Why can banks and agents valuations differ?
By | 5th Jun 19

Ever wondered why a property can have differing valuations? How is that possible and which price is technically the correct one? Sometimes a home can be listed for a particular price and valued by the bank at another.


Bank valuation

If your home is financed by the bank through a mortgage, the bank will definitely have to value your property. What this means is they will have a property valuation done to determine if your asset offers security against the money you are borrowing from them. This is done in the instance you are unable to repay the mortgage. The bank will need to then recoup the debt owed. The bank valuation is often more conservative in this instance, usually by 10-20% in some instances.


Real Estate agent valuation

Part of the process of hiring a selling agent is getting comparable sales and a price indication you’re your property. By looking at comparable properties that have sold recently in the area, the agent will be able to give a price based on how the market is performing and your property’s condition to determine a price to advertise.


Council valuation

A council valuation takes into consideration figures based on comparable sales, Capital Improved Value (CIV), Net Annual Value (NAV) and Gross Rental Value (GRV). The council, fire and water authorities use the above figures to calculate how much homeowners are required to pay for using their services.

In the end the market will most likely determine the property value based on all the above attributes. It is possible that a bank valuation can come in lower than the purchase price, and if you find yourself in this position, you can always challenge the valuation or apply to another lender.

For more information on the buying and selling process, get in touch with us today to see how we can help you! PH 1300 239 901