Glossary
Valuation
Also called: property valuation
A valuation is a formal opinion of a property's value prepared by a qualified valuer, usually commissioned by the lender for lending purposes. It states the basis of value, assumptions and the date it applies to.
An example
A lender sends a valuer from its panel to inspect a property offered as security. The report includes comparable sales, risks the valuer sees and an assessed value, which the lender uses to calculate LVR.
Why it matters
The valuation sets the maximum loan, so a lower than expected result can reduce what is offered or change the deal. Borrowers often pay for the valuation but the report is prepared for the lender's reliance, not the borrower's.
Points to check
Ask the lender which basis of value it uses, such as market value, as-is or as-if-complete, and whether it relies on a forced-sale value. Check the valuation date and how long the lender treats it as current. Request a copy of the report if you are paying for it. If you disagree with the result, ask about the lender's review process and provide any sales evidence you have.