Why the Bank's Valuation Is Lower Than You Expected

The bank valued your property well below what you think it is worth. Here is why that is normal and what you can actually do about it.

Banks are answering a different question

You are asking what your property would sell for. The bank is asking something else entirely: if this loan goes bad and we have to sell quickly, what will we get?

Those are different questions and they have different answers. Both can be correct at the same time.

The two figures in a bank report

• Market value. What it would fetch in a normal sale with a willing buyer and enough time.
• Forced sale value. What it would fetch if it had to go quickly. Always lower, often noticeably.

Your loan is usually calculated from the lower figure, and then a further margin is applied on top. That is why the amount sanctioned can feel a long way from what you believe the property is worth.

Why bank valuations are deliberately cautious

• They ignore the best case and assume a difficult sale
• They often exclude construction that was not approved
• They rely on documented evidence rather than asking prices
• They factor in how long the property would take to sell

What is worth challenging, and what is not

Do not ask for a higher number simply because you want a bigger loan. No honest valuer will do it, and a report that cannot be supported puts you at risk rather than helping you.

Do raise it if something is factually wrong. An area not measured, a floor missed, an improvement not counted, or the wrong colony rate applied. Those are genuine errors and worth pointing out.

The same property, two honest numbers

This is the part people find hard to accept. A property can honestly carry one figure in a sale valuation and a lower one in a bank valuation, because the purpose is different. Valuation is always tied to a purpose and a date. More on how methods differ.