What's the difference between a bank valuation and an appraisal?

What's the difference between a bank valuation and an appraisal?

What's the difference between a bank valuation and an appraisal?

Did you know there are two potential values for your property? There is the market value (an appraisal from a licensed Real Estate Agent) and the bank value (completed by a licensed Valuer).

Market value is essentially the price that the property is anticipated to sell for in the current market. The estimated value that a buyer would pay and a seller would accept. While it is impossible to say exactly what a property will sell for, based on current comparable sales and listings we are able to arrive at an expected market value which we provide as an appraisal.

Where market value can be driven by emotion, a bank valuation is completely numbers. A professional Valuer will assess your property as well as comparable sales to arrive at an amount that they think the property would sell for. The consider how the property presents and any areas of improvement that need to be address and will take this into account with their price. Bank valuations are often lower than the market value and can often be 10 or 20% lower. If your home is or will be mortgaged, your lender will almost certainly need to value it. This gives the lender confidence your asset offers ample security against the borrowed amount if, for some reason, you cannot pay your mortgage and the lender must sell the property to recoup its debt.

A formal bank valuation can only be conducted by a qualified valuer to ensure they take into account all features and issues relating to a particular property. A formal valuation will take into account things such as:

  • The location of the property
  • The building structure and its condition
  • Building/structural faults
  • Features of the home
  • Caveats or encumbrances on the property
  • Local Council zoning
  • Additional features of the property (particularly relevant in rural areas)

After a valuation, the client will receive a written report detailing the value of the property and a fee will be charged for the service. Valuations are required when a definitive value is needed for reasons such as a property settlement, obtaining finance or establishing the value of a deceased estate. A Court may also order that a valuation be obtained as part of the process of resolving a dispute.

Appraisals are estimated by knowledge of the local area and recent sale prices. We offer complimentary appraisals which you can arrange here.

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