Ferny Hills 
Valuation is an essential element in the process of buying and selling property. We are often asked about the difference between a bank valuation and an agent price appraisal. These are two different types of valuation used for two different purposes. We hope this guide provides you with an understanding of each so you can go forward confidently with the sale of your home.
What is a bank valuation, and when do I need one?
A formal valuation can only be conducted by a qualified valuer who has completed the necessary education and training to be certified in this field. A valuation takes into account areas such as:
- Location of property;
- Building structure and condition;
- Structural faults;
- Features of property;
- Legal considerations (such as caveats and encumbrances); and
- Council zoning;
A fee is charged for this service, and at completion the client will receive a detailed report outlining all relevant information pertaining to the property.
These formal valuations are most commonly conducted by banks during the lending process and are therefore known as bank valuations. Bank valuations are necessary when a definitive value of a property is required. Such instances include obtaining finance from a lending institution, property settlement, or establishing value for a deceased estate.
In the case of obtaining finance, a lending institution needs to confirm, before they lend any amount, that the funds could be quickly recouped upon sale of the property if the loan were to default. The only way to confirm this is for a valuation of the property to be conducted.
What is an agent appraisal?
An agent appraisal is a market valuation, generally conducted by a real estate agent. It gives an idea of how much a property would sell for in the current market. An agent will use their knowledge of:
- current market trends,
- demand for similar properties, and
- recent valuations and sales data for comparable properties in the area,
to make an informed estimate of what the property could sell for. While there is no guarantee that a property will sell for the price given in the appraisal, a good agent will have extensive experience of their local market and will work with the seller’s desired sales timeframe and price goals to set realistic expectations around sales price.
How does an appraisal differ from a valuation?
A bank valuation will always be more conservative. When a bank is selling a property, it is generally because the loan has defaulted (through non-payment by the client). The bank’s aim in the sale of the property is to recoup the outstanding debt, as quickly as it can.
Conversely, an agent appraisal will usually be higher than a bank valuation of the same property as agents take into consideration the market conditions and sellers have more time to follow the sales process in order to maximise their sale price.
As your local property experts, we know our local property market inside out and can provide a no-obligation appraisal of your property in about 15 minutes. Not only can we give you an estimate of what your property is currently worth, but we can also make suggestions on simple value for money improvements to maximise your sale price. Call the office today for a no-obligation chat about your property.
