The Registered Property Valuation Guide
Whether you are selling or buying a house, using a property valuer can be invaluable when working out the market value. Do you just need to know where to find a property valuer? Or are you wondering how they come up with the market value? Before you get a property valuer, here is all you need to know about registered property valuations and valuers.
What is a registered property valuation of a house?
Need to get a registered valuer? Who are registered valuers?
How does the valuer work out the market value of a house?
My bank wants a valuation - why?
How much will a registered property valuation cost?
Where can I find a valuer?
Questions to help you find the right property valuer
A property valuation as a condition of sale
What is a registered property valuation of a house?
This is an assessment of the market worth of a property that is done by a registered valuer.
A property valuation is also known as a:
- House valuation
- Registered valuation
- Valuation
A property valuation can be done for a number of reasons including:
- To work out how much you should pay for a house
- To work out how much a house is worth when selling
- As part of a mortgage application
- As part of a refinancing application
You are most likely to need to get a valuation when you have had an offer accepted on a house, and you need finance (a mortgage). Most banks will require a property valuation done by a registered valuer as part of a finance application.
Need to get a registered valuer? Who are registered valuers?
Registered valuers are qualified valuation professionals that work out the value of land and buildings for use in activities including sales, purchases, mortgage finance, refinancing, and insuring. A valuer will have a formal qualification in property with a specialisation in valuation, and will have completed a number of years of work experience before becoming registered. Valuers are also required to have ongoing education and training.
An in-depth knowledge of the real estate market is essential for a property valuer. They will also be knowledgeable about building methods, styles and materials and have an understanding of engineering and architecture. Valuers will also keep up-to-date with local district plans be familiar with the Resource Management Act and other relevant legislation and regulations like the Building Code.
A valuer is usually not an expert in building and engineering matters, but can identify problems. Something spotted by a valuer will need to be investigated by the relevant professional.
Registered valuers are the only people that banks will accept an assessment of a property's market value from.
How does the valuer work out the market value of a house?
A property valuer combines all their knowledge and experience with their observations and research undertaken of the property and its surrounding area, and comes up with a market value.
A property valuer will:
- Inspect the house inside and out.
- Measure the dimensions of the house and rooms.
- Note the building construction type and the materials used.
- Estimate or find out the age of the house.
- Rate the condition of the house.
- Inspect the house inside including looking at walls, floors, ceilings, doors, design features, natural and artificial light, ventilation, exterior cladding, the roof, guttering, and fencing.
- Take into account outstanding maintenance.
- Measure garages and note car parking and access.
- Inspect the site noting any issues such as flooding, drainage, and subsidence.
- Check out the immediate neighbours, the street, and the local area - and will note positives and negatives.
- Work out the distance to the centre of town and look at the convenience of public transport.
- Refer to the district plan and note the present use of the property in relation to its zoning.
- Take into account the type of title.
- Collect data about recent sales that can be used to value the property.
- Make an assessment of marketability based on their observations.
- Take into account the current state of the real estate market for that type of house in that area.
- Prepare a written report.
The valuation is not guesswork! A lot of analysis goes into a valuation report. A property valuer has to be confident that they are right, as people depend on their assessment and, legally, they can be held responsible if they get it wrong.
Your bank wants an impartial, independent expert opinion on the value of the house. They are about to lend you a large amount of money and if circumstances change for the worse they want to make sure they will get their money back. The Valuers Act 1948 ensures that a valuation done by a registered valuer can be relied on.Registered valuations of houses are one of the ways banks work out how much money they are prepared to lend you. Sometimes they will use the rateable value and often the purchase price. If in doubt, a bank will come back to a registered valuation every time.
My bank wants a valuation - why?
Your bank wants an impartial, independent expert opinion on the value of the house. They are about to lend you a large amount of money and if circumstances change for the worse they want to make sure they will get their money back. The Valuers Act 1948 ensures that a valuation done by a registered valuer can be relied on.
Registered valuations are one of the ways banks work out how much money they are prepared to lend you. Sometimes they will use the rateable value and often the purchase price. If in doubt, a bank will come back to a registered valuation every time.
How much will a property valuation cost?
Costs for a valuation can vary and often depend on many things including size of the property, as well as location. The cost of a valuation is usually in the range $500-$800.
Most often the most expensive property to value will be an unusual one - it may not be big or grand, just unique. Valuers rely heavily on comparable sales data to base their conclusions of market value on. If a house is unusual and therefore has very little comparable sales data, this makes the house difficult to value. A valuation can still be done but can often take time; this is when the costs can increase.
Where can I find a valuer?
The yellow pages are a good place to start. The majority of valuers are listed in the yellow pages. The listings include individuals and companies as many valuers work for themselves, but many do work for larger valuation companies.
You can also go to the Property Institute of New Zealand (PINZ) website. Here you can find a list of registered valuers in your area.
If you need to get a valuer, these are good places to start. Recommendations from friends are also a valid. But do not use recommendations from your real estate agent for a valuer! Your real estate agent is not independent from the process so it is best to avoid them as a source of valuer recommendations.
When you have a list of valuers you can call, use the list of questions in the 'questions to help you find the right property valuer' section to help get a valuer who is best suited for you, and the property you want valued.
Questions to help you find the right property valuer
In addition to asking to see a sample report, here are some questions to ask your prospective valuer:
Q: Do they normally do residential work, and if so what experience do they have?
A: You will get the best degree of accuracy with the valuation if you can choose a valuer with experience with the type of property you need valued. Some valuers specialise in commercial or rural properties.
Q: How well do they know the area of the property?
A: A familiarity with the area will give the valuation a higher degree of accuracy.
Q: Do they fully inspect the property (measure the size of the property, report any defects, etc)?
A: You should expect this from your valuer.
Q: When can you expect their report? And how will it be delivered?
A: The valuer should be very clear on the timelines for their reports. Most valuers will be able to provide a report within 4 days. If it is urgent, these requests can often be accommodated. You will need an original paper copy of the report sent to you (this is the only thing that your bank will accept). Getting a pdf version of the report also is great as it is convenient and fast.
Q: Do they have any alliance or association with any of the parties involved?
A: Valuers have a responsibility to disclose information that could be considered to affect their ability to provide an unbiased report. If there is a close conflict of interest, the valuer should refer you on.
Q: Do they hold professional indemnity insurance?
A: Your valuer must be insured.
Q: Are they available to discuss the report once completed (for example if you have any questions)?
A: All valuers should be willing to go through the report findings with you and back up any findings.
A property valuation as a condition of sale
If you want to get a registered property valuation as a condition of sale, you need to state this in your sale and purchase agreement, stating specifically that the valuation be satisfactory to you. A property valuation usually takes 2 - 4 days to complete so you should allow yourself at least 5 days for satisfying your conditions. This will give you time to get your property valuation organised, completed and sent to all relevant parties i.e. your bank or lender.
