What Happens If Bank Valuation Is Lower Than Purchase Price? 7 Smart Tips to Handle It in the UAE

Buying a home in the UAE is exciting — but what if the bank says your chosen property is worth less than what you agreed to pay?

This is more common than you think. When a bank carries out a property valuation, the number they come up with might be lower than your purchase price — and that can impact how much you can borrow. So, what happens if bank valuation is lower than purchase price?

In this article, we’ll explain exactly what this means, why it happens, and share 7 smart tips to handle it if you’re a buyer in the UAE property market.

What Is a Bank Valuation and Why Does It Matter?

Before approving a mortgage, your bank will send a third-party valuation expert to estimate the market value of the property. This is a safeguard for the bank — they want to make sure they’re not lending more than what the home is actually worth.

 Important:

-The loan amount is based on the bank valuation, not the purchase price.

-Most banks offer up to 80% of the valuation (not the agreed price).

So, what happens if bank valuation is lower than purchase price? You may be expected to cover the difference out of pocket.

 

Why Would the Bank Valuation Be Lower Than the Purchase Price?

Several factors can lead to a lower bank valuation:

-Overpriced listings by sellers

-Emotional bidding in competitive areas

-Property condition not matching seller’s claims

-Outdated or limited comparable sales data

-Off-plan properties valued differently than expected

In short, even if you’re willing to pay a certain amount, the bank may not see it as a fair market value.

What Happens If Bank Valuation Is Lower Than Purchase Price?

Let’s look at a simple example:

-Purchase Price: AED 1,000,000

-Bank Valuation: AED 900,000

-Bank’s Offer (80%): AED 720,000

-Shortfall to Cover: AED 280,000 (AED 100,000 gap + 20% down payment on valuation)

This means you’ll need to increase your down payment to cover both the valuation gap and your share of the loan.

This scenario can be frustrating, but there are ways to manage it — let’s go through them.

7 Smart Tips to Handle a Low Bank Valuation in the UAE

1. Negotiate the Purchase Price with the Seller

If the valuation is significantly lower, try to renegotiate the price.
Sellers are sometimes open to adjusting the figure to keep the deal moving — especially if there aren’t other offers.

Tip: Use the official valuation report as a negotiation tool.

2. Appeal the Valuation (If Possible)

In some cases, you can ask your bank to reconsider the valuation.
You’ll need valid reasons, such as:

-Comparable sales data from similar properties

-Renovations or features not considered in the initial report

 Note: Not all banks allow appeals, and they rarely adjust valuations by large amounts — but it’s worth trying.

3. Pay the Shortfall in Cash

If you have the extra funds, the simplest route is to pay the valuation difference yourself.

For example, if the property is valued AED 100,000 below your agreed price, you’d need to increase your down payment by that amount.

It’s not ideal, but if it’s your dream home or a long-term investment, this may be worth it.

4. Choose a Different Bank for a Second Valuation

Each bank uses different valuation firms, so if one comes in low, another might be slightly higher.

You can try applying with a different bank to get a new valuation — but be aware:

-Time delays may impact your transaction

-Sellers may not want to wait

 Our Mortgage Finder advisors can help identify which banks are more flexible in valuation approaches.

5. Adjust the Loan Structure or Use a Co-Borrower

If you’re short on cash to cover the valuation gap, consider:

-Adding a co-borrower with income to boost your mortgage eligibility

-Adjusting loan terms to explore options with lower down payment requirements

Some banks may allow limited restructuring based on total eligibility.

 

6. Explore Developer Deals or Promotions

If you’re buying off-plan or from a developer, ask if they:

-Guarantee valuations

-Cover valuation gaps

-Offer post-handover payment plans

This can reduce your risk of running into valuation-related surprises.

7. Walk Away from the Deal (If Necessary)

Sometimes, the deal just isn’t worth it.
If the valuation is much lower than the price and none of the other options work, it may be better to walk away and find another property that fits your budget and valuation comfortably.

 

 FAQs About Low Valuations in the UAE

Q: What happens if bank valuation is lower than purchase price by a small amount?

You can usually pay the difference in cash or try to negotiate with the seller.

Q: Can I cancel the deal if I can’t cover the shortfall?

Yes — but check if your sales agreement has an exit clause. In some cases, you may lose your deposit.

Q: How long does a bank valuation stay valid?

Typically 30 to 90 days, depending on the bank.

So, what happens if bank valuation is lower than purchase price? You’ll need to rethink your financing, negotiate with the seller, or consider other options. While this situation can be frustrating, it’s not the end of your homeownership journey.

With the right strategy — and the right advisor — you can still close the deal on your terms or find an even better property.

Unsure what to do if the bank valuation is too low?
Give us a call today, We’ll guide you through valuation appeals, alternate banks, and smart financing strategies so you can move forward confidently.