Lenders provide brokers with access to their valuation software to streamline the loan application process. This access allows brokers to order property valuations early, helping to avoid delays and enhance the client experience. However, this privilege comes with conditions, and misuse can have serious consequences.
Key Conditions for Using Valuation Tools
Lenders provide valuation system access on the understanding that brokers will use the valuation tool with an intent of lodging a loan application. This system is designed to speed up the process, but it’s closely monitored. You may not realise that lenders are tracking brokers’ usage, comparing the number of valuations ordered to the number of loan applications lodged.
Here’s what lenders are watching for:
Valuations vs Applications: Brokers who order an excessive number of valuations without submitting corresponding applications may raise red flags.
"Gaming" the system: Brokers who order, cancel and reorder the valuation until this is allocated to a particular firm.
Risks of Misusing Valuation Tools
If a lender identifies inappropriate usage, brokers may face unwanted consequences, such as:
Loss of valuation system access: A lender can remove a broker’s access to their valuation system.
Accreditation revoked: In some cases, brokers have lost their accreditation with a lender for discrepancies between valuations and applications.
Costly penalties: Some brokers have been required to pay thousands of dollars for valuations that didn’t lead to loan applications.
Best Practices to Stay Compliant
To avoid these outcomes and ensure you're following best practices, consider the following:
Leverage CoreLogic or online data: Use available data, such as recent property sales, to get a realistic estimate of a property’s value before ordering a formal valuation. Tools such as Connective Property Tools (CPT) have an inbuilt Automated Valuation Model (AVM), which provides deeper insights and reduces unnecessary valuations.
Secure your login credentials: Never share your login details for lender valuation tools with other brokers. Each broker is responsible for their own usage, and sharing credentials can lead to serious breaches.
Evaluate your process: If your practice is to order multiple valuations from different lenders and choose the highest one, reconsider whether this approach aligns with the Best Interests Duty (BID) standard. Always act in the client’s best interest, and only order valuations when there’s a genuine loan application with the lender.
Be Careful with Client Information
It’s also important to remember privacy obligations when handling client data. Some lenders have reported instances where brokers sent personal information—such as client IDs—to valuers when this information wasn’t necessary. Such actions can lead to privacy breaches.
To prevent this, only send essential information to the valuer, such as property details. If you’re unsure what’s required, reach out to the compliance team for guidance.
Need Help?
If you have any questions or need further clarification, contact Connective’s compliance team or your Partnership Manager. They’re here to support you and ensure you’re meeting your obligations while delivering a great customer experience.