Quick answer
A valuation fee is the charge for the independent valuation a lender orders on the property or asset offered as security. The lender chooses the valuer, usually from its own panel, but the borrower normally pays, either upfront or out of the loan at settlement. Many lenders treat the fee as payable even if the application is later declined or withdrawn, because the valuer's work has already been done.
Key points
- The lender picks and instructs the valuer; the borrower usually foots the bill
- Fees scale with the property type and the depth of the report, so commercial and rural cost more
- Often payable even if the loan doesn't proceed, so ask before you authorise it
- A second valuation is generally at your cost, and banks tend to rely on the lower figure
The line item usually appears early, often before a formal offer: “Valuation fee, payable on authority.” A valuation fee is what you pay for the independent valuation a lender needs before it will lend against your property or other security. You pay it, but the lender chooses the valuer and the report is written for the lender.
Why does a lender charge a valuation fee?
A secured lender sizes the loan on what the security is worth, not on the owner’s hopes for it. To get a figure it can stand behind, it sends a qualified valuer from its approved panel. In Queensland, for example, valuers must be registered with the Valuers Registration Board, and lenders in every state limit themselves to firms on their approved panel.
Because the lender is the client, the valuer owes their duty to the lender. That’s why you normally can’t substitute your own report, however fresh. Your own report isn’t wasted, though: it can still help as background if the lender’s figure comes in low.
What drives the size of the fee?
| Factor | Effect on the fee |
|---|---|
| Report type | A desktop valuation or kerbside drive-by costs least; a full internal inspection with a written report costs most |
| Property type | Standard homes are cheapest; commercial, industrial, rural and specialised properties take longer to assess |
| Location | Regional and remote properties can carry travel costs |
| Urgency | Some panels charge more for a rushed turnaround |
| Number of securities | Each property offered needs its own valuation |
Full commercial valuations can also take weeks rather than days, which matters when a settlement date is fixed. If speed is the priority, ask early whether the lender will accept a shorter-form report for your loan size.
When is it payable, and is it refundable?
This is where owners get caught out. Many lenders ask you to sign a valuation authority before the valuer is booked, and the fee becomes payable once the work is done. If the figure comes in short and you walk away, or the lender declines, you’ve usually still paid. Some lenders collect it upfront by card; others add it to the amount owing at settlement.
The Australian Banking Association’s guideline on appointing valuers adds a second wrinkle: if a bank orders another valuation, the customer will usually pay for that too, and the bank will generally rely on the lower result.
Not sure how fees stack up against the money you actually receive? A quick enquiry gets a specialist to walk through the numbers with you.
A worked example
Lena runs a joinery business in regional NSW and needs $180k for a CNC machine deposit and stock. She offers her home as security for a second mortgage. Before booking the valuer, the lender confirms the fee in writing, including a travel charge because the property is some distance from the valuer’s office.
The report comes back $40k under the agent’s appraisal, but there’s still enough equity for the full $180k, so the loan proceeds and the fee is deducted from the advance at settlement. Had the shortfall been bigger, Lena would have kept the report but lost the fee. Asking for the quoted cost and the refund policy before signing meant there were no surprises either way.
Tips before you sign the valuation authority
- Ask for the fee in writing, including any travel or rush charges.
- Ask whether it’s payable if the loan doesn’t proceed.
- Ask whether you’ll receive a copy of the report or at least the figure.
- Gather recent comparable sales and a list of improvements for the valuer.
- Factor the fee into the total cost alongside the establishment fee and other charges.
Our guide on business loan costs and fees lays out the full set of charges you might see.
Weighing up a property-secured loan?
The valuation fee is a small part of the overall cost, but it’s money you can lose if the deal is mismatched from the start. That’s a good reason to talk the numbers through before any valuer is booked. Our form is roughly sixty seconds of typing, and nobody pulls your credit file because you asked a question. We keep your enquiry in-house rather than shopping it around, and a person on our team works through the property details before picking up the phone to you. Straight answers about the property, what’s already owed on it and the amount you’re after help us steer you towards a lender whose valuer and policy suit the security.
Frequently asked questions
How much is a valuation fee for a business loan?
It depends on the asset and the report. A short desktop or kerbside assessment of a standard home is at the low end, while a full inspection of a commercial building, a rural holding or a development site costs considerably more. Ask the lender or broker for the quoted figure in writing before you sign the valuation authority.
Do I get the valuation fee back if my loan is declined?
Usually not. The valuer has done the work, so most lenders' valuation authorities make the fee payable whether or not the loan settles. Some lenders absorb the cost for certain loans, so it's worth asking up front.
Can I get a copy of the valuation I paid for?
The report is prepared for the lender, which is the valuer's client, even though you paid for it. Many lenders will share a copy or at least the valuation figure on request, but policies differ, so ask when you authorise the fee.
Why does a second valuation cost me again?
A second valuation means a fresh inspection and report from another panel valuer. Under the Australian Banking Association's guideline on appointing valuers, the customer will usually need to pay for it, and the bank will generally consider the lower of the two results.
Is a valuation fee the same as an establishment fee?
No. An establishment fee is the lender's own charge for setting up the loan. A valuation fee passes through to a third party, the valuer, and is often listed separately on the loan offer and settlement statement.