The Difference Between Market Appraisals And Valuations

As a buyers’ agent, a critical function of your role is to provide price feedback on properties.

But there is a distinct difference between an appraisal (what a buyers’ agent performs) and a valuation (what a registered valuer performs) and when each is required.

“It’s important to stress that valuations can only be performed by a registered valuer,” says Nick Viner, Principal of Buyers Domain. “As a buyers’ agent, unless you’re a registered valuer you cannot provide a valuation. We can really only provide an opinion or appraisal on a property’s value.”

Despite this, Viner says there’s no reason why buyers’ agents can’t replicate the valuation process.

“I can’t stress enough how important it is to continually raise the bar and provide the highest level of service to our clients,” he says. “When appraising a property for a client, there’s no harm in following the same process a valuer would.”

What is a valuation?

A valuation, as Viner said, can only be performed by a qualified valuer who has completed prescribed training and education. A valuation takes into account all features and issues relating to a property.

“The one thing we stress to our valuers and to the broader market is that a valuers assessment is a fair market value,” says Tim Frazer, Director of Quality and Risk Management, Valuation and Advisory Services at CBRE Asia Pacific. “There are myths out there that valuers are conservative for mortgage valuations, but that’s not the case. Valuers should always be reflecting fair market value between a willing buyer and a willing seller.”

Frazer says valuers provide banks with an assessment of the value of a property, but also perform a risk assessment.

“The risk assessment enables lenders to make an informed decision about whether or not the property they’re looking at taking as security meets their policy guidelines,” he says.

While there are many types of valuations (automated valuation model [AVM] and desktop valuation), Frazer says the most common type of valuation is a short-form valuation.

“Lenders, nowadays, have very little use for AVM and desktop valuations as they often don’t meet the right criteria,” he says. “A short-form valuation – which is the most common type of valuation – is where the valuer performs an internal and external inspection of the property. They look at land size, building structure and condition, bedrooms and features of the home. It’s more in-depth.”

Frazer says in the last five years, lenders have all developed their own instructions for valuations, which is making the process more complicated.

“As a valuer, if you’re working for 20 different lenders, you could have up to 20 different sets of instructions for performing a valuation,” he says. “The Australian Property Institute has worked hard with lenders, valuation firms and the mortgage industry recently to get one set of instructions that relates to a short-form report and this is helping to improve consistency.”

In contrast, an appraisal is an informed assessment of the value of a property.

How to approach an appraisal

“Given my professional history, starting as a valuer and now as a buyers’ agent, I am biased to performing appraisals in the same manner as a valuation,” says Shelley Horton, Director of Albion Avenue.

“The best way to approach an appraisal as a buyers’ agent is to look at the market and comparable sales – comparing like for like.

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“It’s about trying to find a sold property that’s as similar as possible to the one you are appraising, so you can give your client a realistic assessment of the property’s worth and what it might sell for. When you’re going into a negotiation for a private treaty or going to bid at an auction, you want to be well-armed.”

To conduct a thorough appraisal, Horton uses a combination of tactics and resources.

“I have a subscription with various data providers – as I’m assuming valuers do too,” she says. “It’s a steady and regular reference point for me.

“I also always keep in touch with agents in the areas I work in and attend auctions so I can see what’s happening with my own eyes.”

Horton says attending auctions, rather than waiting for the result, has many benefits.

“You can see how many people were interested, how many people registered to bid and how many people actually placed bids,” she says. “It also allows you to see where the most competitive bidding took place and where it tapered off. For me, that’s great evidence gathering and avoids the information lag. It’s so important to have the most up-to-date information for your clients.”

Horton says it’s also important to provide historical data.

“While valuers may only look for a minimum of two pre-settled sales, ideally I like to do more,” she says. “I would consider looking further back. For example, for an apartment, I would look as far back as a year for comparable sales and asses how the market has changed since then.

“If the apartment sold for $950,000 12 months ago and I now value it at $1 million, using this method, I can justify why.”

In providing this advice, Viner, Frazer and Horton agree that valuation is an art, not a science.

“Valuation – and indeed, an appraisal – is a professional opinion based on available evidence,” says Horton.

And while there is no right answer, all agree that whatever you say must be researched and substantiable.


Troy McNeice
Troy McNeice is a name familiar to most Northern Illawarra households. With a passion for helping people, rock solid ethics and a contagious positivity, it’s no surprise that over 60% of Troy’s business is referred or repeat clients. Troy’s determination, friendly approach and in-depth understanding of the local market has seen him achieve countless record sal...View Profile ›
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