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When it comes to buying a property, understanding the difference between a bank valuation and the market value of a property is key. This is because you'll need to ensure that the purchase price is below the market value so that you don't end up owing the bank more money than the property is worth. 

On the other hand, sellers will want to make sure that the sale price is above the market value so that you can get the most money for your property. In this guide, we break down the difference between bank valuations and market value, so you get more out of any property transaction.

How Bank Valuations are Determined

Bank valuations are used to assess the worth of a property or a loan, and these valuations are used to help lenders determine how much money they are willing to lend out. This is important for borrowers, as they can help to ensure that they are getting a good deal on a property. Lenders will often use bank valuations to determine whether they are willing to offer a loan and at what interest rate. 

It's important to note, however, that bank valuations are not always consistent. They can be affected by a number of factors, including the current market conditions. As a result, it's always a good idea to get a second opinion from a different bank.

How Market Value is Determined

Market value is the estimated worth of a property in the current market. There are a few key ways that market value is determined. One is by analysing recent sales of similar properties in the area. This is often done by a real estate appraiser. They will look at the size, age, and features of the properties that have sold, as well as the sale prices. This will give them a good idea of what the market value is for a property like yours.

Ultimately, market value is what someone is willing to pay for a property. It can be affected by a number of factors, but it is always relative to other properties in the area.

Knowing the Difference

When it comes to understanding the value of a property, it's essential to know the difference between a bank valuation and a market value. Bank valuations are typically lower than market values, as they only take into account the property's current worth to the bank. In contrast, market values take into account all potential buyers and sellers in the market. 

This means that a property with a market value of $200,000 could have a bank valuation of $180,000, as the bank would only be interested in how much it could sell the property for right now, while a market value would take into account how much someone would be willing to pay for the property.

This difference can be important when it comes to selling a property. If a property has a market value of $200,000 but a bank valuation of $180,000, the owner may want to consider lowering the price to meet the bank's valuation in order to make it more appealing to potential buyers. Conversely, if a property has a bank valuation of $200,000 but a market value of $180,000, the owner may want to consider increasing the price to meet the bank valuation to get the most money for the property.


Bank valuations and market values of a property can differ greatly at times. While it is important to understand the difference between the two, it is also important to remember that they are both just estimates of what a property is worth.

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Now that you know the difference between market value and bank valuations, it's time to apply for a loan so you can finally get the property you want. Trust Wealthy You to help you find the best home loans in Sydney without hassle. As a reputable mortgage broker serving clients in Sydney and surrounding areas, we offer a variety of mortgage solutions to meet your financial needs. All you have to do is reach out to us and apply. Contact us today to get started!