Forced Sale Value
Forced Sale Value (FSV) is the estimated price a property would achieve if sold under duress — typically within a compressed timeframe (e.g. 90 days) and without the benefit of a full marketing campaign. It represents the lender's downside scenario and is commonly used by private lenders to assess LVR on property-secured loans.
Why It Matters
Banks typically lend against market value. Private and specialist lenders often lend against forced sale value because they need to know what happens if the deal goes wrong. Understanding the difference is important for borrowers because a property worth $1M at market value might have an FSV of $750K–$850K — and that lower number is what determines the maximum loan amount.
How It Works
- A registered valuer assesses the property and provides both a market value and a forced sale value estimate.
- FSV is typically 10–30% below market value, depending on the property type, location, and liquidity.
- Private lenders calculate LVR based on FSV rather than market value to protect against downside risk.
- Highly liquid property types (standard residential, inner-city apartments) have a smaller discount. Specialised or regional properties have a larger discount.
Common Use Cases
- Private lending assessments where downside protection matters
- Second mortgage LVR calculations
- Development feasibility — lenders assessing worst-case sell-down scenarios
- Receivers and insolvency practitioners valuing distressed portfolios
Related Switchboard Resources
For valuation standards, refer to the Australian Property Institute.