Bank valuation vs market value: why the bank's number is lower
A bank valuation is the number a lender will actually lend against, and it is often lower than what a selling agent says your home is worth. The two figures answer different questions, which is why they disagree. Here is what the valuer is asked to work out, what a low number does to your loan, and what you can do about one.
Last updated August 2026 · about 8 minute read · written by the Seek Mortgages editorial team
When you buy or refinance, two numbers describe the same property. The agent's appraisal is a marketing estimate. It is what the agent thinks the home could fetch after a good campaign, and agents have a reason to be generous, because a high appraisal helps win the listing. The bank valuation is a formal report from an independent valuer, and the bank uses it to decide how much it will lend.
The valuer is not asked what your home might fetch on a strong Saturday after six weeks of advertising. The bank's question is blunter. If this borrower stops paying and we have to sell the place, what do we get back?
The question being answered. The banking industry's own guideline on appointing valuers, written for business lending, puts it plainly. A security valuation assesses what could be realised if the customer cannot repay. That value, the guideline notes, may differ from an appraisal given for another purpose, such as one from a real estate agent.
Why the bank's number comes in lower
On paper, the valuer assesses market value, the same idea an agent gestures at. In practice, the rules pull the number down. A valuer signs the figure and answers for it. If the bank later sells at a loss and the valuation was too generous, the valuer's professional indemnity insurance is on the line. Nobody sues a valuer for being careful. So the incentives point down, never up.
The evidence rules push the same way. The Australian Property Institute's guidance for mortgage security work reads like a list of ways to say no.
- Only settled sales count. The evidence is comparable homes that sold, not asking prices or listing hopes.
- A marketing period must be stated. The valuer estimates how long a proper sale would take and flags anything that could hurt it.
- Incentives are stripped out. Cashbacks and other sweeteners do not belong in a security value.
- The future does not count. The valuer must not build predicted growth into the figure.
An agent sells the future. A valuer is only allowed to count the past.
There is a harsher basis a lender can ask for on top of that. Forced sale value is a recognised concept in the valuation standards. It is the price a home would bring if the owner had to sell on a short timetable without proper marketing. Banks do not instruct every valuation that way, but the recovery scenario always shapes the brief, because recovering the debt is the whole point of holding security.
Desktop, kerbside and full: the three levels
Not every valuation involves someone walking through your home. Lenders order three levels, and the level tracks how much risk the loan carries. A desktop valuation is done from sales records and photographs, without a visit. A kerbside valuation means the valuer drives past and checks the outside. A full valuation is the complete version, where the valuer walks through, measures, and records the condition and anything unusual.
| Level | What the valuer does | Where lenders use it |
|---|---|---|
| Desktop | Works from sales records and photos, no visit | Lower risk loans with plenty of sales evidence |
| Kerbside | Drives past and checks the outside | The data looks fine but the bank wants eyes on it |
| Full valuation | Walks through, measures, records condition | Purchases at higher LVRs and unusual properties |
A low risk refinance in a suburb full of sales evidence often gets a desktop. A purchase at a high ratio, or a home the data cannot describe, gets a full inspection.
Why you usually cannot see the report
The report is addressed to the bank, because the bank is the client. The valuer's duty, and the liability that comes with it, runs to the lender who gave the instructions. That is why you usually cannot see the report, even when your application fee covered it. Paying the fee does not make you the client.
For business loans, the banking guideline says a copy is provided on a non-reliance basis. For home loans, many lenders will not release the report at all. Most will share the figure once it threatens the deal, and a broker can often see the result in the platform used to order it. You can commission your own valuation and get a report you are entitled to read. The bank will still rely on the one from its own panel.
What a low valuation does to your LVR and LMI
A low valuation matters because of one ratio. Your loan to value ratio is the loan divided by the value the bank accepts, and for a purchase the bank accepts the lower of the price and the valuation. ASIC's Moneysmart notes that lenders mortgage insurance is usually payable when the amount borrowed goes above 80 per cent of the value of the property, and that the insurance protects the lender, not you. Staying under that line is part of what makes a lender treat you as a prime borrower.
The figures here are illustrative. Say you buy at $750,000 with a $150,000 deposit, borrowing $600,000. Against the price, that is a clean 80 per cent. If the valuation comes in at $720,000, the same loan is just over 83 per cent of the value the bank will use. To get back to 80 per cent you could borrow only $576,000, so you would need another $24,000 of deposit. Otherwise you pay lenders mortgage insurance on a loan you thought was safely under the line.
