How lenders value your property
The bank's valuation determines how much you can borrow, and it's often different from the price you paid or what an agent told you.
What a bank valuation actually is
When you apply for a home loan, the lender needs to know what the property is worth — independently of what you're paying for it. They commission a valuation from an accredited valuer, who assesses the property against recent comparable sales.
The valuation determines your Loan-to-Value Ratio (LVR). A lower LVR means a lower rate tier and no LMI. A higher LVR may trigger LMI or disqualify you from certain lenders entirely.
The key rule
Lenders lend against the lower of purchase price or valuation. If you pay $700,000 but the property values at $670,000, you are effectively buying at a higher LVR than planned — and need extra cash to bridge the gap.
Most lenders order the valuation after conditional approval — but before formal approval. Knowing the result before you exchange protects you.
How LVR affects your loan
LVR = loan amount ÷ property value. Rates and LMI indicative only.
Types of property valuation
Lenders choose the valuation type based on property type, LVR, and available data.
| Type | Conducted by | Cost | Timing | Typical use |
|---|---|---|---|---|
| Full (desktop or kerbside) | Accredited valuer | $200–$600 | 2–5 business days | Complex, rural, or high-value properties |
| Full (internal inspection) | Accredited valuer | $400–$800 | 3–7 business days | Unique homes, units over 3 floors, prestige market |
| Automated (AVM) | Algorithm (CoreLogic, PropTrack) | Free | Instant | Standard suburban properties, strong data |
What valuers look at
Bank valuers are conservative by nature. Their job is to determine what the property would sell for in an orderly market, not a rushed one.
Comparable sales (comps)
The most important factor. What have similar properties in the same suburb sold for in the last 3–6 months? Less data = more conservative estimate.
Land size and zoning
For houses, land value is significant. Larger blocks on development-zoned land attract higher valuations.
Condition and improvements
A renovated kitchen or bathroom adds value, but only if reflected in comps. Over-capitalising beyond suburb ceiling limits is common.
Location factors
Busy roads, proximity to infrastructure, flood zones, and easements all reduce value. Good schools, parks, and transport add it.
Market conditions at the date of valuation
If the market has moved significantly since comparable sales, valuers apply a time adjustment — but cautiously.
Protecting yourself from a low val
Research comps before you bid
Check recent sales on realestate.com.au or via a free CoreLogic report before auction. Know what the property should value at before you commit.
Include a finance clause
A 14-day finance condition on private treaty sales lets you exit if the valuation comes in short and the vendor won't negotiate. Never waive finance at auction without pre-approval.
Use a lender with multiple valuers
Brokers can order valuations from multiple lenders. If the first comes in low, a second lender using a different valuer may return a better result on the same property.
Brisbane suburb data
Looking at a specific Brisbane suburb? Our suburb insights pages include median prices, recent trends, and growth data to help you understand what a property should value at.
View suburb insights →Property valuation FAQs
Why is the bank valuation lower than the agent's appraisal?
A real estate agent's appraisal is a marketing opinion: it reflects what the agent believes they can achieve at market, often on the optimistic side to win your listing. A bank valuation is a formal assessment by an accredited valuer using recent comparable sales, and errs on the conservative side to protect the lender's security. The two can differ by 5–15% on the same property.
Can I dispute a bank valuation?
Yes, in limited circumstances. If you believe the valuer missed key comparable sales or made factual errors (e.g., recorded the wrong number of bedrooms), you or your broker can request a review with supporting evidence. Some lenders will order a second valuation from a different firm. It's worth attempting if the shortfall affects your LVR band, as a $20,000 difference can save or cost thousands in LMI.
Does a lender always order a valuation?
Not always. Many lenders use automated valuation models (AVMs) for straightforward properties with abundant comparable data — typically in suburban areas with lots of recent sales. AVMs are instant and free. A full valuation (ordered by the lender, cost $200–$600) is required for higher-risk properties, unique homes, rural land, or when the AVM result is borderline for the requested LVR.
Does the purchase price ever affect the valuation?
The purchase price is always disclosed to the valuer. In normal markets, if you're buying at market value, the valuation typically comes in at or close to the purchase price. However, if the purchase price is above comparable sales (you've paid a premium at auction, for a unique feature, or in a rising market), the valuation may come in lower. This gap becomes a problem if you've budgeted for 80% LVR — you'd need extra cash to cover the shortfall.
What happens if the valuation comes in low?
You have several options: negotiate with the vendor to reduce the price; find additional cash to cover the gap (so your LVR stays where the lender approved); dispute the valuation with comparable evidence; or try another lender who may use a different valuer or AVM. Your broker can manage this process — they've seen low vals before and know which approach fits your situation.
How does property value affect my borrowing power?
Lenders lend against the lower of purchase price or valuation — not the higher. If you buy at $650,000 but the property values at $620,000, an 80% LVR loan means the lender will lend 80% of $620,000 ($496,000), not $520,000. You need to fund the $24,000 difference in cash. This is why understanding valuations before exchange is important, especially in competitive markets.