When you are looking to purchase a property, the chosen lender will require a valuation to be completed before they are willing to provide you with an unconditional loan approval.
The ‘bank valuation’ (as opposed to a ‘real estate valuation’) will be completed in one of three different ways.
The lender may arrange for a valuation to be completed on your property either by a desktop, kerbside or full valuation but what’s the difference between them all?
Desktop valuations are completed by the lender themselves using the median price of the suburb combined with median security. No inspection of the property is done.
Generally this type of valuation is usually only utilised for properties in capital cities where the LVR (Loan to Value Ratio) is low.
Kerbside valuations involve someone inspecting the property from the kerb on the street.
Generally speaking when the property and estimated value amount is median to the suburb, no lenders mortgage insurance (LMI) is required and there is a contract of sale, a kerbside valuation may be used to confirm the property value.
Full valuations are carried out by an independent qualified valuer from a third party valuation company who are engaged by the chosen lender to inspect the property and issue a written report complete with pictures and measurements.
The full valuation report will reference comparable properties that have sold in the area and are comparable to the property being valued. This is the most common and widely used form of valuation but it does take time to be completed and can be delayed depending on how difficult it is for the valuer to gain access to the property especially if the property is currently tenanted.
If you are thinking about refinancing, there are many lenders that will complete an upfront valuation to give you peace of mind.
An upfront valuation means the lender will organise a valuation to be completed on the property prior to receiving a deal. They do the valuation in ‘good faith’ that you will complete the transaction with them.
With brokers, most of the time, the first valuation in a deal will be subsidised by the lender. However, every subsequent valuation will be at the cost of you, the customer.