Valuations
Valuations
What Is a Property Valuation?
A property valuation is an independent assessment of a property’s market value, carried out by a qualified valuer. Lenders require valuations when you apply for a home loan, refinance, or top-up your mortgage because the property acts as security for the loan.
Most major lenders in Australia have a panel of approved valuers and will usually arrange the valuation on your behalf. In many
cases, especially for standard residential properties, the lender will cover the cost of the valuation.
Why Do Lenders Require Valuations?
To ensure the property provides adequate security for the loan.
To protect themselves from lending more than the property is worth.
To assist in determining how much you can borrow (your Loan-to-Value Ratio, or LVR).
To confirm the property’s condition, location, and saleability in case of default.
Types of Property Valuations
Lenders and their valuers decide which type of valuation is most suitable depending on the loan, property type, and risk level. The
main methods are:
1. Automated Valuation Model (AVM)
Computer-generated estimate using recent sales, market trends, and property data.
Fastest and most cost-effective option.
Common for standard metro properties and low-risk loans.
2. Desktop Valuation
Completed by a valuer using property databases, sales records, and online information.
No physical inspection is required.
Suitable for properties in well-established areas with plenty of comparable sales.
3. Kerbside (Drive-By) Valuation
Valuer physically inspects the property from the street but does not enter the home.
Used as a faster and cheaper alternative to a full inspection.
Works for investment properties or refinances where internal condition is assumed to be reasonable.
4. Full Valuation (Short Form Valuation)
Valuer conducts a complete internal and external inspection of the property.
Involves measurements, photographs, and comparisons with recent sales.
Typically required for high LVR loans, construction loans, unique or luxury properties, and rural areas.
Things to Keep in Mind About Valuations
Valuations can differ from purchase price: If the valuer’s figure comes in lower than what you’ve agreed to pay, you may need a
larger deposit or to renegotiate with the seller.
Market conditions influence outcomes: In a rising market, valuations may lag behind current buyer demand. In a cooling market, valuations tend to be conservative.
Valuations are not the same as appraisals: A real estate agent appraisal is an estimate designed to attract a seller’s business, while a valuer’s report is independent and prepared for the lender.
Costs: For most standard residential loans, banks absorb the cost. However, for non-standard or complex properties, fees
may apply.
Final Thought
If you receive a lower-than-expected valuation, don’t panic. Your mortgage broker can sometimes request a second valuation with
a different lender’s panel valuer. This may result in a higher figure, improving your borrowing position and helping you move
forward with your property plans.
What Is a Property Valuation?
A property valuation is an independent assessment of a property’s market value, carried out by a qualified valuer. Lenders require valuations when you apply for a home loan, refinance, or top-up your mortgage because the property acts as security for the loan.
Most major lenders in Australia have a panel of approved valuers and will usually arrange the valuation on your behalf. In many cases, especially for standard residential properties, the lender will cover the cost of the valuation.
Why Do Lenders Require Valuations?
To ensure the property provides adequate security for the loan.
To protect themselves from lending more than the property is worth.
To assist in determining how much you can borrow (your Loan-to-Value Ratio, or LVR).
To confirm the property’s condition, location, and saleability in case of default.
Types of Property Valuations
Lenders and their valuers decide which type of valuation is most suitable depending on the loan, property type, and risk level. The main methods are:
1. Automated Valuation Model (AVM)
Computer-generated estimate using recent sales, market trends, and property data.
Fastest and most cost-effective option.
Common for standard metro properties and low-risk loans.
2. Desktop Valuation
Completed by a valuer using property databases, sales records, and online information.
No physical inspection is required.
Suitable for properties in well-established areas with plenty of comparable sales.
3. Kerbside (Drive-By) Valuation
Valuer physically inspects the property from the street but does not enter the home.
Used as a faster and cheaper alternative to a full inspection.
Works for investment properties or refinances where internal condition is assumed to be reasonable.
4. Full Valuation (Short Form Valuation)
Valuer conducts a complete internal and external inspection of the property.
Involves measurements, photographs, and comparisons with recent sales.
Typically required for high LVR loans, construction loans, unique or luxury properties, and rural areas.
Things to Keep in Mind About Valuations
Valuations can differ from purchase price: If the valuer’s figure comes in lower than what you’ve agreed to pay, you may need a larger deposit or to renegotiate with the seller.
Market conditions influence outcomes: In a rising market, valuations may lag behind current buyer demand. In a cooling market, valuations tend to be conservative.
Valuations are not the same as appraisals: A real estate agent appraisal is an estimate designed to attract a seller’s business, while a valuer’s report is independent and prepared for the lender.
Costs: For most standard residential loans, banks absorb the cost. However, for non-standard or complex properties, fees may apply.
Final Thought
If you receive a lower-than-expected valuation, don’t panic. Your mortgage broker can sometimes request a second valuation with a different lender’s panel valuer. This may result in a higher figure, improving your borrowing position and helping you move forward with your property plans.
Related Topics
Key experts—like brokers, solicitors, and inspectors—who guide and support you through every step of buying your first home.
A split loan lets you divide your mortgage into two parts—one fixed, one variable—so you can balance stability with flexibility.
Lenders may discount parts of your income—like bonuses or casual earnings—when assessing your borrowing power. This is known as “income shredding” or an “income haircut.”
The cooling-off period is a brief timeframe after signing a property contract when buyers can cancel the deal, often with little or no penalty.
Discover the five key factors lenders evaluate when assessing loan applications and learn how each plays a role in securing mortgage approval.
A high LVR could mean extra costs, while a low LVR can save you thousands. Find out why lenders care so much about this number.
Related Topics
Key experts—like brokers, solicitors, and inspectors—who guide and support you through every step of buying your first home.
A split loan lets you divide your mortgage into two parts—one fixed, one variable—so you can balance stability with flexibility.
Lenders may discount parts of your income—like bonuses or casual earnings—when assessing your borrowing power. This is known as “income shredding” or an “income haircut.”
The cooling-off period is a brief timeframe after signing a property contract when buyers can cancel the deal, often with little or no penalty.
Discover the five key factors lenders evaluate when assessing loan applications and learn how each plays a role in securing mortgage approval.
A high LVR could mean extra costs, while a low LVR can save you thousands. Find out why lenders care so much about this number.
FOLLOW US
© 2025 Estate Seeker.com.au - All Rights Reserved. Content on this site is for educational purposes only.
Always consult with a professional before making any investment decisions.