Posts Tagged ‘Market Value’
The Rateable Value of a house (or RV) is often quoted in the advertising for a house for sale - the suggestion is that it provides some kind of indication of the market value of the house - but does it?
What is the RV?
The RV is the rateable value or the 'value' of a house set by the local authority for the purpose of determining and allocating rates. The RV is also sometimes known as the government valuation (GV) or capital value (CV).
Why is the Rateable Value Quoted in House Adverts
Real estate agents often mention the RV in advertising, most often this is because people like to know the rateable value! But sometimes it is because the real estate agent or home owner feels that the RV is a good indication of the market value of the house. The RV's relationship to the market value of the house is ultimately up to you to decide, here are some things to consider:
Rateable Value v Price
The rateable value doesn't usually take into account anything that makes a property better or worse than others in the area, for example condition of the house and land, chattels included, landscaping improvements, and so on. Sometimes the RV is a good rough-guide of value but other times it is completely irrelevant.
An RV can be very out of date! RV's are done at least every 3 years - this can be a long time in the property market. Check the date of the rateable value - it may be 2+ years old - and not relevant in the current market.
Should I Use The RV as a Price Guide?
As a rule, you should only use the rateable value in combination with other information, like your own experience or a registered property valuation. If you are looking for the rateable value of a house - you can find out rateable value information on your local council's website for free.
Property Valuation and Rateable Values
One last thing! A registered property valuation done by a registered valuer is not a rateable value or a RV, and a registered valuation should not be referred to as an RV. To find a registered valuer - visit Property Valuation NZ.
The Propertytoolbox Home Buyers Guide
This information about the RV as a price guide was from the resources section of Property Valuation NZ – the home of the property valuer profile – making it easy for you to make a good decision when choosing a local property valuer.
A property valuer combines all their knowledge and experience with their observations and research undertaken on the a 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.
Valuers can also help you out with estimations of what a house could be worth after planned renovations. You can provide a Valuer with a brief of your plans and they can give you a post renovation estimate of worth that can help you work out if an investment in renovations is worth it.
The house you are interested in may be marketed with or without a price - the only thing the price indicates is the vendor's expectations. Whether these expectations are realistic, is for you to decide. You may think you have a good idea of what a house is worth, but it never hurts to do a bit more research.
If you want to get the experts in, a registered property valuation can be done and costs from $500. If there have been some sales in the area that you think were comparable, ring the listing agent. If the sales are now unconditional agents should be happy to tell you what the sale prices were.
If you want reliable house sale information Quotable Value (QV) has some great online resources - some of the information available on this site is free to access.
We recommend you buy a recent or local sales report from QV as these reports will give you the addresses of a number of recent sales near your chosen address.
Take the report and go for a drive, note the differences you can see between the houses. Take into account, location, street appeal, exterior presentation and building type. The reports will give you floor area, age, rateable value, sale price and sale date, and you can use all this information to compare houses and to make up your mind about price.
The online 'valuer' reports do not give an accurate enough estimate of market value to be relied on, but they can be useful as they contain an 'all you need to know' range of information about a house which includes comparable sales, sales history and more.
Sometimes the rateable value (government valuation of the house) has a strong relationship with price for an area i.e. in Palmerston North, in February 09, houses were selling within 1% of their rateable value. In areas like these, the rateable value can give you a good idea of price. But you should only use the rateable value in combination with other information, like your own experience or a registered valuation. You can find out rateable value information on your local council's website for free.
Before settling on a price, make sure you have done a second inspection and checked around the house again, as you may have missed something that significantly affects the value. Here is our second inspection checklist to help you out.