What is a valuation report?

A valuation report is a valuer's signed opinion on what a property is worth.

Written 22 September 2026. For bankers in India.

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In one line

A valuation report is a signed opinion, from a qualified valuer, on a property's worth. A bank uses it to size the loan and check the security.

Why it matters to you

• It sets the loan value. The Loan to Value cap uses this figure.
• It is not one number. A report can show three separate values.
• The valuer must stay independent. An interested valuer gives false comfort.
• An old report is a risk. Prices can fall before disbursement day.
• It is not the only check. Read it beside a title search and an encumbrance certificate.

How it works

1. The bank picks an approved valuer. This is called an empanelled valuer.
2. The valuer inspects the property. A site visit is stronger than a desk check from photos.
3. The valuer may state three figures. Not every report gives all three.
4. Your bank decides which figure to use. No single rule fixes this for every product.
5. The bank applies its Loan to Value cap to that figure. See What is LTV? for the caps.

A report can carry three kinds of value. Each one answers a different question.

• Market value: the normal price a willing buyer would pay a willing seller.
• Realisable value: the price in a fair, reasonably quick sale. Usually lower than market value.
• Distress value: the lowest price likely in a forced, urgent sale.

BANKPULSE VIEW: read the valuer's stated basis, not just the final number. Two reports on the same house can differ by lakhs.

Worked examples

Example 1: two valuers, one loan, and which figure is used

A housing finance company asks for two valuation reports on a flat. The loan applied for is Rs 40,00,000. This loan sits in the Rs 30 lakh to Rs 75 lakh band. The Loan to Value cap here is 80 per cent.

• Valuer A's market value: Rs 54,00,000. At 80 per cent, this alone would allow Rs 43,20,000.
• Valuer B's market value: Rs 48,00,000. At 80 per cent, this alone would allow Rs 38,40,000.
• Bank practice (seen in one housing finance company's own policy): use the lower of the two reports.
• Value used: Rs 48,00,000. Maximum eligible loan: 80 per cent of Rs 48,00,000 = Rs 38,40,000.
• The loan asked for is Rs 1,60,000 above this. It must be cut, or the borrower must add own money.

Had the bank used Valuer A's higher figure instead, the loan would have cleared with room to spare. The choice of which report to use decided the outcome here.

Example 2: reading the three figures on one report

A valuer's report on a second property states three figures on the same page.

• Market value: Rs 96,00,000.
• Realisable value: Rs 86,40,000, which the report's own numbers show is 90 per cent of the market value.
• Distress value: Rs 76,80,000, which is 80 per cent of the market value.

These two percentages are only this one report's own numbers. No rule fixes them at these percentages for every property. A different valuer, or a different property, gives different figures. The gap between market value and realisable value here is Rs 9,60,000. The gap between market value and distress value is Rs 19,20,000.

What the rule says

RBI RULE: paragraph 58 of the Reserve Bank of India (Housing Finance Companies) Directions, 2025 says a housing finance company "shall be guided by" paragraph 215 of the same Directions on valuation of properties and empanelment of valuers. We opened this Directions document and confirmed paragraph 58 says this.

Our tool could not read as far as paragraph 215 itself, on repeated tries, because the file is very long. We could not confirm the exact wording of paragraph 215 from a source we could open today. This is an open question for the founder, not a point we are willing to guess on.

Two older, dated figures turned up for the loan size that needs a second, independent valuation. Neither can be confirmed as today's rule in paragraph 215:

• A National Housing Bank circular, dated 31 August 2017, set this threshold at Rs 1 crore.
• A government broadcaster reported Rs 50 crore for banks and Rs 75 lakh for housing finance companies, in March 2026.

BANK PRACTICE: a bank or housing finance company sets its own numbers inside this frame. One housing finance company's own policy needs two valuation reports for loans of Rs 25 lakh to Rs 50 lakh. At least one report must be independent. The policy uses the lower of the two values. Loans under Rs 25 lakh may use an internal, qualified staff valuation instead. Your bank's own policy may set different figures.

RBI RULE: Rule 8(5) of the Security Interest (Enforcement) Rules, 2002 sets a duty here. The authorised officer must get a valuation from an approved valuer. This must happen before the reserve price is fixed for an enforcement sale. These Rules sit under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the SARFAESI Act). The Rule does not use the words market value, realisable value or distress value. It only asks for "valuation".

BANK PRACTICE: each bank's own empanelment policy decides who may value a property, and up to what loan size. State Bank of India's published criteria name five paths to becoming an empanelled real estate valuer:

1. A civil engineering, architecture or town planning graduate, with 5 years in valuing land and buildings.
2. A civil engineering or architecture diploma holder, with 8 years in real estate valuation.
3. A pass in the Indian Banks' Association's real estate valuation exam, with 2 years' experience.
4. A graduate with a postgraduate qualification in civil engineering, architecture or town planning, with 3 years in the field.
5. Royal Institution of Chartered Surveyors, American Society of Appraisers or Appraisal Institute membership, no extra experience needed.

The same source caps the loan size for two of these categories. A graduate valuer is capped at Rs 2 crore. This applies with no Insolvency and Bankruptcy Board of India or Wealth Tax Act registration. A diploma holder is capped at Rs 1 crore. For a housing loan, this cap rises to Rs 2 crore. We found no stated cap for the other categories in this source, so we do not print one.

Common mistakes

• Reading only the market value. Check which figure your bank's policy asks you to use.
• Treating a valuation report as proof of ownership. It shows worth, not who owns the property.
• Using an old report. A falling market can make yesterday's figure too high today.
• Assuming every report carries all three values. Some reports state market value only.
• Letting one person source the loan and pick the valuer. Keep this separate to protect independence.
• Calling a bank policy a Reserve Bank of India rule. State which is which.

How to use it at your desk

1. Confirm your bank's rule on when a second, independent valuation is needed.
2. Check the valuer is on your bank's current empanelled list.
3. Read which of the three values (market, realisable, distress) the report states.
4. Confirm your bank's policy on which figure to use for this loan type.
5. Check the report's date against your bank's freshness rule before disbursement.
6. Cross-check the report against the title search report and the encumbrance certificate.
7. Record the figure used, the valuer's name, and the report date in the loan file.

Related terms

• Loan to Value ratio — the value here is the base figure for its cap.
• Title search report — checks who owns the property; this report checks its worth.
• Encumbrance certificate — checks registered claims; it says nothing about worth.
• Mortgage types — a fresh report is read before a bank accepts any of these.
• Product rule pages: Housing loan rules, Housing Finance Companies Directions 2025.

Quick check

A report gives market value Rs 50,00,000 and realisable value Rs 44,00,000. Which figure is usually lower?

Answer: Realisable value. It reflects a quicker sale than the open market value.

Does the Reserve Bank of India fix one single loan-size threshold for a second valuation, confirmed on this page?

Answer: No. We found two different reported figures and could not open paragraph 215 to confirm either.

Does the Security Interest (Enforcement) Rules, 2002 use the words "distress value"?

Answer: No. Rule 8(5) only asks for "valuation" before the reserve price is fixed.

Sources

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