The bank valuation is an assessment of the property's value conducted by a qualified valuer. This valuation is typically ordered by the bank when a buyer is obtaining a mortgage loan to purchase a property, or refinance/ top up an existing mortgage loan.
The purpose of the bank valuation is to determine whether the agreed-upon purchase price is in line with the property's appraised value. It helps the lender assess the risk associated with the loan and ensures that the property provides adequate collateral for the loan.
If the appraised value of the property comes in lower than the purchase price, the buyer may need to increase their deposit to cover the gap between the loan amount and the purchase price.
The property purchase price is the agreed-upon amount of money that a buyer and a seller have negotiated for the sale of a property. It represents the cost that the buyer is willing to pay to acquire the property.
The purchase price is determined through negotiations between the buyer and seller and is outlined in the purchase agreement, which is a legally binding contract. The purchase price may include not only the base price of the property but also other costs, such as real estate agent commissions and any additional items or fixtures included in the sale.
So the property purchase price is the mutually agreed-upon amount between the buyer and seller, while the bank valuation is an independent assessment of the property's value conducted by a qualified valuer on behalf of the lender. The bank valuation is used by the lender to evaluate the loan's risk and ensure that the property's value justifies the loan amount.
Things to be Mindful:
Local Regulations: Be aware that real estate practices and regulations can vary by state. Stay informed of local laws and policies.
Due Diligence: Always conduct due diligence. For buyers, this includes property inspections, title searches, and understanding the property's history. Sellers should disclose any known issues within the property.
Financial Preparation: Ensure you're financially prepared for the transaction. Understand your budget, borrowing power, deposit requirements, and potential costs.
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