Not all property valuations are the same. A valuation prepared for a bank, a family law settlement, a deceased estate or a self-managed superannuation fund can involve different standards, different methodologies, and sometimes different legal requirements — even when it's the same house being valued. Understanding which type of valuation you need, and why, helps you brief a valuer accurately and avoid paying for the wrong report.
What is a property valuation?
A property valuation is a written, independent opinion of a property's value, prepared by a qualified valuer following a recognised methodology and supported by market evidence such as comparable sales. This distinguishes it from a real estate agent's appraisal, which is typically a free, informal estimate intended to help set a listing price, and from automated online estimates, which use algorithms and public data rather than a physical inspection and professional judgement.
Mortgage and security valuations
A mortgage valuation, sometimes called a bank or security valuation, is commissioned by a lender before approving or varying a loan, to confirm that the property offers adequate security for the amount being borrowed. Because the lender is the client, the report is generally addressed to them rather than to the borrower, and its scope is set by the lender's own requirements.
Pre-purchase valuations
A pre-purchase valuation is commissioned by a prospective buyer, independently of the vendor or their agent, to obtain an objective view of a property's market value before making an offer. This can help a buyer avoid overpaying in a competitive market, and can support negotiations where the buyer believes the asking price is not supported by comparable evidence.
Pre-sale valuations
A pre-sale valuation is commissioned by a property owner ahead of listing, to obtain an independent view of likely market value that can be used alongside — rather than instead of — a real estate agent's marketing appraisal. Because it is prepared by a party with no interest in the sale outcome, it can offer a useful reality check before a pricing strategy is set.
Family law and matrimonial valuations
When a relationship ends, Australian family law generally requires the parties to identify and value the property pool being divided, which can include the family home, investment properties, business interests and other significant assets. Courts and family lawyers typically expect this valuation to be prepared by an independent, appropriately qualified valuer, rather than relying on either party's own estimate, so that both sides and the court can have confidence in the figure used for settlement purposes.
Deceased estate and probate valuations
When a person dies, their estate generally needs to be valued as at the date of death for probate and estate administration purposes, and this value can also be relevant to the cost base used for capital gains tax when a beneficiary later sells an inherited property. An independent, dated valuation provides the executor with a defensible figure for these purposes.
SMSF valuations
Self-managed superannuation funds are subject to superannuation legislation that generally requires fund assets — including real property — to be valued at market value for the purposes of the fund's annual financial statements, and specifically requires an independent valuation where a property is being acquired from, or disposed of to, a related party of the fund. Trustees should discuss the specific timing and documentation requirements that apply to their fund with their accountant or auditor, as well as engaging a qualified valuer.
Insurance and reinstatement valuations
An insurance or reinstatement valuation assesses what it would cost to rebuild or replace a property, which is a different figure from its market value and does not include the value of the land. Insurers and lenders sometimes require this figure to confirm that a building is adequately insured.
Litigation and expert witness valuations
Valuations are also commonly required in litigation — for example, in commercial disputes, compulsory acquisition matters, or partnership disagreements — where a valuer may be engaged to prepare an expert report and, in some cases, to give evidence in court. These valuations typically follow a more formal reporting standard, given the report may be tested under cross-examination.
Business and plant & equipment valuations
Beyond real property, valuations are also commonly required for businesses (for a sale, partnership dispute, or succession planning) and for plant, machinery and equipment (for finance, insurance or financial reporting). These follow different methodologies again — often based on earnings, net assets or comparable transactions rather than comparable property sales. See our Business Valuations and Plant & Equipment Valuations service pages for more detail.
How to choose the right valuation type
Before requesting a valuation, it helps to be clear on three things: who the report needs to be addressed to or accepted by (a lender, a court, the ATO, an insurer); what the property or asset actually is; and what specific date the valuation needs to reflect (today's date, a date of death, or a date of separation, for example). Sharing this information with your valuer when you request a quote helps ensure the report is fit for purpose the first time.
Conclusion
Whatever the purpose, the common thread across every valuation type is independence: a valuation is only as useful as the confidence a lender, court, or government body can place in the valuer's impartiality. Working with a qualified, independent valuer — rather than relying on an agent's appraisal or an automated estimate — is what makes a valuation report something other parties can actually rely on.