Sellers hear one number from the agent and a different one from the bank, and the gap can decide whether a loan settles. The two numbers answer different questions, and knowing the difference saves deals.
Two different questions
Market value asks: what would a willing buyer pay today? It is shaped by competition, emotion and marketing. A bank valuation asks: if we had to repossess and sell this quickly, what would we safely recover? It is conservative by design, done by an independent valuer who answers to the lender’s risk team, not to your hopes.
Why bank valuations come in lower
- Valuers are liable if they overshoot, so they anchor to settled comparable sales, not asking prices.
- Purchases are usually valued at the contract price, no higher, even in a rising market.
- Unusual properties (unique builds, high-density apartments, remote locations) get bigger haircuts.
- Desktop and drive-by valuations, used for speed, are blunter than full inspections.
When the gap bites
Refinancing: a low valuation can push your LVR above 80% and kill the deal’s economics. Equity release: it directly shrinks what you can access. Off-the-plan settlements: the valuation happens years after the price was set, and shortfalls come out of your pocket. See buying off the plan.
The fix: valuation shopping
Different lenders use different valuers and different methods, and results on the same property routinely spread 5 to 10%. Brokers can order free upfront valuations with several lenders before lodging anywhere, then send your application where the number is strongest. It is one of the quietest ways a broker adds five figures of value. Ask Nathan to run yours.