Property Purchase
Property Valuation Process Explained
5 min read- Finance Guide
- Updated 2026
Quick answer
The valuation sets the lender's view of the property value
80% Key Lending Check
A lower than expected valuation can reduce the loan amount or increase the cash needed
- Valuation ordered Before formal approval
- Main purpose Confirm security value
- Key outcome Sets LVR
- If value is low Cash gap may arise
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1300 421 044
Detailed explanation
A property valuation is not the same as an agent's appraisal or the contract price. For lending purposes, the valuer is focused on market evidence, saleability and risk from the lender's perspective. The final figure is used to test the lender's exposure against the property and to confirm the deal fits credit policy.
Core parts of the valuation process
Valuation order
Instruction from the lender or panel valuer to assess the security property
Inspection method
Inspection type such as full valuation, desktop review or other accepted method
Sales evidence
Comparable sales analysis based on recent market evidence in the area
Property assessment
Assessment of condition, layout, land, improvements and marketability
Lending impact
Final valuation figure used to calculate the lender's LVR
Possible next step
Outcome management if the value supports the deal or creates a shortfall
What valuers usually assess
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Recent comparable sales in the same or similar market
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Land size, zoning and overall property type
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Dwelling size, layout, age and presentation
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Condition, renovation quality and any obvious defects
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Marketability, location appeal and ease of resale
How the valuation affects the loan
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The lender compares the loan amount against the final assessed value
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That figure helps determine the actual loan to value ratio
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A lower valuation can reduce the maximum available loan
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If the value is strong, the structure may proceed as planned
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If the value is weak, the borrower may need more cash contribution
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The lender may also review whether the property remains acceptable security under policy
Typical valuation outcomes
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Valuation supports purchase price Loan structure can usually proceed as planned
Proceed -
Valuation slightly below contract price Deposit top up or loan adjustment may be needed
Review needed -
Valuation materially below expectations Deal may need to be restructured or renegotiated
Shortfall risk
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How the valuation process usually unfolds
The property valuation stage usually fits into the lending process like this:
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01. Lender or broker submits the application and identifies the security property
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02. The lender decides which valuation type is required under policy
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03. A valuer is instructed through the lender's panel or approved system
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04. The valuer completes the inspection or desktop assessment
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05. The valuation report is returned to the lender for review
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06. The lender recalculates LVR and confirms the deal still fits policy
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07. If the value is acceptable, approval can move toward documents and settlement
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08. If the value is low, the borrower may need to contribute more cash or revise the structure
Common Problems
Valuations can create delays or funding gaps when the property, market evidence or contract price does not align with the lender's risk settings. The main issues usually involve low values, property concerns or timing pressure.
Valuation comes in below contract price
If the valuer assesses the property below the agreed purchase price, the lender may reduce the loan amount based on the lower figure.
Possible solutions include:
- Increase the cash contribution if possible
- Review whether the contract price can be renegotiated
- Consider a different lender only where there is a genuine policy difference
- Restructure the deal to fit the new LVR
The property has security issues
Some properties raise concerns because of location, condition, layout, zoning or limited resale appeal.
Possible solutions include:
- Address obvious condition issues where possible
- Choose a lender that is comfortable with the specific property type
- Obtain clarity on the issue early in the process
- Reassess whether the property is suitable security for finance purposes
The valuation causes delays
Delays can occur when access is hard to arrange, the report is queried, or extra valuation review is required.
Possible solutions include:
- Arrange access to the property quickly
- Submit a complete application so the valuation can be ordered without delay
- Allow enough time for inspection and report turnaround
- Expect extra time if the property is unusual or the valuation is disputed
Steps To Get Finance
Step
01
Choose the target property and submit the finance application.
Step
02
Let the lender instruct the valuation through its approved process.
Step
03
Arrange inspection access or confirm the property details needed for assessment.
Step
04
Wait for the valuer's report and the lender's credit review.
Step
05
Review the outcome and adjust the structure if the value is lower than expected.
Step
06
Proceed to formal approval, documents and settlement once the valuation is accepted.
Speak With A Property Finance Specialist
Property valuations can vary depending on property type, location, comparable sales, condition and the lender's requirements.
A specialist can review the property, the contract and the valuation outcome to help determine which finance options may still be available.
Speak with a finance specialist about your property valuation and lending scenario.
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