Banks Lower Valuation Of New House.

[skybluestu]

I'm in the process of having a new house built, nothing amazing on hundreds of rai but a nice single storey, 3 bedroom, 2 bathroom house on 113 sq wah (452 sq mt), the house itself is built over 190 sq mt. I'm paying 2.5 Million Baht for the land and house with the land being bought at a price of 7,500baht per sq wah. It's a small project consisting of x12 houses which allows each owner to pretty much design their own house which is one of the things that attracted me to it so they are not all the same like they are on the bigger housing projects. They use high quality materials and the other houses that have been built already seem to be of good quality with happy owners so I'm happy with the 2.5M price. I'm paying 50% and trying to borrow 50% as I'm only a poor teacher and so can't pay cash for the full asking price (any of you rich fella's want to make a donation?) but the guy from the bank who went out to see the project said the land office say the land should only be 4,500baht per sq wah and the total for land & house should only be around 2M! Should I be worried by this lower valuation or is it normal in Thailand so they can lend less money. I was surprised because this same bank, SCB, is the main lender at one of the bigger projects with similar houses there around 2.8M!!! Could they be trying to affect sales at the project where I'm buying?

Thanks for any information, advice, opinions re this but please no 'Farang can't buy land' comments.

Thanking you Kindly

[InterestedObserver]

Valuations recorded at the local Land Office and the money that actually changes hands in the field are seldom the same. If all you are concerned about is what the bank will lend, then not a problem. You could pay for an independent survey. TIT!

[quiksilva]

Land office valuations are carried out infrequently, normally every 3-5 years and even then not for the entire country at once (simply too much work). So it is not unusual to get government appraised values much lower than open market.

Bank valuations are usually very conservative too, and often lower than market value (same thing happens when you buy a car.) This means the bank will only lend on their perceived value of 2 million.

Some solutions that immediately spring to mind:

1 . If you can comfortably afford the repayments on your required loan of 1.25m. Stick to it. There's no need to get caught up on a 50:50 mortgage, you are only asking for 75% of their perceived value, which is not unreasonable (if its your wife's name).

2. Or you could try to use the banks valuation to negotiate a better deal with the developer. Not sure how flexible they are, but a deal might be possible in today's market.

[ballbreaker]

I would think that even with the lower valuation they have given the property they will most likely lend you the 1.25 M provided you have good credit and employment history.

[mommysboy]

I would think that even with the lower valuation they have given the property they will most likely lend you the 1.25 M provided you have good credit and employment history.

Bank valuations are more conservative. LR call the tune, what's their valuation?

Do banks lend to foreign owned companies? If so it's good news as it means the company nrules are watertight.