A share has a price at every moment because identical units trade constantly. A house has no such price, which is why valuation depends on what similar properties recently achieved.
Every property is a one-off asset
No two properties are identical, since location alone differs for each, and location carries much of the value. There is nothing interchangeable to price against.
Transactions are also infrequent. A given house may sell once a decade, so there is no recent trade in the asset itself to refer to.
Valuation therefore reconstructs a price from the closest available evidence rather than observing one, which is why two competent valuers can reasonably differ.
Adjustment is where the judgement sits
A valuer selects recent sales of broadly similar properties nearby, then adjusts for differences in size, condition, layout, outlook and any feature the market prices.
Each adjustment is an estimate of what buyers would pay for that difference, drawn from patterns across many transactions rather than from any published schedule.
The fewer genuinely comparable sales exist, the larger the adjustments become, and the wider the plausible range of the final figure.
The method lags a turning market
Comparable evidence describes completed transactions, and completion typically follows agreement by weeks or months, so the data already describes the past.
In a rapidly rising market valuations trail actual prices, and in a falling one they remain above what buyers are currently prepared to pay.
This lag is why lender valuations and asking prices diverge most sharply exactly when the market is moving fastest, and why transactions fall through more often at those moments.
Lenders value for a different purpose
A mortgage valuation asks what the property would realise if the lender had to sell it, which is a more conservative question than what a motivated buyer will pay today.
That difference explains why a lender's figure can come in below an agreed price without any suggestion that the buyer overpaid in ordinary terms.
The consequence lands on the borrower, who must cover the shortfall in cash because the loan is calculated against the lower of price and valuation.
Income property uses a different anchor
Commercial and rented property is valued primarily from the income it produces, capitalised at a yield drawn from comparable investment transactions.
Comparables still appear, but they are comparable yields rather than comparable prices, and the security and length of the income stream matter as much as the building.
The two approaches can diverge substantially for the same asset, which is one reason properties sometimes sell for far more to an owner-occupier than to an investor.