Why do banks and agents value your home differently?


Why do banks and agents value your home differently?

Mr. and Mrs. Williams are selling their home to downsize, as they are empty nesters. They have lived in the house for three decades since they got married. In their selling journey, they encountered different prices for their home. While they sold it at a higher price than they expected, seeing different prices for their property is confusing.

How and why are there different prices for one property in the first place? It mostly comes from 5 different places - let’s list them down!


Of course, you have a set figure in mind, depending on how much you think the property deserves. However, that figure might not be realistic. Back up your desired figure with data from comparable sales from nearby properties.

The Williams, after researching sale prices of similar properties in their area, decided on $500,000, to reflect the properties’ median price.

Selling Agent

Once you decide to sell your home, it’s given that you ask a real estate agent to assess the value of your property, as they have the data and knowledge to do so accurately. This will also help you and the agent ascertain the right target market for your property.

The agent the Williams tapped declared their property’s price as $520,000 to $600,000.

Local Council

You will see figures on your property’s value whenever you get your municipal rates bill. Specifically, these are the Capital Improved Value (CIV), site value, net annual value (NAV), and/or gross rental value (GRV).

They get these figures through comparable sales data and figures from the State Valuer-General’s offices. The council, water and fire authorities will use these to determine how much you owe for their services.

The rates notice indicate that their property, including the land, the house, and its bells and whistles, is worth $510,000. It has a Site Value, the value of the land only, of $270,000.


This is the amount your lender/bank will give when you’re applying for a loan. The value gives them confidence that your property can cover the borrowed amount in case you can’t pay your mortgage and the bank must sell it. This amount is usually lower than the other values you will get, usually 10%-20% less.

The Williams’ lender valued the property at 480,000.

Final Sale

This is the amount the buyer prepared to pay for, whether the sale is made through a private sale or an auction. Many factors affect this value: the demand in your area, market conditions, and auction day turnouts.

The Williams sold their home through a private sale. With their agent’s negotiation efforts and the home’s charm, it sold for 550,000.

Our protagonists got a happy ending in their selling journey. They were able to buy a smaller home, perfect just for them. But in case the bank valuation is lower than the purchase price, here’s what you can do:

  • Challenge it. Some lenders will allow you to challenge their valuation if you think it’s too low. However, be prepared to provide evidence to support your claim, like recent comparable sales in your area. Ask your lender for a copy of their valuation report and check for errors. If the assessor didn’t go inside your house, ask them to do so, as the interiors of a property add significant value to it. If they’re hesitant to do another valuation, offering to cover the costs might convince them.
  • Borrow more. You can still go ahead with borrowing, as long as you don’t borrow more than 95% of the lender-assessed value. However, borrowing more than 80% means that you need to pay for lenders mortgage insurance (LMI).
  • Use equity from another property. If a second valuation still has a disappointing result, putting on equity from another property can serve as security, This will reduce your loan to value ratio and you might not need to pay LMI. A first time home buyer can ask a relative to put equity in their loan as a guarantor.
  • Go to another lender. The valuation of different lenders will vary. It’s possible that you’ll find a valuation that will match the value you want.

Property values will fluctuate, depending on market conditions and other factors. However, knowing how and why different institutions place different values on property is important so you know how to get the price you want. If you need help in selling or buying your home, or just for general property advice, don’t hesitate to contact us. We’re always glad to help!


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