not all values are created equal
The confusion surrounding the seemingly endless array of property valuation types is not surprising. We keep hearing terms like Rating Values, Capital Values, Government Values, E-Valuer and Full Current Market Values, and their accuracy in determining value. In this article we discuss the purpose and differences between the three main types of valuation in New Zealand; Rating Values (RV) and E-Valuer and Full Current Market Valuation.
Rating Values
The primary purpose of a Rating Value is to apportion the rates payable by property owners to their respective Councils. It was historically called a Government Valuation (GV) before the industry was deregulated in 1998, and is also sometimes referred to as the Capital Value (CV).
The calculation of Rating Values and how they impact on the rates is a complex process which can vary by council. Rating Values are calculated using mass-appraisal techniques supplemented with kerbside inspections and random internal inspections. This method of mass-appraisal gives a good indication of general property values and is cost-effective and appropriate for Councils purpose of allocating rates. Building consents or sub-divisions will also result in the Rating Values being re-assessed. When you receive your Rating Valuation notice there is a period of time where you can object to the valuation by supplying evidence to support why you believe the valuation is too high or too low.
A thorn in the side for many people is when their recent Rating Value notice shows an increase in value, whilst property analysts across the country are currently screaming; "DOWNTURN!!". Generally speaking, this is because the downturn has occurred in the recent past (around 12 months), whereas the increase in value is over a full 3-year period. How quickly we forget the extensive growth which preceded the current comparatively smaller downturn.
You can access rating valuations for every property in New Zealand from QV.co.nz.
Rating Values and Real Estate marketing
Over time RVs have become utilised as property marketing tools, a role which the poor little RV never intended to fulfil. It is constantly being stretched between measuring capital gain, and the home-owner not wanting to contribute more than their fair share to the rate pool. Fundamentally, an RV is an indicative value snapshot in time. Yes, it easily goes out of date in a fickle market, but all properties in the same Council are on an even keel with the same effective date.
Updating your Rating Value is easy
So, you're selling (or re-mortgaging), and your RV does not yet accurately reflect the Italian marble you put in with your bathroom renovations. Introducing, the urgent Rating Value update service. This service is offered by the valuation service provider to your Council as part of the Rating Valuation Act (1998). For around $200, a valuer will come and inspect your property and, if appropriate, issue an amended RV. This value will still be calculated as at the effective date of your Council's last revaluation, but it will reflect value-adding improvements. Contact your Council to find out who their valuation service provider is (or refer to your last Notice of Rating Valuation); you can then contact the service provider directly in order to request an urgent RV update.
To gain a better understanding of the process for calculating Rating Values and their purpose read Rating Values in Context.
E-Valuer (Instant estimates of market value)
E-Valuer is an automated tool that provides you with a cost effective instant estimate of a property's current market value. An E-Valuer estimates the current market value of a property by identifying recent sales of other properties in the area that are considered “comparable” based on a range of dynamic criteria. These comparable sales provide a good indication of what similar properties are selling for in the area. At only $39.95 E-Valuer provides an easy and cost effective way to estmate a property’s current value.
Go to QV.co.nz to access more information about the E-Valuer and purchase a report.
Full Current Market Valuation
Full current Market Valuations (also known as Market Valuations) are completed by Registered Valuers who are independent and professionally trained experts within the property field. Full Current Market valuations represent the most comprehensive analysis of the current value of a property. The valuer will utilise the most recent sales data available, as well as use their professional judgment to consider any factors that may have changed since those sales occurred and arrive at a final value.
While a Full Current Market Valuation may represent a substantial upfront cost, it is nothing compared to the potential cost of making a poor or uninformed property decision. Buying or selling a property is a big emotional and financial decision, and apart from anything, a Market Valuation can provide you with peace of mind. If you are about to make an important property decision, make sure you do your homework (especially in this market). Otherwise, let a valuer do it for you; you will be in good hands. QV provides Market Valuations throughout New Zealand. To find out more about Full Current Market Valuations call us on 0800 16 44 44 or go to QV.co.nz.