Who knows how to value a house?
Of course the real question is not who knows how to value a house, but how do they place a value on a house.
The reality is that the value of a house is what a willing buyer is prepared to pay for the house at any point in time and that can depend on a number of factors which might include the local economy, confidence in the market and number of properties on the market at that particular point in time.
Sometimes it is a sellers market – it is easy to sell houses as there is a high demand from buyers.
Other times it is a buyers market – lots of houses for sale and not too many buyers.
Rates or Council Valuations
These valuations are done for the Council’s so they can levy property owners for rates, which effectively is the Council’s main income used to fund the services they provide for the towns and cities of New Zealand.
The Auckland Council has just released the new 2017 valuations and as a mortgage broker we are already seeing that they are quite different to the market values in many instances, but they can also be used to establish the value of a security for the banks; hence have been useful.
There are lots of people that are not happy with their council valuations, but as always we expect very few will actually do anything about this.
Online Tools
We live in a World where there are online tools and Apps for almost everything, and property valuations are no exception.
As mortgage brokers we have access to online valuations and at times the banks will be happy to use them too; however they are not always accurate so they need to be used with care.
The online valuations are purely statistically based using past sales data to determine the values of similar sized houses and sections within the same local area. Issues arise for a number of reasons including the various outlooks (inner versus coastal), the contours, conditions of the houses etc…
To get a more formal online valuation we can access e-values which cost $49.95 and some banks will be happy to use.
Using Property Valuers
There are a lot of “professionals” who are qualified to value a house, but in property markets like we have in Auckland at present even they are finding it difficult. Property valuers will claim their teams of qualified and experienced registered valuers around the country will help you establish the market value of a property and to complete due diligence, providing your financiers with the right numbers and you with piece of mind.
The advantage of having a registered valuation completed is the accuracy and the fact that the valuers are insured. Being insured in itself does not guarantee the quality of the valuers reports, but it does mean the banks and other lenders have some recourse if the valuer makes a mistake or is fraudulent.
Real Estate Agents Value A House For The Market
Most real estate agents presume they know what a house will sell for and can even product data to back up what they deem to be the value.
The issue with some real estate agents is they will say what you want to hear so they get to list your property for sale and therefore you end up hearing the wrong information. I guess in their defense they are trying to make a sale and it is easier to keep it friendly and agree than enter into a debate over the value of your property.
When serious about selling your house, real estate agents may promote different methods like auctions, by negotiation, tenders, set date of sale and others rather than putting a price or perceived value on your house. This works in a bullish market and this way they hope to find buyers willing to pay the most for your property.
Your Own Research & Gut Feel
Sometimes your opinion will be better than anything else – especially if you are buying a house as a home.
If you are prepared to research and go to view the houses for sale in your area you will quite quickly get a concept of the property values. Be careful not to focus too much on the asking prices as it is the actual sale prices that really matter.
With Auckland property you may find that the prices are harder to establish as good properties are being snapped up fast, but in other parts of the country you want to try to also gauge how long a property has been on the market and the reason for the sale – if possible. Someone who is buying and selling on the same market is not too concerned about the values as long as it is the difference in values between the property they are selling and property they are buying that really matters most.
