How much does a bank valuation cost?

Desktop valuations are typically free. Full physical valuations cost between $300 and $600, depending on the property type and location. Many lenders include a free upfront valuation as part of their loan product, but may charge for subsequent valuations.

Can I choose my own valuer?

No. The lender selects the valuer from their approved panel. You cannot commission your own valuation and submit it to the lender. However, if you disagree with the result, your mortgage broker can request a second valuation or submit to a different lender.

Why is the bank valuation lower than the purchase price?

Bank valuations are deliberately conservative. They rely on verifiable recent sales of comparable properties, not aspirational listing prices or emotional buyer sentiment. In competitive or rising markets, buyers often pay above what comparable sales data supports, resulting in a valuation shortfall.

Do I get to see the valuation report?

It depends on the lender. Some lenders provide the full valuation report to the borrower, while others only disclose the valuation figure. Your mortgage broker can usually obtain the figure and key details on your behalf.

What is a Lender's Valuation? | Realestate Lens

Definition

Lender's Valuation

A lender's valuation (also called a bank valuation) is an independent assessment of a property's market value commissioned by the lender to determine how much they are willing to lend against it. It is based on comparable recent sales data — not the asking price or the price you agreed to pay.

When you apply for a home loan, the lender needs to confirm the property is worth enough to secure the loan. The bank valuation protects the lender — if you default and they need to sell the property, they want confidence they can recover the outstanding loan amount. The valuation directly affects your loan-to-value ratio (LVR), which determines whether you pay Lenders Mortgage Insurance (LMI) and the interest rate you are offered. For a broader look at how properties are valued, see our property valuation guide.

Bank Valuation vs Market Value

Criteria	Bank Valuation	Market Value
Purpose	Determines how much the lender will lend	Estimates what a buyer would pay on the open market
Who commissions it	The lender (you usually pay the fee)	The buyer, seller, or their agent
Methodology	Conservative — based on recent comparable sales	May factor in market sentiment, demand, and unique features
Typical outcome	Often at or below the purchase price	Often at or above the purchase price
Used for	Loan approval and LVR calculation	Setting asking prices, auction guides, insurance

Types of Lender Valuations

Lenders use different valuation methods depending on the property type, loan amount, and LVR:

Desktop valuation (automated): Uses an algorithm and property data to estimate value without a physical inspection. Fast (often same-day) and typically free. Common for low-LVR loans on standard properties in well-established suburbs.
Kerbside (drive-by) valuation: A valuer inspects the property externally without entering it. Used for moderate-risk loans. Costs $150 - $300.
Full valuation (on-site inspection): A qualified valuer inspects the property inside and out, assesses its condition, and compares it to recent sales. The most thorough method. Costs $300 - $600. Required for high-LVR loans, unusual properties, or rural areas.

What Happens If the Valuation Comes In Low

A low valuation (also called a valuation shortfall) occurs when the bank values the property below the purchase price you agreed to pay. This creates a gap that directly affects your loan.

Example: You agreed to buy a property for $900,000 with a 10% deposit ($90,000), needing an $810,000 loan (90% LVR). The bank values the property at $850,000. At 90% LVR on the bank's valuation, the lender will only approve $765,000. You now have a $45,000 shortfall ($810,000 - $765,000) that you must fund yourself — or renegotiate the purchase price.

Options When You Receive a Low Valuation

1
Make up the shortfall
If you have additional savings, you can contribute more cash to cover the gap between the loan amount and the purchase price.
2
Renegotiate the purchase price
If the contract has a subject-to-finance clause, a low valuation gives you grounds to renegotiate with the vendor or withdraw from the contract.
3
Request a revaluation
You can challenge the valuation by providing evidence of recent comparable sales that support a higher value. Your broker can submit this to the lender.
4
Try a different lender
Different lenders use different valuers and valuation panels. A mortgage broker can submit your application to another lender whose valuer may assess the property differently.

How Valuation Affects LVR and LMI

The lender calculates your LVR using the lower of the purchase price or the bank valuation. If the bank values the property below your purchase price, your effective LVR increases, which can push you into a higher LMI bracket or cause the loan to be declined entirely.

For example, if you planned to borrow at 80% LVR (no LMI), but a low valuation pushes your effective LVR to 85%, you would suddenly need to pay LMI — potentially adding thousands of dollars to your costs.

Frequently Asked Questions

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