Your question answered: What’s the difference between a bank valuation and a market valuation?
When you’re selling, buying, or valuing a home, chances are you’re going to end up with a few different figures floating around. But “why?” we hear you ask. Check out our ‘qlick’ run-down of the reasons below.
Bank Valuation
If a home is going to be mortgaged through a bank, you can be almost certain that a bank valuation is needed to get the loan (or the person buying your home will need to get one for their loan). This is because the bank needs to know the property is adequate security against the loan – i.e. if in the worst-case scenario the loan cannot be paid, the bank can sell the property and recover the loan amount.
For this reason, bank values are often on the conservative side, and can come in 10%-20% less than market value.
The Qlick Answer
This valuation is really not for the buyer at all, but rather for the lender’s decision to loan funds.
Market Valuation
Market valuations are often provided by real estate experts (hint hint – like us) and take into account the property as well as comparable recent sales in the area, the market itself, the property’s features, the condition of the house and other aspects. This valuation is the price a person might be willing to pay for your home – especially when they could be driven by emotion.
A market valuation is a useful price guide for a person who wants to take their home to market (that is, try to sell it).
The Qlick Answer
While it’s impossible to know what a house will sell for, a market value can give you an indication of where it may land and what to price your home at when you go to market.