BANK VALUATION VS MARKET VALUE

Did you know there are two potential values for your property?

Unfortunately, many homeowners don’t understand the difference between a market value and a bank value – but it’s vitally important that they do. In fact, sometimes when a homeowner wants to draw on some of the equity in their property, they are shocked when the bank valuation comes in below the market value they had already assessed in their head. So, why does this happen? How can two “values” be so different for the same property?

This article will outline why a market value and a bank value are not necessarily the same thing.

What is market value?
Market value is essentially the price that the property will trade for on the current market. A more formal way of putting it is: “The estimated value that a buyer would pay and a seller would accept for an item in an open and competitive market.”

Why is a bank value different?
Where market value can be impacted by emotion, a bank valuation is purely a numbers game. A professional valuer will complete a bank valuation on the property without any emotion whatsoever.