If the bank's valuation comes in below your agreed price, the bank lends a percentage of the lower figure, not of the price you signed for. You pay the difference in cash. On a RM600,000 house valued at RM550,000, a 90% loan drops from RM540,000 to RM495,000, so your cash needed rises from RM60,000 to RM105,000. You can close the gap by trying other banks, renegotiating, using savings or EPF, or walking away if your offer letter allows it.
A low valuation (penilaian bank rendah) is one of the most common reasons subsale purchases in Malaysia stall between the offer and the loan approval. It is rarely a sign that you are being cheated, and it is almost never the end of the deal. But it does change the arithmetic, and the earlier you understand that arithmetic, the more choices you keep.
This guide covers how banks use a valuation, the exact cash-gap formula, why valuations come in low, five practical ways to respond, and the clause you should put in your offer letter before you pay any deposit.
At a Glance: Your Options When the Valuation Is Low
| Option | Typical time | Effect on your cash gap | When it works best |
|---|---|---|---|
| 1. Apply to other banks | 1 to 3 weeks | Can remove the gap if another panel valuer agrees with the price | Gap is small (under about 5%) and comparable sales support your price |
| 2. Ask for a review with new evidence | 1 to 2 weeks | Can raise the figure if the valuer missed comparables or features | You can show recent higher transactions for similar units |
| 3. Renegotiate the price | Days | Reduces the gap directly | Seller has had the property on the market for a while |
| 4. Fund the gap yourself | Immediate to 2 weeks | Gap stays; you pay it from savings or EPF | You have the cash and still believe the price is fair |
| 5. Withdraw under a loan clause | Per offer letter | Deposit refunded if the clause covers it | Your offer letter is subject to loan approval at a stated margin |
How Banks Use a Valuation
When you apply for a housing loan on a subsale property, the bank appoints a registered valuer from its panel to value the property. The valuer must be registered with the Board of Valuers, Appraisers, Estate Agents and Property Managers (Lembaga Penilai, Pentaksir, Ejen Harta Tanah dan Pengurus Harta, LPPEH). The bank then lends a percentage of the lower of the purchase price and the valuation. That percentage is the margin of finance, or loan-to-value (LTV) ratio.
For most buyers of a first or second home the bank's margin is up to 90%. Bank Negara Malaysia caps the margin at 70% for an individual's third and subsequent housing loans, so a low valuation hurts even more if you already own two financed homes. (Source: Bank Negara Malaysia macroprudential measures on housing loans, 70% LTV cap on third and subsequent housing loans; checked 5 Oct 2026.)
New launches are different. The developer's end-financing banks usually agree project pricing before sales open, so a low valuation on a new launch is uncommon. Most of the problems in this guide happen in the subsale market.
The Cash-Gap Formula
Two lines are enough:
Loan approved = lower of (SPA price, bank valuation) x margin of finance
Cash you must pay = SPA price - loan approved
The gap you must cover is not just the difference between the price and the valuation. It is that difference plus the normal down payment on the valuation.
Worked example: a RM600,000 subsale condo
| If valued at price | If valued at RM550,000 | |
|---|---|---|
| SPA price | RM600,000 | RM600,000 |
| Bank valuation | RM600,000 | RM550,000 |
| Loan at 90% | RM540,000 | RM495,000 |
| Cash for the price | RM60,000 | RM105,000 |
| Extra cash needed | RM45,000 |
The RM50,000 valuation shortfall costs you RM45,000 more in cash, because the bank also lends 90% less on the missing RM50,000. On top of the price, you still pay legal fees, stamp duty and valuation fees. A low valuation does not lower your stamp duty: duty on the memorandum of transfer is charged on the higher of the price and the market value, so on RM600,000 you still pay RM12,000 (1% of the first RM100,000, 2% up to RM500,000 and 3% on the next RM100,000). Loan agreement duty is 0.5% of the smaller loan, RM2,475 instead of RM2,700. (Source: Stamp Act 1949, First Schedule items 27(a) and 32(a), (duty on the higher of price and market value); checked 5 Oct 2026. First-time buyers of a home up to RM500,000 are exempt until 31 December 2027; see our stamp duty guide.)
At today's rates the smaller loan does lower your instalment. Bank Negara held the Overnight Policy Rate at 2.75% on 3 September 2026, and floating housing loans are priced on the Standardised Base Rate, which follows it, plus each bank's spread. (Source: Bank Negara Malaysia Monetary Policy Committee statement, OPR 2.75% as of 3 Sep 2026; checked 5 Oct 2026.) At an illustrative effective rate of 4.0% over 35 years, RM540,000 costs about RM2,390 a month and RM495,000 about RM2,190, a RM200 monthly difference you are paying for with RM45,000 of extra cash today.
Why Valuations Come in Low
Residential valuers mostly use the comparison method: they look at recent transactions of similar units nearby and adjust for size, floor, condition, tenure and facing. That leads to a handful of predictable causes.
- Recent transactions are lower than the asking market. Valuers rely on registered transfers, which lag asking prices by months. If several owners in your block sold cheaply, perhaps through auctions or quick sales, those deals pull the evidence down.
- Renovation is discounted. A RM150,000 kitchen and built-in carpentry rarely add RM150,000 in a valuation. Valuers recognise structural improvements with approvals more readily than loose furnishing and finishes.
- The price was pushed up by competition. In popular areas, multiple offers can push prices above recent evidence. The valuer is not bound by what you were willing to pay.
