Bank Valuations Explained
When buying a property or refinancing your current home loan, a valuation is required by the bank to determine the market value of the property. This valuation must be completed before the bank will provide you with their Unconditional Loan Approval.
The ‘bank valuation’ (as opposed to a ‘real estate valuation’) is completed not by a member of the bank’s staff but via an independent property valuation company.
An independent valuation firm is used in the unfortunate event the purchaser defaults on their mortgage. If the property is later sold for less than the valuation, the bank can sue the valuer for any shortfall.
There are three different types of valuation that can be completed. Here’s the difference between them:
Desktop Valuations
Completed by the lender using suburb median prices and data. No physical inspection is done. Usually only used for properties in capital cities where the LVR is low.
Kerbside Valuations
Someone inspects the property from the street (kerb). Often used when the property value is median for the suburb, no LMI is required, and there is a contract of sale.
Full Valuations
An independent qualified valuer inspects the property and issues a detailed written report with photos, measurements and comparable sales. This is the most common type.
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