Valuers are optimistic that tighter mortgage lending standards will hasten the decline of "drive-by" valuations - a practice they say is good for neither borrower nor lender, especially in markets where prices are stagnant or falling.

Lenders' increased focus on credit risk, because of the US subprime mortgage crisis and resulting global credit crunch, means kerbside valuations - which came into use amid the property boom - are falling out of favour, valuers say.

This return to full and independent valuations coincides with lenders' moves to tighten other lending criteria, such as the size of deposit, as reported recently by Money.

The president of the NSW branch of the Australian Property Institute, Chris Egan, says lenders have used drive-by valuations as a cost-cutting measure in recent years.

A full valuation would be required when a borrower had a riskier loan-to-value ratio (that is, a smaller deposit) but they might rely on a quick valuation - or none at all - if there was clearly sufficient equity to ensure they'd get their money back if a loan went into default and the property had to be sold.

Lenders were able to take comfort from the fact house prices were rising.

These kerbside valuations might be carried out by bank staff or an independent valuer prepared to go along with the practice. Egan says his firm doesn't conduct such valuations and the industry generally has opposed them.

"What's changed since the 1980s is if there's been a bigger deposit the bank may have required a lesser inspection, and the valuation may have been a drive-by," Egan says. "Over the past five years, values were increasing across the board and banks' default rates were low.

"But in the past six to 12 months the market's been changing - it's faltering, or at least stagnating, in some areas."

Egan says some borrowers may have mistakenly taken comfort from the fact their loan had passed the valuation hurdle, without knowing whether a full valuation or a drive-by assessment had been involved.

He says lenders that have maintained valuation standards will be best placed to ride out a rise in problem loans in tougher times. "That's when the banks that have kept up their standard of valuations will come to the fore," he says.

Greville Pabst, chief executive of Melbourne property services and valuations company WBP Property Group, says most lenders take a cautious approach.

"It's their risk and the credit departments of major banks are pretty tight at the moment," Pabst says. "They're looking at valuations a lot more closely."

Egan says property buyers should insist on a full valuation and perhaps even obtain their own report, independently of the bank.

"The valuation is by the bank's valuer, but at the end of the day consumers see that the bank's got a valuation and think they can base their decisions on that," he says. "If it's a drive-by valuation - and they haven't been told what level of valuation it is - then they shouldn't be basing any decision on purchase or sale on anything except a full valuation."

Sellers should consider getting valuation reports so they can price accurately, he says.

Pabst says, on the flip side, a valuation will help buyers avoid paying too much.

"We are seeing properties staying on the market if they're not priced well. In a buyer's market, people research and know what they can get for their dollars," Egan says.

As for buyers, Pabst says they should remember that a real estate agent is acting for the vendor and isn't legally liable for any price guidance they may provide. A licensed valuer, on the other hand, must base the figures on hard evidence and can be sued.

In Melbourne, probably 60 per cent of sales are by private treaty, Pabst says, so "how does one know what the true property value is?"

"I can't believe that people make the biggest investment of their lives and don't seek any independent advice beforehand," he says. "When you buy a car in Victoria they get a mechanic to look over the car but people will put their hand up at an auction to pay $500,000 [for a house] and it's just guesswork.

"We believe we can save consumers a fair bit of money - particularly when they're buying off the plan."

Robert Hecek, managing director of Sydney's ValueCorp and Egan's vice-president, says some property investors are using valuation reports as ammunition when negotiating on price.

The footy test

Lenders and borrowers tend to look at valuations from completely different perspectives, valuers say.

Lenders aren't asking valuers to nominate the best price you'll get for your house but what's the worst case if there's a forced sale.

"The general test is, if it's a cold, wintry Saturday morning and the home football team is playing away, and the bank puts a red flag outside a property, we as valuers need to be sure we're going to get a realisation of our valuation," says WBP Property Group's chief executive, Greville Pabst.

The valuation process starts with a physical inspection of the property. Measurements are taken and the number and type of rooms noted, along with fixtures, fittings and improvements. Factors such as planning restrictions are also considered.

ValueCorp's Robert Hecek says the valuer also looks for things such as unapproved alterations or shoddy workmanship. "A drive-by would miss all of that," he says.

The valuer then uses one of a few comparison methods to come up with a value range. Direct comparison with other similar properties is the usual method for residential property.