Valuers fear state-funded system
Some valuers claim a new property valuation system part-funded by the Government will cut competition and damage business.
The Property IQ Valuation Service allows banks to randomly appoint an approved valuer for mortgage applications, taking away the property buyer's choice.
Property IQ charges both the bank and the valuer a fee for every valuation provided. For valuers to be part of the system, they need to be registered, and a third of the country's professional valuers – just over 300 individuals – have signed up so far.
Property IQ is half-owned by government valuer QV and half by Australian valuation firm RP Data. A similar service running in Australia processes 85 per cent of all mortgage applications, with mixed results.
New Zealand Institute of Valuers president Nicki Bilbrough said valuers across the Tasman thought it had reduced fees along with the quality and standard of valuation reports, and some Kiwi valuers opposed the system.
"They feel that it possibly takes away direct competition. Clients who they have built up a relationship with may no longer be able to use their services because they've gone to a particular bank to get a mortgage who has said they will appoint a valuer. The valuers feel their goodwill has been eroded," she said.
Some members had asked the institute to advise valuers not to register for the system, but the industry body had been told by the Commerce Commission that it could not instruct members to make a commercial decision such as that, Bilbrough said.
Property IQ general manger Steve Longridge said prices for valuations were set across its panel of valuers.
"Our intention is that pricing for the customer is market competitive and should be the same they would pay were they to approach a valuation firm outside the panel. Fees vary for every property in the country but, to a great extent, most valuations on the average home are around the $500 mark inclusive of GST."
He said the system was supposed to remove the opportunity for third-party influence, ensuring an independent valuation was delivered to the bank giving it a level of confidence in the value a mortgage was written at.
Although Property IQ is 50 per cent state-owned, Longridge refused to say what fees it charged banks and valuation companies for using the service or how many valuations it had processed so far.
ASB has been using the service since September. General manager of lending Mike Davy said the ordering process saved customers arranging the property valuation themselves, making the loan application process easier. Fairfax NZ