The first question on most homeowners’ minds when thinking about selling their property is usually – how much is it actually worth? The answer to this question is a little more complicated than you may think as there are quite a number of factors that influence property value, including the current market conditions, its location, the condition of the property and much more!
So how do you figure out what your asking price should be? Is the ratable value any use as a guide? And what other resources can you use to narrow down a price range? Let’s take a look at some of the easiest ways to get an idea of what your property is worth.
1. Understanding The Rateable Value (RV)
As a homeowner, one of the most easily accessible property numbers is the Rateable Value or RV. But how useful is this as a price guide, and is it even accurate? The truth is your home’s actual market value is likely to differ from the RV in the majority of cases. In fact, often relying solely on the RV can be misleading when working out how much a property is worth.
What Is The Rateable Value (RV) And How Is It Calculated?
The Rateable Value is a figure generated by your local council as a broad assessment of the value of a property. It is used to calculate how much property rates the owner needs to pay each year and is made up of three key figures: Capital Value, Land Value and the value of improvements.
The main issue with relying on the RV as a value indicator is that in New Zealand, it is common for the Rateable Value to only be updated every few years (typically 3 years). Therefore, any recent changes to your property and also current market conditions will not be reflected.
The RV calculation and its limitations are also compounded by the fact that although they do take into account the location, land size, and any consented improvements, this process does not involve an on-site inspection of each property, which is why property owners often face quite significant discrepancies between RV and the actual market value.
Market Value vs Rateable Value
The market value of your property is essentially the amount a buyer is willing to pay on sale day. This figure can fluctuate significantly and is influenced by a variety of factors including current market trends, comparable sales, the condition of the property, its location, design features, buyer sentiment and much more.
In a buyer’s market, where the market is flooded, homes are more likely to sell closer to their RV, whereas in a seller’s market, where demand exceeds supply, properties often sell well above their RV.
This makes the RV a useful starting point but not the sole determining figure you should be relying on when determining the value of your home. The market value is a more accurate indication as it takes current market conditions, buyer demand, and the unique features of your home into account.
2. Online Property Resources
Typically the first port of call for most homeowners, having a quick browse online can offer some interesting insight into property values in your area. These sites offer some quick facts and figures that may be helpful in setting your guide price, but it does pay to note they are generally based on rateable values, don’t take into consideration any recent upgrades or improvements and may be influenced by external factors that are not always entirely accurate.
- Homes.co.nz. A property appraisal website, Homes.co. nz is partnered with Trademe and provides a platform for the HomesEstimate (a regularly updated value estimate for properties in New Zealand). Keep in mind these are automatically system-generated numbers based on an algorithm and therefore do not act as an official property valuation.
- QV. New Zealand’s leading property valuation company, QV or Quotable Value, provides official online valuations and information on properties all over New Zealand. QV is a state-owned enterprise and therefore offers unbiased independent valuations, research, and other property-related services and solutions.
- Trade Me Property. Part of NZ’s biggest and most popular online auction and classifieds site, Trade Me Property is used by real estate agents and private sellers all over the country for the sale and purchase of properties. Trade Me Property is arguably the most popular property sales platform in New Zealand today.
- OneRoof. Offering a one-stop-shop approach for buyers, sellers, tenants, real estate agents and investors, OneRoof allows you to compare, research and profile property in your local area and across the country. OneRoof publishes regular resources on market prices and trends, capital growth updates, property affordability growth and general property-related news.
- Realestate.co.nz. Property sales website aimed at providing a central advertising platform for property sales and purchases across NZ. Similar to Trade Me Property.
3. Comparable Market Analysis
Probably the most reliable and accurate way to get an idea of what your property is worth, a comparable market analysis completed by a real estate professional offers insight into recent sales of similar properties within the immediate area.
Under NZ real estate laws governing real estate agents, a CMA must “realistically reflect current market conditions and be supported by comparable information on sales of similar properties in similar locations”. For this reason, CMAs will include a variety of useful information, including the asking price vs sale price, the addresses of the properties, a description, a rough idea of the floor plan (square meterage), the number of bedrooms and bathrooms, and any additional features.
CMAs are an excellent way to get an overview of the local market through an industry professional. You will find real estate professionals who work in the industry are also able to draw on their own knowledgebase built up from years of experience in the industry. However, it is important to remember this is not an exact science, only an indicative estimate using the available resources for your local property market. The information presented could also be manipulated if desired, especially if ulterior motives in pricing strategies, so always watch out for over or under-pricing (including only properties that match the desired outcome).
4. Registered Property Valuations
Property valuations in New Zealand are undertaken by registered property valuers who must be certified by the Valuers Registration Board. This ensures an independent (unbiased) assessment of the value of your property.
To get a registered valuation, you will have to purchase these services at a cost of anywhere between $1000-$2000 on average, depending on who you choose to engage and the type of property. Unless there are exceptional circumstances, the valuer will visit the property in person, inspecting both the inside and outside before finalising their valuation.
Registered Property Valuations vs Market Value
The key difference between registered property valuations and market value information is the valuation establishes the actual value of the property, while the market value helps set the home’s price tag. The key distinction here being the value is what the property is worth, whereas the market value is what you hope/expect to get for the property on sale day.
It is important to make this distinction when considering how much your home is worth – factors like location (particularly in relation to desirable schools or facilities), orientation, additional features, views and the floorplan can have a significant (and sometimes unexpected) impact on buyer demand on the open market.
Key Facts To Look For When DIY Valuing Your Home
- Rateable Value. As discussed above the RV acts as a good starting point and comparable value across different properties.
- Previous Sales Data. For this one you want to make sure you are looking at sale prices not asking prices, houses don’t always sell or what they were put on the market for.
- Property Size. The size of the section directly affects the valuation, make sure you are comparing apples with apples or at least adjusting for this variable.
- When The Property Was Built. The construction date can usually be easily found online, why is it important to know when the property was built? This just gives you more data to ensure you are looking at the right comparable properties.
- Estimated Value Range. The HomesEstimate is a great resource for this one – it helps to get a comparison figure to the RV to see how far off it is and helps with valuing nearby properties.
If you’re considering selling your property but don’t want the hassle and expense of having to deal with real estate agents and valuers, have you ever considered selling as is where is? Learn more about as is where is property sales here or give Kane a call at My New Start for a no-nonsense, no-obligation open-book appraisal of your property and what it’s worth in today’s market.
