Property appraisal vs valuation in NSW: what's the difference?
People use the two words as if they mean the same thing. They don't. One is a free estimate of your likely selling price, the other is a paid formal report. Picking the right one saves you money and confusion.
The difference in one minute
An appraisal is a real estate agent's estimate of the price your home is likely to sell for in the current market. It is usually free. A valuation is a formal, paid report from a qualified property valuer, prepared for purposes such as lending, legal matters or tax. Both are useful. They answer different questions.
What an agent appraisal is
An appraisal is built from the same evidence buyers use: recent sales of similar homes nearby, the homes currently for sale that yours would compete with, and the agent's feel for how many buyers are active right now. A good appraisal walks you through those comparable sales and explains why your home should sit above or below each one.
In NSW, underquoting laws also apply once you engage an agent to sell. The agent must put an estimated selling price in writing in the agency agreement, have reasonable grounds for it, such as comparable sales, and update it if their view of the likely price changes. In practice this means a serious appraisal should always come with evidence you can check.
Appraisals are usually free because agents offer them hoping to earn your business when you decide to sell. That does not make them worthless, but it is a good reason to ask to see the sales behind the number.
What a formal valuation is
A valuation is an independent assessment by a qualified valuer, often a Certified Practising Valuer with the Australian Property Institute. The valuer inspects the property, analyses sales evidence and produces a formal written report stating a market value as at a specific date. You pay for it, and the valuer is accountable for the figure.
You would normally need a formal valuation for:
- Family law property settlements or separation
- Deceased estates and transfers between family members
- Capital gains tax and other tax matters
- Disputes, insurance or court proceedings
When you borrow money, the lender arranges its own valuation, usually through a valuer on its panel. Depending on the loan, that can range from a desktop assessment to a full inspection. It is ordered for the bank's protection, so it tends to be conservative.
Side by side
| Agent appraisal | Formal valuation | |
|---|---|---|
| Who does it | A licensed real estate agent | A qualified property valuer |
| Cost | Usually free | Paid |
| What it tells you | Your likely selling price in the current market | Market value as at a specific date, for a stated purpose |
| Based on | Comparable sales, competing listings, current buyer demand | Inspection, sales evidence and a formal method |
| Best for | Deciding whether and when to sell, setting a price | Lending, family law, estates, tax, disputes |
And the land value on your rates notice?
That is a third, different figure. The NSW Valuer General sets a land value for every property each year. It covers the land only, not the house or other improvements, and it is used for council rates and land tax. It is not an estimate of what your home would sell for, so it is common for a home's sale price to be far higher than its land value.
Which one do you need?
If you are weighing up the different free reports on offer, our guide to free property reports in NSW compares them side by side.
- Thinking about selling, or just curious? Start with an appraisal. It is free and it answers the question you are actually asking: what would a buyer pay?
- Refinancing or buying? Your lender will organise the valuation it needs.
- Settlement, estate or tax matter? Engage a qualified valuer for a formal report.
If you want to see how an appraisal figure is put together, our guide to what your house is worth in the Blue Mountains walks through the factors, and six free ways to check property value shows how to sense-check any number you are given.
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Common questions
Is a property appraisal free?
Agent appraisals are usually free because agents offer them in the hope of winning the listing when you sell. A formal valuation from a qualified valuer is a paid service.
Will the bank accept an agent's appraisal?
No. When you borrow, the lender arranges its own valuation, usually through a panel valuer. An agent appraisal is a guide to the market, not a lending document.
Do I need a valuation to sell my home?
Usually not. To sell, an agent appraisal based on recent comparable sales is what you need to set your price. A formal valuation is for lending, family law, deceased estates, tax and disputes.