What you can actually do about a low valuation
Start by asking for the number. Lenders rarely hand over the report, but the figure itself is usually shared once it puts the loan in doubt. Then you have three realistic moves.
Challenge it with evidence
Most lenders have a reconsideration process. What moves a valuer is settled sales the report may have missed: recent, nearby and genuinely comparable. An agent's appraisal letter is not evidence, and neither is an asking price. Two or three hard sales with dates and prices give the valuer something they can defend on paper.
Try a second lender
A valuation is an opinion inside a range. Lenders use different valuation firms and different levels of inspection, and some accept automated estimates that others will not. A desktop at one lender can land where a kerbside at another did not. Brokers can often test the valuation with more than one lender before the application goes in, and most borrowers already have one. The MFAA reports that brokers settled a record 81.0 per cent of new residential home loans in the March 2026 quarter.
Renegotiate or top up
If your contract has a finance clause, a short valuation is a fact you can put to the vendor, and some vendors will meet you partway rather than restart their campaign. If you want the home regardless, the blunt fixes are a bigger deposit or wearing the insurance cost.
Seek Mortgages is an independent publication. We do not sell loans or take enquiries, and nothing here is personal advice. Whether to pay the insurance, top up or move lenders depends on your own numbers, and a licensed broker or adviser is the right person to run them with you.
The short version
An agent estimates what your home could fetch. A valuer certifies what the bank could get back if things go wrong, and answers for it if the figure is too high. The second number is lower by design. If it lands short, get the figure, fight it with settled sales, or take the file to a lender whose valuer sees it differently.
Common questions
Why is the bank valuation lower than the real estate agent's appraisal?
They serve different purposes. The agent is estimating what a good campaign might achieve, and a generous number helps win your listing. The valuer is telling a bank what the home is worth as security for a debt, and carries the liability if the figure proves too high. Careful beats optimistic every time.
Can I see the bank's valuation report?
Usually not for a home loan. The report is addressed to the lender, and the valuer's duty runs to the lender rather than to you, even when your fees covered the cost. Most lenders will share the figure if it affects your application, and brokers can often see the result in their ordering platform. A valuation you commission yourself is yours to read, but the bank will still use its own.
Does a low bank valuation mean I paid too much?
Not by itself. The valuation answers a deliberately cautious question, so a modest gap between it and your price is normal. A large gap is worth taking seriously though. If your contract is subject to finance, it can be grounds to renegotiate with the vendor or to walk away.
Can I challenge a bank valuation?
Yes. Most lenders accept a reconsideration request through your broker or banker. It succeeds on evidence: recent settled sales of genuinely comparable homes the valuer may have missed. Asking prices and agent appraisals carry no weight. If the challenge fails, applying with a lender that uses a different valuation firm is often the more effective path.
Do different lenders get different valuations on the same property?
They can, and often do. Lenders use different valuation firms, order different levels of inspection, and set different rules for automated estimates, so the same home can come back with different numbers in the same month. That variation is one of the practical reasons borrowers lean on brokers, who can sometimes test a valuation with a second lender before anything is lodged.
Sources and further reading
- Australian Property Institute, Valuations for Mortgage and Loan Security Purposes (ANZVGP112, effective 1 January 2025). The professional guidance behind bank valuations: settled evidence, a stated marketing period, risks flagged, cashbacks excluded, and forced sale treated as a separate basis a lender can instruct.
- Australian Banking Association industry guideline, Appointing property valuers. States that a security valuation assesses what could be realised if the customer cannot repay, may differ from a real estate agent's appraisal, and is addressed to the bank, with any copy provided on a non-reliance basis.
- ASIC Moneysmart, lenders mortgage insurance. LMI is usually payable when the amount borrowed exceeds 80 per cent of the value of the property, and it protects the lender, not the borrower.
- MFAA Quarterly Market Share Report, March 2026 quarter. Mortgage brokers settled a record 81.0 per cent of new residential home loans, up 4.2 percentage points on the March 2025 quarter.
General information only. This guide explains how home loans work in Australia in broad terms. It is not financial or credit advice and does not take account of your objectives, situation or needs. Seek Mortgages is an independent publication, not a mortgage broker, lender or financial adviser, and we do not arrange loans. Rates, caps and eligibility rules change often, so always confirm the current detail with the relevant provider or regulator, and consider getting advice from a licensed professional before you act.
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