What is a property appraisal, and how is it different from a valuation?

Before you list your home you will hear two words that sound interchangeable and are not: appraisal and valuation. Confusing them costs money in both directions. Vendors pay for valuations they do not need, and vendors treat appraisals as if they carried the authority of a valuation. This guide explains what each is, what a good appraisal contains, and how to use the three you should collect.

An appraisal is an agent's opinion of likely sale price

A property appraisal is a real estate agent's estimate of what your home would sell for in the current market, usually given after a walk-through of the property and a look at recent comparable sales. It is free, it is informal, and it is not legally binding on anyone. Agents provide appraisals because they want the listing; the appraisal is the start of their pitch.

That does not make it worthless. A good agent sees more sales in your suburb in a month than you will in a lifetime, and their estimate is grounded in what buyers are actually paying. The problem is that the incentive runs the wrong way: a higher number is more likely to win your listing, so appraisals skew high. The solution is to collect three and ask each agent for the evidence.

In Victoria the appraisal has legal weight once it goes into the sales authority. The authority must state the agent's estimated selling price, as a single figure or a range no wider than 10 per cent, and the underquoting laws tie the advertised price to that estimate and to the three most comparable sales (Consumer Affairs Victoria). New South Wales has similar rules linking the agency agreement estimate to the advertised guide. In Queensland the Form 6 does not require an estimated price, so the appraisal stays informal until a price is advertised.

A valuation is a certified valuer's formal assessment

A valuation is a written report by a Certified Practising Valuer that states the market value of the property at a date, with the methodology and comparable evidence set out. It is used where someone other than you needs to rely on the number: a lender deciding how much to advance, the Family Court splitting assets, an executor administering an estate, or the Tax Office assessing capital gains. The Australian Property Institute's guide to levels of valuation advice describes the different levels of report a valuer can provide.

A residential valuation typically costs between about $300 and $800 according to Savvy and LJ Hooker, depending on the property and the level of report. Queensland law restricts who can call themselves a valuer: valuations of real property there may only be done by someone registered under the Valuers Registration Act 1992, which the Valuers Registration Board of Queensland explains on its page about the difference between a valuation and an appraisal.

Valuers are conservative by design. A bank valuation is often below what a competitive campaign would achieve, because the valuer is assessing what the property would fetch in a forced sale within a reasonable period, not what two emotional buyers might pay at auction. If you obtain a valuation before selling, treat it as a floor, not a target.

When you need which

| Situation | What you need | |---|---| | Deciding whether to sell and at what price | Three agent appraisals | | Refinancing or borrowing against the property | Lender's valuation (the lender orders it) | | Divorce or family law settlement | Independent valuation | | Deceased estate | Valuation at date of death, often required by the executor | | Transferring a former home to investment use (capital gains tax cost base) | Valuation at the date it first earned income | | Selling a home you have lived in throughout | Appraisals only; the main residence is generally exempt from CGT |

Most vendors selling their own home need appraisals and nothing else.

What a good appraisal contains

Ask each agent for the appraisal in writing. It should contain:

1. An estimated range, not just a single flattering number, with a short explanation of where in the range the agent expects to land.
2. Three to five comparable sales: address, sale date, sale price, and how each compares with your property (land size, condition, position). Sales older than six months or more than a few kilometres away are weak evidence in a metropolitan suburb.
3. Current competing listings: what else a buyer for your home would be looking at this month, and at what price.
4. A recommended method of sale and a campaign outline, with marketing costs itemised.
5. The agent's proposed commission with GST stated.
6. What would change the number: for example, "with the kitchen painted and the carpets replaced I would expect the top of the range".

An appraisal that arrives as a single figure on a letterhead with no comparables is a pitch, not an appraisal.

How to use three appraisals

Line the three up. If two agents land within a few per cent of each other and the third is 10 per cent higher, ask the high one which comparable sales justify the gap. Sometimes they have seen an off-market sale the others missed; more often they are buying the listing. Our guide on questions to ask at an appraisal has the full list of questions.

Then look at our suburb page for your area. The market snapshot shows the median price, median days on market and the sales trend with the date they were last updated, and each ranked agent's profile shows what they have sold in the suburb and at what price. An agent whose appraisal is consistent with their own record is more likely to deliver it.

The appraisal is not the price

The appraisal informs three decisions: whether to sell now, which agent to use, and what to advertise. It does not set the price; buyers do that. A realistic appraisal, a well-run campaign and a competent negotiator will usually outperform a high appraisal with a slow campaign and a price reduction in week five. Days on market matters more to your result than the number on the first brochure.

Compare agents near you

Our suburb pages rank agents by sales in the suburb, days on market, price achieved and verified reviews, and let you request appraisals from up to three ranked agents in one form. Partner agents, labelled "Partner: pays a referral fee on settlement", pay us a share of their commission on settlement; it never affects their rank and you pay nothing.

Frequently asked questions

Is a property appraisal free?+

Yes. Agents provide appraisals at no cost because they want the opportunity to list your property. A valuation by a certified valuer is a paid service, typically $300 to $800 for a residential property.

Is an appraisal legally binding?+

No. It is the agent's opinion. In Victoria and New South Wales the estimate written into the agency agreement does carry legal consequences for the agent under underquoting rules, but it does not bind you or any buyer.

Do I need a valuation to sell my home?+

Usually not. You need a valuation when a third party must rely on the figure: a lender, a court, an executor or the Tax Office. For a normal sale, three agent appraisals are the right tool.

Why is a bank valuation lower than the agent's appraisal?+

Valuers assess what the property would fetch in a reasonable sale period with no special buyer. Agents estimate what a competitive campaign might achieve. Both can be right; they answer different questions.