The definition of valuation in the Oxford Dictionary is:

a professional judgement about how much money something is worth; its estimated value

When applying for a loan, there is a good chance the bank will carry out a valuation on your property. This is to determine the value of the property from an independent professional point of view.

Let’s say you think your property is worth $900,000 (because everyone’s property is worth more than the same house that sold down the road), but the valuer might have a different opinion. After comparing to what’s sold, they might think it’s only worth $800,000. The valuer compares your property to the comparable sales within a certain radius of your property to determine the value. These sales cannot be more than 6 months old and then arrives at a valuation amount. If there are no sales to support $900,000 then they cannot justify that value on the report.

Things that impact your valuation