Quick Answer: What Is A Bank Valuation?

A bank valuation, as the name implies, is a valuation of a property determined by your bank. The valuation takes into account a number of factors, including the condition of the property and comparable prices in the suburb. The bank uses the valuation to determine the risk it takes in lending you money.

What does a bank valuation look at?

A valuation is carried out by a certified practicing valuer on behalf of a bank or mortgage lender, and is often based on available data about the property and recent sales of other similar properties in the local area. The valuer may also visit the property to assess its condition in person.

Are bank valuations lower than market value?

Depending on whether you’re selling, buying or refinancing, your property could potentially have two different values. The market value is usually higher, because it’s generally positively impacted by human emotion, whereas the bank value is likely to be more conservative and calculated without any emotion whatsoever.

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How accurate is a bank valuation?

The bank value It is therefore unsurprising that a bank valuation will usually be conservative, sometimes 10%-20% less than the current selling prices of comparable homes.

What happens if bank valuation is lower than purchase price?

A lower valuation result often means you can’t borrow as much money. This is because a lender will use the lower of the purchase price or the valuation to determine the Loan to Value Ratio. If you can’t borrow as much money to purchase the property, you will need to contribute additional cash.

What happens after valuation is done?

After the valuation has been received from the surveyor, the lender’s underwriter will have all the required information to come to a final decision and will then be able to provide a mortgage offer. At the point, the mortgage lender is willing to make an offer you will have it sent to through the mail.

How do bank valuations work?

The valuation takes into account a number of factors, including the condition of the property and comparable prices in the suburb. The bank uses the valuation to determine the risk it takes in lending you money. If the bank valuation is much lower than the purchase price, you may have to borrow more for your home loan.

What happens if bank valuation is higher than offer?

If there’s a big difference between your offer and the valuation, giving you a home loan may put your mortgage lender at more risk than they’re willing to accept. This could lead to your mortgage application being declined.

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How long does a bank valuation take?

The valuation is used to determine the loan to value ratio, and informs the bank whether the property provides enough security for the loan. Bank valuations typically take a few days to complete as a licensed appraiser considers the size of the home, the land size and floorspace, and other property features.

Are bank house valuations accurate?

Wrong! While it’s true that when you apply for a mortgage, your lender will set a value for the property you’re buying, the figure they come up with is not necessarily an accurate representation of the property’s value. “Novice property investors often expect a bank valuation to mirror the market price,” Kelly says.

What happens if valuation is lower?

Why is a Down-Valuation a Problem? Down-valuations can result in a failed sale. If your buyer’s mortgage provider values your property at a lower price than the accepted offer, this will affect the amount of money they are willing to lend.

How does a bank determine the value of your home?

A bank uses a licensed appraiser to determine the current price of a home. The parameters that appraisers consider is the square footage of the home, the size of the lot, how many bedrooms and bathroom the home has as well as any extras such as a den, smart home features, a pool or shed.

How do banks do mortgage valuations?

A lender’s valuation is specific to the property you’re looking to buy. It’s a survey that gives the lender an independent confirmation of the property’s value – including checking the prices of similar properties sold in the area. Your mortgage lender may rely on a mortgage valuation arranged by the vendor.

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How long does a property valuation last?

The valuation expiry date is set from the day that the property is valued and generally, most lenders valuations are valid for six months. As the mortgage valuation process is completed before the formal mortgage offer, it’s rare to find the two expiry dates coinciding.

Can you dispute a bank valuation?

The benefits of challenging a bank valuation You’ll be more sure of how much the bank is willing to lend. The valuer may come back with a higher valuation once they study all the documents and evidence that you have shared with them. If the challenge isn’t accepted, you can always try to re-negotiate with the seller.

Why do banks undervalue property?

No comparable sold property values This is the most common reason for your property to be undervalued is that it simply isn’t worth what you are looking to pay for it. You may think if you can afford to buy it, then this is what the property is worth.

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