- Tenure and title issues. Short remaining leases, Malay reserve or Bumiputera lot restrictions, or a strata title not yet issued can all lower a valuation or reduce how much the bank will lend.
- The valuer's view of the market. Banks want conservative figures. Two equally qualified valuers can be 5% apart on the same unit.
Before you make an offer, check the asking prices on comparable listings in the same development, such as condominiums in Cheras or Petaling Jaya, and ask your agent for recent transacted prices. A price well above the transacted range is the single best predictor of a low valuation.
Five Ways to Respond
1. Apply to other banks
Each bank uses its own panel of valuers, and a different firm may reach a higher figure, especially when the gap is small. Many buyers submit applications to two or three banks at the same time for this reason. Ask each bank which valuer it uses; two banks sharing a valuer will give you the same answer. Keep an eye on your offer letter's deadline for signing the SPA, because new applications take time.
2. Ask for a review with evidence
A valuation is not a fixed verdict. You, through your banker, can ask the bank to request a review if you can show evidence the valuer may have missed: recent higher transactions for comparable units, a better floor or view, or approved extensions. The decision stays with the bank and its valuer, and many reviews do not change the number, but a well-documented request costs little. Note that the bank's valuer is a private firm on its panel, not the government's Valuation and Property Services Department (JPPH), so there is no JPPH "appeal" for a bank valuation.
3. Renegotiate the price
Show the seller the shortfall. Any buyer who needs a loan will face a similar valuation, so a seller who wants to close within weeks may prefer a lower price over relisting. A common outcome is splitting the difference: on the example above, a RM25,000 price cut reduces your extra cash from RM45,000 to RM20,000.
4. Fund the gap yourself
If you still believe the price is fair, you can pay the gap from savings. Two EPF options can help:
- Akaun Sejahtera (Account 2) can be withdrawn to buy or build a house, subject to EPF's housing withdrawal rules and the amount in the account.
- Akaun Fleksibel (Account 3) can be withdrawn at any time for any purpose, with a minimum of RM50 per withdrawal.
(Source: KWSP, account restructuring from 11 May 2024 and housing withdrawal terms; checked 5 Oct 2026. See our EPF Account 3 guide.) Using retirement savings has a real long-term cost, so treat this as a considered choice, not a reflex.
5. Withdraw under your loan clause
Most subsale offer letters say the earnest deposit is refundable if the buyer's loan is not approved. Read yours carefully. A clause that only says "subject to loan approval" may not help you if a bank approves a smaller loan. A clause that says "subject to a loan of not less than 90% of the purchase price" is far stronger, because a lower approval triggers it. If your clause applies, you can usually withdraw and recover the deposit; see our booking cancellation and refund guide.
The Clause to Put in Your Offer Letter
Before you pay an earnest deposit, ask your agent to write the loan condition precisely, for example:
This offer is conditional on the purchaser obtaining a housing loan of not less than 90% of the purchase price within [21] days. If the loan is not approved, or is approved for a lower amount, the earnest deposit shall be refunded in full.
Ask your lawyer to check the wording; there is no standard form imposed by law, and the clause only protects you if it is in the document you sign.
Second Worked Example: Landed Home With a Small Gap
You agree to buy a terrace house in Shah Alam for RM720,000. The valuation comes back at RM700,000.
- Loan at 90% of RM700,000: RM630,000 (instead of RM648,000).
- Cash for the price: RM720,000 - RM630,000 = RM90,000 (instead of RM72,000).
- Extra cash: RM18,000.
Here the gap is under 3%. A second bank's valuer may well reach the price, and a seller may accept RM10,000 off. This is the typical case: a small gap that a couple of phone calls can resolve.
FAQs
Q: What happens if the bank valuation is lower than the purchase price?
The bank lends its margin, often up to 90%, on the lower valuation instead of the price. You pay the difference between the price and that smaller loan in cash. A RM50,000 shortfall on a RM600,000 home adds RM45,000 to the cash you need at a 90% margin.
Q: Can I get a refund of my booking deposit if the valuation is low?
Only if your offer letter says so. A clause making the purchase conditional on a loan of a stated margin, such as 90% of the price, lets you withdraw if the approved loan is smaller. A clause that only says "subject to loan approval" may not cover a reduced approval.
Q: Can I choose the valuer for my housing loan?
Not usually. The bank appoints a valuer from its own panel, and you pay the valuation fee. You can, however, apply to several banks, each of which will use its own panel.
Q: Does a low bank valuation reduce stamp duty?
No. Memorandum of transfer stamp duty is charged on the higher of the price and the market value, so you pay duty on the agreed price. Loan agreement duty is 0.5% of the loan, which falls slightly if the loan is smaller.
Q: Do new launch properties get low valuations?
Rarely. Developers' end-financing banks generally agree project pricing before launch. Low valuations are mainly a subsale market problem.
Q: Can I use EPF to cover a valuation shortfall?
Yes, within limits. Akaun Sejahtera (Account 2) can fund a house purchase under EPF's housing withdrawal rules, and Akaun Fleksibel (Account 3) can be withdrawn for any purpose. Check your balances in KWSP i-Akaun before you commit.
Q: How long does a bank valuation take in Malaysia?
The site visit and report usually take a few working days to two weeks after the bank receives your application and the documents. Applying to several banks at once avoids losing time if the first valuation is low.
Q: Is a low valuation a sign I am overpaying?
It is a warning, not proof. Valuations lag the market and discount renovations. Compare recent transacted prices and current listings in the same development before deciding whether to renegotiate or pay the gap.
