top of page

Understanding Property Valuations

When investing in property most people will need to obtain a loan from a bank or lending institution. The lender will use the property as security and will agree to lend a percentage of the value of the property, for example 80%. This is referred to as the Loan to Value Ratio (LVR).

As part of the loan approval process the lender or your broker will arrange a valuation on the property. Now most of us will assume that the purchase price is the ‘value of the property’ – after all, it was set by market forces and is a true indication of what the market is willing to pay. The lenders and valuers do not necessarily see it this way.

Lenders instruct valuers to take a very conservative approach to valuations. They use historical sales data to compare values within a small geographical area and also take into consideration broader market conditions. Some of these considerations are subjective. Sometimes they only use the sales data (known as a Desktop Valuation) and sometimes they only drive past the property (known as a Kerbside Valuation). In the current market we are seeing very conservative valuation results.

Preparation – The Key to Success!

Let’s face it. Investing in property is a big decision and a valuation shortfall can leave you questioning your decision. It is important to have done your research before committing to a purchase and getting the right advice to help you make the right decision. You need to know your numbers and manage any potential risk by:

  • Creating a financial buffer – either equity or savings so you can cover any valuation shortfall

  • Do not wait until the last minute to apply for finance

  • Consider a number of lender options so you can mitigate the results of a valuation – not all valuers and lenders are equal!

I am available to answer any questions and help you to achieve your property dreams. Contact me on 0448 258 716 or by email to

Featured Posts
Recent Posts
Search By Tags
Follow Us
  • Facebook Basic Square
  • Twitter Basic Square
  • Google+ Basic Square
bottom of page