Beware of property valuation fraud

Dodgy valuations are being used to fraudulently pump up property sale prices or mortgage values, senior industry figures say, leaving buyers and lenders vulnerable to big losses.

Dodgy valuations are being used to fraudulently pump up property sale prices or mortgage values, senior industry figures say, leaving buyers and lenders vulnerable to big losses.

Claims have emerged that valuations have been used in relation to property in Queensland, in at least one case with the purpose of obtaining a bigger mortgage from a lender.

More difficult property market conditions this year have increased the incentives for valuers and property owners to engage in valuation scams, NSW Australian Property Institute president Chris Egan says.

“We are seeing examples of parties acting in the marketplace writing fraudulent valuation reports, which are being presented to lenders in a desperate attempt to secure mortgage funds,” Egan says.

The fraudulent valuations that have been identified so far have been relatively easy to identify because of their poor quality and limited scope.

But risks remain. Knight Frank Valuations director David Castles says buyers and lenders should not overlook potentially dodgy valuations in the rush to get deals done.

“It is essential for parties relying on valuations to ensure that proper processes are followed to ensure that the valuation is authentic. Our clients would generally be able to recognise whether something looks doctored or manufactured by unauthorised parties,” Castles says.

“However, this could always vary with the level of sophistication of the author or the experience of the party relying on the valuation.”

Buyers or lenders planning to rely on a valuation should take steps to ensure its authenticity and the credibility of the valuer, Castles says.

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