Understanding Property Valuations: What Agents Won't Tell You (2026 Guide)

The Short Answer (2026 Update)

A "Market Appraisal" from an agent is an estimate of what a buyer might pay, whereas a "Bank Valuation" is a risk assessment used for lending. In 2026, with the RBA holding rates at 3.60%, the gap between these two figures is often 5-10%. Understanding this "valuation gap" is critical before you bid in Kew or Mulgrave, as a bank shortfall can leave you scrambling for extra cash to settle.

Director's Tip: "The market price is not what an agent says, and it's not what a valuer says. It is what a buyer is willing to sign a contract for on Saturday afternoon. Everything else is just an opinion." — Luke Fornieri

The Three Types of "Value"

If you own a home in Sorrento, it has three different price tags attached to it today.

• The Market Appraisal (The "Optimistic" Number): This is what an agent believes they can achieve in the current market. It accounts for emotion, school zones, and the "vibe."
• Example: A renovated period home in Camberwell might appraise at $3.2M because two families are fighting over it.
• The Bank Valuation (The "Safe" Number): This is the only number your lender cares about. The valuer works for the bank, not you. Their job is to protect the bank's money. If the market crashes tomorrow, can the bank sell it quickly?
• Reality Check: That same $3.2M Camberwell home might get a bank valuation of $2.95M.
• The Council/Site Value (The "Tax" Number): Found on your rates notice. This is often calculated using mass-data algorithms and can lag the real market by 12-18 months. Never use this to set your reserve price.

The 2026 "Valuation Gap"

Why are bank valuations coming in low this year? In 2026, lenders are risk-averse. In high-density areas like Chadstone or Box Hill, banks are worried about an oversupply of apartments. If you buy an off-the-plan unit for $700k, do not be surprised if the bank values it at $650k at settlement. You must have the cash to cover that $50k difference.

The "Cookie Cutter" vs. "Unique" Problem

Automated valuation models (like the ones you see on banking apps) work fine for "cookie cutter" suburbs.

• Works for: A standard 4-bedroom home in a new estate in Clyde North. There are 50 other recent sales exactly like it.
• Fails for: Unique properties in the hills. If you are selling a mud-brick home on a sloping block in Upwey or Belgrave, an algorithm has no idea how to price the view or the architecture. It will often undervalue your asset by hundreds of thousands.

Insider Truths: What Agents Won't Tell You

Truth #1: "Buying the Listing" Some agents will deliberately give you an inflated appraisal just to get you to sign with them. They tell you your home in Wheelers Hill is worth $1.8M (when it's really worth $1.6M). After 4 weeks on the market with no offers, they will "crunch" you down to the real price.

• The Fix: Ask for "Comparable Sales" evidence. If they say $1.8M, ask them to show you three other homes in Wheelers Hill that sold for $1.8M recently.

Truth #2: Renovation Over-Capitalisation Spending $150,000 on a swimming pool in Toorak adds value. Spending $150,000 on a swimming pool in Dandenong North does not. A valuer will likely only attribute $30k-$50k of value to that pool. You have effectively lost $100k.

FAQ: Common Questions

Q: Can I challenge a low bank valuation? It is difficult, but possible. You need hard evidence. If the bank valuer missed a comparable sale in your street in Mornington that sold last week for a higher price, send that contract of sale to your broker to challenge the figure.

Q: Does a "kerbside" valuation mean they didn't look inside? Yes. For low-risk loans (e.g., refinancing with 50% equity), banks often just drive past the house in Rowville to check it hasn't burned down. They don't see your new kitchen. If you need a higher value, request a "Full Valuation."

Q: Why is my Council Valuation so low? Be thankful! A lower Council Valuation means you pay less in rates and land tax. Do not ring the council to complain that your house is worth more—you are just asking for a higher tax bill!