Buying your first home is an exciting step—but it can also be overwhelming. From sorting out your deposit to getting pre-approved for finance, there’s a lot to consider. One part of the process that often causes confusion is the property valuation—a critical step for securing your home loan.
In this guide, we’ll break down what a property valuation is, why it matters for first-home buyers, and how it can affect your borrowing power.
What Is a Property Valuation?
A property valuation is an independent, professional assessment of a home’s current market value. It’s usually carried out by a Certified Practising Valuer (CPV) and is a key requirement for lenders during the home loan process.
Unlike a real estate agent’s appraisal (which estimates potential selling price), a valuation is based on:
- Recent comparable sales
- The condition of the property
- Land size and zoning
- Suburb trends and market demand
- Building structure and improvements
Why Lenders Require a Property Valuation
When you apply for a mortgage, your lender wants to make sure the property you’re buying is worth what you’ve agreed to pay. They use the valuation to:
- Confirm loan security—so if you default, the bank knows they can recover the amount
- Calculate your loan-to-value ratio (LVR)
- Decide how much they’re willing to lend
If the valuation comes in lower than your purchase price, you may need to contribute a larger deposit to make up the shortfall.
How Property Valuation Affects Your First-Home Loan
Let’s say you’re buying a home for $600,000 with a 10% deposit ($60,000). You’re expecting a loan of $540,000. But if the bank’s valuation comes in at $580,000, they may only lend you 90% of $580,000 = $522,000.
That means you’ll need to come up with an extra $18,000 on top of your original deposit—something many first-home buyers aren’t prepared for.
Tip: To avoid this situation, aim to borrow no more than 80–90% of the estimated value and always have a buffer.
What’s In a Property Valuation Report?
A typical valuation includes:
- Full address and legal property description
- Land size, zoning, and planning information
- Structural condition and building materials
- Comparison to recently sold nearby properties
- Market commentary
- Final assessed value as of the inspection date
Some valuations are done in person, while others may be desktop or kerbside assessments depending on the lender and location.
Can You Prepare Your Property for a Valuation?
If you’re buying off the plan or moving into an established home post-settlement, you won’t need to do anything.
However, if you’re refinancing or buying from a private seller before handover, these tips can help:
- Ensure the home is clean and presentable
- Provide documentation for renovations or upgrades
- Highlight features like solar panels, new kitchens, or energy-efficient appliances
- Ensure the valuer can access the full property (yard, garage, etc.)
What First-Home Buyers Should Know About Valuation Myths
| Myth | Reality |
| The contract price = valuation | Not always—valuers use independent criteria |
| You can “talk up” the value | Valuers work independently, based on hard data |
| Online tools give the same value | Online tools offer estimates, not formal valuations |
Steps to Navigate Property Valuation Smoothly
- Get pre-approval before making an offer
- Ask your lender when and how the valuation will be arranged
- Confirm if there are any valuation fees (some lenders cover them)
- Have a buffer in your budget in case the valuation comes in lower
- Request a copy of the report—understanding it helps you negotiate with confidence
Conclusion
As a first-home buyer, understanding the role of property valuation gives you an edge. It ensures your expectations are grounded, your loan is structured wisely, and you’re not caught off guard during the approval process.
Work closely with your mortgage broker or lender, keep your finances in check, and remember—valuation is not a hurdle, but a safeguard to help you start your property journey on solid ground.