In the dynamic world of Australian real estate, grasping the fundamentals of property valuation is more than just a savvy move – it’s a necessity. Key to this understanding are two concepts that often cause confusion: bank valuation and market value. This distinction is critical for everyone involved in the property market, from first-time buyers to seasoned investors. Our goal here is to shed light on these terms, clarifying their meanings, differences, and the significant role they play in property transactions.

What is Bank Valuation?

At its core, a bank valuation is an estimate conducted by a lender or financial institution to determine the value of a property, primarily used for loan security purposes. This figure is pivotal, as it helps the lender assess the risk involved in the mortgage process. It’s not just about the market trends; a bank’s valuation is influenced by a variety of factors including the property’s location, its condition, and the prices of similar properties recently sold in the area.

Banks tend to be conservative in their valuations, often presenting figures that are lower than the market value. This conservatism is a protective measure, ensuring that the bank can recover the loan amount in case of a default.

For buyers and sellers, understanding the process and reasoning behind bank valuations is essential. It impacts not only the loan amount you might receive but also the overall strategy for your property investment or sale.

Market Value in Real Estate Explained

Market value in real estate is a term that resonates deeply with anyone involved in buying or selling property. It represents an estimate of the price a property would sell for under current market conditions. This value is dynamic, reflecting the ongoing interplay between what buyers are willing to pay and what sellers are willing to accept.

Factors like supply and demand, economic conditions, and overall buyer sentiment significantly influence market value. For instance, in a seller’s market, where demand outstrips supply, market values tend to be higher.

The Role of Real Estate Agents in Determining Market Value

Real estate agents play a pivotal role in determining a property’s market value. Their expertise and local market knowledge are invaluable in this process. Agents typically perform a Comparative Market Analysis (CMA), which involves comparing the property in question to similar properties that have recently sold in the area. This comparison helps in estimating a property’s market value by analyzing various attributes such as location, size, condition, and features.

Real estate agents’ understanding of current market trends and buyer preferences also significantly contributes to accurately determining market value.

How Will Bell Can Help

If you need expert advice or guidance in making sense of these numbers and how they affect your property decisions, don't hesitate to reach out to Will Bell Mortgage Broker. We can provide personalized advice tailored to your financial situation and property goals, ensuring that you make informed and strategic decisions in your real estate journey.

Comparing Bank Valuation and Market Value


Bank Valuation

Market Value


An estimate by a lender for loan security.

The estimated price a property would fetch in the current market.

Influencing Factors

Property’s location, condition, recent sales of similar properties.

Supply and demand, economic conditions, buyer sentiment.


To assess the risk involved in the mortgage process.

To determine a realistic selling price in current market conditions.


Typically conservative, often lower than market value.

Based on real-time market data, it can be higher or lower.

Role in Transactions

Used by banks for loan approvals.

Used by sellers and buyers to agree on a sale price.

In certain scenarios, these valuations can diverge significantly. For instance, during a market downturn, market values might decrease due to reduced buyer demand, but bank valuations might not adjust as rapidly. Conversely, in a booming market, market values might surge ahead of more cautious bank valuations. These discrepancies can have various implications for buyers and sellers.

For sellers, a low bank valuation might mean potential buyers cannot secure sufficient financing, while for buyers, paying significantly above the bank valuation can mean more capital upfront.

Understanding both bank valuation and market value is crucial in navigating the real estate market. Recognizing the differences helps in making informed decisions, whether you’re applying for a loan or negotiating a property purchase.


Knowing the differences between bank valuation and market value is key for anyone involved in the real estate market. While bank valuations focus on lending risk and tend to be conservative, market values are influenced by current market conditions and can fluctuate more freely. Recognizing how these valuations work and their implications can significantly impact your real estate decisions, whether you’re buying, selling, or seeking a loan.

Frequently Asked Questions About Bank Valuation vs Market Value

Bank valuations are usually more conservative as they are designed to assess lending risk and protect the lender’s interest, while market values are determined by current market conditions and buyer-seller agreements.

Indeed, contesting a bank’s valuation is an option if you believe it doesn’t accurately reflect the property’s true worth. This process might require you to submit further details or seek a second assessment. However, persuading the original valuer to revise their estimate can be challenging. A more viable strategy might involve obtaining an alternative valuation through a different lender, as this could offer a fresh perspective on the property’s value.

It’s advisable to get your property revalued every 1-2 years, or more frequently if there are significant changes in the market or property condition.

No, bank valuations do not directly determine the sale price of your property. These valuations are based on existing sales data and serve primarily to assess the borrowing capacity of potential buyers. While they may indirectly influence buyers’ perceptions and offers, the ultimate selling price is decided by the market dynamics, including what buyers are prepared to pay based on current market conditions and comparative sales.

Current market trends significantly impact property valuations. They influence buyer sentiment and demand, which are key factors in determining a property’s market value.

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Will Bell

Will Bell has 15 years’ experience in the finance industry, the last 11 years he has owned and operated Will Bell Mortgage Broker. He specializes in residential home loans and over the years has carved out a trusted brand. This is proven by the reviews his customers have made regarding the service and the experience he has provided.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.


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