Bank valuation vs market value – How much is your property worth?

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Here’s the thing: Did you know that there are two potential values for your property?

Unfortunately, many homeowners don’t understand the difference between a market value and a bank value but it’s vitally important that they do.

In fact, sometimes when a homeowner wants to draw on some of the equity in their property, they get a shock when the bank valuation is lower than the market value that they had calculated in their head.

So, why does this happen? How can two “values” be so different for the same property?

This article will outline why market values and bank values are not necessarily the same thing so you don’t get a shock the next time you go to refinance.

So what is market value anyway?

Market value is essentially the price that the market is prepared to pay for your home.

A more formal way of putting it is: “The highest estimated price that a buyer would pay and a seller would accept for an item in an open and competitive market.”

The main thing to understand about market value is that it generally relies on emotions to drive up the price.

A great example of this is at auctions where buyers often get carried away with the competitive environment and end up paying much more than their budget to “win” the property.

Likewise when a market is hot, then buyers can have FOMO (or Fear Of Missing Out) and end up paying too much for property.

It’s impossible to say what a property will sell for on any given day, but by researching comparable sales, homeowners can get an idea of what the market value may be.

But why is a bank valuation different?

Illustration and Painting

So, where market value can be impacted by human emotion, a bank valuation is purely a numbers game.

That is, a professional valuer, will complete a valuation on the property without any emotion whatsoever.

The valuer will physically assess your home as well as comparable sales to arrive at a value which he or she believes the property would sell for at that moment in time.

The main point here is that a bank value is generally always lower than market value because of its objectivity, lack of emotion, and tendency to be conservative.

Of course, this can be annoying to anyone wanting to refinance to access equity or for buyers who have to come up with a bigger deposit because banks will only lend a percentage (loan to value ratio) of the bank valuation not the market value.

How can you increase the value of your property?

fresh paint new startOne of the most common reasons for homeowners to get a bank valuation is when they’ve completed renovations on their home and perhaps want to access the increased equity to buy another property.

Of course, cosmetic or structural improvements to a property are likely to increase its market or bank value – as long as they’re done well of course

But there are other attributes to look for in a home that can have a positive impact on it price.
These include such things as:

  • General location and council zoning
  • Overall size and number of rooms
  • Vehicle access to the property
  • Building structure and condition.

Of course, these attributes are ones that you should look out for during your initial research as they will usually always have a favourable effect on the future price of the property.
During the ownership of your property – whether it’s a home or an investment property – there are also many other ways that you can increase its value.

These include:

  • Upkeep and maintenance
  • The use of space – such as open plan living to create the illusion of space
  • Update appliances – air conditioning, kitchen appliances, etc.
  • Consider a new coat of paint or new flooring
  • Update the kitchen or bathroom for a fresh new look.

So, while we might just have to accept that market and bank values are often different, that doesn’t necessarily mean that you can’t have a positive influence on both of them.

For more information see our article on about the property valuation process.

Intuitive Finance – the smart choice

Depending on whether you’re selling, buying or refinancing, your property could potentially have two different values.

The market value is usually higher, because it’s generally positively impacted by human emotion, whereas the bank value is likely to be more conservative and calculated without any emotion whatsoever.

The world of banking and finance can be a pretty daunting one for both novice and sophisticated investors and since our establishment in 2002 we’ve focused on providing outstanding service and business standards.

This approach was vindicated when we were named Victoria’s favourite mortgage broker at the 2015 Investors Choice Awards.

If you’re considering refinancing to access equity or are on the hunt for your first, or next, property, why now contact Intuitive Finance today to ensure you have the right information and expert support on your side no matter what stage of the property ownership journey you are on?

Discuss your specific needs & formulate the right strategy for you. Get in touch to organise your complimentary 60min session today!


The information provided in this article is general in nature and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information with regard to your objectives, financial situation and needs.

Andrew Mirams

Andrew Mirams

Andrew Mirams is the Managing Director of Intuitive Finance and is a highly qualified mortgage advisor who holds dual diplomas in Financial Planning (Financial Services) and Banking and Finance (Mortgage Broking). Andrew’s expertise covers all aspects of lending for a diverse range of applications – from first home buyer loans or property upgrader loans, property investor loans, expatriates and loans for self-employed. With almost 30 years of experience, Andrew has been acknowledged by the mortgage industry as one of its best performers with multiple awards including regularly featuring in both the top 100 mortgage brokers list and Top 50 Elite business writers. Andrew was voted Victoria's favourite Mortgage Broker at the 2015 Investors Choice Awards, and won again for the same category at the 2017 Better Business Awards. The team at Intuitive Finance has also figured prominently by winning the 2016 "Best Independent Office (<5 brokers)" and "Best customer Service" Awards, and more recently at the 2017 MFAA National Awards, they also took out the "Best Customer Service" Award, a recognition which speaks for itself! Visit Intuitive Finance for more information.
Andrew Mirams

1 Comment. Leave new

Would not having electricity or plumbing to a large proportion of a home affect the valuation or it enough for the valuer to say he is not a plumber or electrician so a note is placed on the valuation.


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