indicative price from DBS at $2.3 million (which works out to slightly above $580 psf), I asked for $2.4m for my property.

One buyer was keen to buy the house after viewing it, and checked with his bank, Citibank, for valuation. After getting Citibank's valuation at $1.4 million, a staggering difference from my asking price, the buyer backed out.

When I called Citibank in disbelief, the female officer gave me an indicative price at $1.6 million after checking with the bank's 'only approved valuation agency, Knight Frank'.

I called back shortly after and asked to talk to someone at a higher level. An AVP named Adeline Wee called me back.

First, she asked me if I was a Citibank customer. Once she found out I was not, she told me in an unfriendly manner that her officer had given the correct indicative price based on 'a few valuation agencies'. This differed from what the earlier officer had told me - that Knight Frank is Citibank's only approved valuation agency. I pressed Ms Wee for the names of the other agencies, and she named DTZ. She then reminded me that since I am not a Citibank customer, I have no right to question the accuracy of its indicative price. Does she not realise my buyer and I are potential customers? Also, whether I am a customer or not should not change the fact that Citibank should be diligent and professional enough to seek valuations from more than one agency, a practice I believe other banks follow. Such an inaccurate property valuation directly impacts property sellers like me.

I then called Knight Frank to check further. A director of valuation, Ms Lydia Sng, called me back after checking for a few hours. She insisted that its valuation was correct and based on the 'latest and only caveat' for a property near mine. I then told her that based on the Urban Redevelopment Authority's (URA) publicly available caveat records, there are three comparable houses nearby which were sold recently at $720 psf (October last year), $620 psf and $605 psf (July last year). She was surprised and did not seem aware that such records are available, which is astonishing considering she is in the property industry and I am not.

When I searched URA's caveat records for details of the caveat she had based the valuation on, I was shocked to find it had been lodged way back in June last year, before prices of suburban housing started moving up. This is serious as the resulting difference in price valuation is a million dollars, or roughly half the current market rate. Does Knight Frank base all its valuations on outdated transacted prices? If so, aren't the resulting property valuations a poor reflection of true market trends?

Does any authority or professional organisation evaluate valuation practices in the market?

Wong Meow Yin (Ms)