What is property valuation?

When you apply for a home loan the lender orders an independent property valuation from an external Certified Practising Valuer (or runs an automated AVM for low-risk loans below 80% LVR). The valuer's figure becomes the 'value' in the loan-to-value ratio calculation, regardless of what you paid.

Valuations come in three flavours: a desktop AVM (~$0, instant, accuracy ±10%), a kerbside drive-by (~$200, 1-2 days, accuracy ±5%), and a full inspection (~$300-$500, 3-7 days, accuracy ±3%). Most lenders order the simplest valuation that satisfies the LVR risk, escalating only when the desktop value comes in light.

If the valuation lands below your contract price (a 'low val'), the loan size is calculated from the lower of the two, which can increase your LVR — and sometimes push you above 80%, triggering LMI you weren't budgeting for. Some lenders let you appeal a low val with comparable sales evidence.

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