20180605 When is valuation required?

20180605 (Tue)
When is valuation required for property?

When you go to the bank for loan, the bank would ask for a valuation report for the price of the property. Why is that so?

The mortgage given is based on the selling price or market value of the property has become a question of dispute. Some people says I can afford it, just give me the loan! Some people would say it is dangerous, the bank loan can become NPL (non-performing loan) and it will turn into Subprime Crisis of the US!

Truly, the amount for loan should be prudent. During the uptrend market, this price can be exorbitantly high. When the bank loan out the money, it might not have the value to sustain it. Hence, valuation is required to ensure the price paid is not too far out the market value.

There are two key reasons that valuation is required. First the regulation of Stamp Duty calculation and second the Bank Negara Malaysia loan assessment for risk.

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