Quick answer
Many fast short-term private lenders do not require a formal valuation before they lend. They assess the property themselves using recent sales and sometimes an inspection. That saves the cost of a valuation, often $2,000 to $10,000 or more, and the weeks it takes, but the lender may still order one for large or unusual deals.
Key points
- Lender assesses the property itself, using sales evidence and sometimes an inspection
- Saves a valuation cost of $2,000 to $10,000 or more
- Saves the weeks a formal valuation can take
- A formal valuation may still be ordered on large or unusual deals
- Valuation cost avoided
- $2,000 to $10,000+
- Time saved
- Days to weeks
- Suits
- Fast short-term loans
- Not suited to
- Some large or specialised property
Why valuations slow lending down
A formal valuation is a report by a licensed valuer on what a property is worth. For a bank or a longer-term private lender it is a core part of the file: the lender decides how much to advance based on the valuer’s figure. The trouble is that ordering one takes time. The lender instructs a valuer from a panel, the valuer arranges access, inspects, researches sales and writes the report. That is often several days at best and a couple of weeks at worst, and in a busy market or a regional area it can be longer.
It also costs money, and the borrower pays. For a longer-term private loan a valuation commonly costs from about $2,000 to $10,000, and more for large commercial, rural or specialised property. Because lenders often want that money up front, it is spent before you know whether the loan will be approved.
How fast lenders assess property instead
Fast short-term lenders skip the formal report and do the assessment themselves. A typical approach combines:
- Recent comparable sales in the same street, suburb or area.
- Online property data covering land size, type, listing history and improvements.
- A drive-by or photos to confirm the property looks as expected.
- Title and zoning details from a search.
- Their own experience of the area, since specialist lenders see many deals in the same markets.
That gives a working figure within hours. Because the lender then lends only a limited share of that figure, it has a buffer if the true value is a little lower.
Why it still works for the lender
The reason this approach is safe enough is simple arithmetic. If a property is worth about $1,000,000 and the combined debt, including the new loan, is around 60% of that, the lender has a large buffer against error. A property that is overvalued by 10% still covers the debt comfortably. The lender is not trying to price the property to the last dollar; it is checking that the equity is large enough to protect it. Our second mortgage calculator shows how much room your property leaves.
When a valuation is still needed
No valuation up front is common, not universal. A fast lender is more likely to order a formal valuation when:
- The loan is large relative to the usual range.
- The combined loan-to-value ratio is high.
- The property is unusual: a large rural holding, a specialised industrial building, a development site or a heritage building.
- There is little recent sales evidence in the area.
- The first mortgagee or another party requires one.
When that happens, the cost is normally the borrower’s, and it can add days. A good lender tells you early, so you can decide whether to go ahead.
Protect yourself
Skipping the valuation shifts a little responsibility to you. Before you borrow:
- Get an agent’s appraisal. Free, quick and a good reality check.
- Look at recent sales yourself. If your expectation is far above the lender’s, ask why.
- Borrow a comfortable amount. The further inside the property’s value the loan sits, the safer you are.
- Check the exit. A loan that cannot be repaid is a problem however the property was valued. Use our exit plan checker.
- Read the offer. Make sure the amount, fees and any valuation clause are clear. Our letter of offer checklist helps.
No valuation does not mean no documents
Skipping a valuation does not mean skipping due diligence. The lender still searches title, still verifies identity and still expects clear documents and a believable exit. It is faster because the process is lean, not because it is loose. The related idea of low-doc private loans covers what a lender will and will not ask you to supply.
Choosing the right style
If time and credit are your problems, a loan without an upfront valuation is usually the practical choice. If you are not in a hurry and have a clean file, a longer-term lender with a valuation will generally cost less per month. Our comparison of short-term and long-term private loans lays out the trade-off.
Start with a short enquiry
Tell us about the property, the amount and the deadline. There is no credit check when you first enquire, and we will tell you straight away whether a valuation is likely to be needed. Start your enquiry and avoid spending money on a report you may not need.
Frequently asked questions
How can a lender lend without a valuation?
It relies on its own assessment: recent comparable sales, the title details, the location and sometimes a drive-by look. Because the loan is a modest share of the property value and the term is short, the lender is comfortable that the security covers the risk without a full report.
Will a valuation be needed later?
Possibly. If the lender decides the property is unusual, the loan is large or the combined loan-to-value ratio is high, it may order one, and the cost is usually passed on. Your lender should tell you before you commit to anything.
Who pays for a valuation when one is required?
The borrower normally pays, and often before a final offer is issued. That is why it is worth confirming a lender will lend in principle before you order one.
Is skipping the valuation risky for me?
The main risk is a loan sized on an assumed value that turns out to be wrong. Protect yourself by getting an agent appraisal, checking recent sales yourself and borrowing a comfortable amount well inside the property value.