What the valuation is for
The valuation establishes 'as is' market value, and for development transactions also GRV and sometimes value on completion. Every other number in the deal — loan amount, LVR, price, conditions — follows from it. A valuation instructed by the lender also creates a reliance relationship, so if the valuer is negligent, the lender has recourse.
What a valuer actually assesses
Comparable sales, location and land attributes, building condition and improvements, zoning and planning constraints, current lease or income where relevant, and marketability — how long the asset would take to sell and to what pool of buyers. The report also notes any factors affecting value: contamination risk, flood or bushfire exposure, structural defects, heritage constraints or a limited buyer market.
Those comments matter as much as the number. A valuation with a 'limited market' or 'extended selling period' note commonly reduces the LVR a lender is willing to advance.
How to move it along
Provide prompt access and a contact for inspection. Supply plans, permits, the schedule of finishes, lease documents and rent rolls, recent building or pest reports and any contract of sale. Disclose known issues up front. For developments, supply the approved plans, the construction contract or costings and the sales schedule.
Standard metropolitan residential valuations often return within a few business days; complex commercial, rural or development assessments take longer.
Key points
- The valuation sets LVR, so it must be independent and instructed by the lender.
- 'As is' value drives the loan; future value assumptions are discounted.
- Marketability comments can reduce available leverage.
- Good information and access shorten turnaround materially.
Frequently asked questions
Who pays for the valuation?
The borrower, normally up front, because it is a third-party cost incurred whether or not the loan proceeds.
Can I see the valuation report?
Practice varies. Many lenders share the figure and key conditions; the report itself is instructed for the lender's reliance.
What if the valuation comes in low?
The loan is resized to keep the LVR within tolerance, which means more equity, additional security, or a smaller facility.