It’s every buyer’s worst nightmare: you’ve agreed on the condo price, you’ve put your old flat up for sale for this upgrade, and – at the crucial moment – you find you’re $50,000 short of the asking price, and the bank loan won’t cover it.

To your frustration, this isn’t happening because of your credit score, your CPF, or your loan package. It’s a simple case of the buyer wanting more than the bank feels the property is worth. And if you can’t cough up that difference in cash, your dream home is going to the next buyer in the queue.

This is the outcome of a property valuation, that leaves you short on the loan you need. It’s a vital consideration when taking your home loan, and here’s what you should know about it:

What’s a property valuation, as used by actual banks?

There are two general types