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What is a Registered Valuation in New Zealand: A Comprehensive Guide for Property Buyers and Sellers
31 August, 2023 | Kandice Moore
Deciding what a property is worth is a particularly tricky aspect of buying and selling property in New Zealand. Whether you’re a buyer, a seller or the trustee of a family trust wanting to meet your legal and tax requirements, knowing the value of the property is vital to making good decisions.
It can seem like there’s a plethora of information online – CVs, RVs, GVs, TradeMe estimates, homes.co.nz, One Roof, Property Value, QV to name a few. If your local real estate agent is offering to provide a free market appraisal of the value of the property – why would you consider paying money for a registered valuation? In this article we’ll help walk you through what’s involved in a Registered Valuation and why you might consider getting one.
What is Registered Valuation?
A registered valuation is a professional assessment of the market value of a property carried out by a qualified and licensed valuer. A registered valuation provides an independent and unbiased assessment of the property’s value.
At a simple level, a registered valuation involves the qualified valuer completing an in-person inspection of the property, conducting a thorough market analysis and using their expertise to assess the value of the property at that particular point in time.
A full valuation report is provided, along with the estimated value of the property.
Why would you get a registered valuation?
A registered valuation can help you price the property for sale. It provides vendors with an accurate representation of their property’s value in terms of what they could expect to receive for the sale of the property and means that they can ensure that their property is reasonably priced to sell.
Some sellers provide potential purchasers with a copy of the registered valuation to show that the price they are asking for is fair.
(In this situation we would recommend that potential purchasers still consider whether they would want to get their own valuation done)
Assessing the value of a property is no easy feat. The market is constantly changing, online options such as RV/CVs and online evaluation services are providing estimates based on limited information with no in-person inspection. A registered valuation provides potential purchasers with a good, independent idea of how much to offer for a property.
When negotiating with the buyer or seller, you can use the valuation to prove that your offer is reasonable for that particular property in that market.
If you are purchasing a property off a friend or family member, or as part of a relationship property division, a registered valuation gives the benefit of independence, fairness and transparency. As a valuation provides an impartial, objective assessment this means that all parties have a clear understanding of the property’s worth and minimises the chances of disputes and disagreements.
Legitimisation for family trusts
Where family trusts are buying or selling property, a registered valuation may be needed:
- to avoid tax penalties,
- to prevent conflicts,
- for compliance and reporting purposes
- to meet the trustees’ fiduciary obligations
Many banks require a registered valuation as a condition of finance. This is particularly true for first home buyers or those borrowing with a low loan-to-value-ratio (LVR).
It is important to note that some banks require you to use specific registered valuers for the assessment and will not accept registered valuations from other valuers (even if they are registered valuers).
If a registered valuation is required as part of your lending criteria, it is critical that you include a finance condition in your offer, or if buying at auction – have completed the valuation prior to auction day.
As soon as you are made aware by your broker or banker that a valuation is required, you should enquire as to whether there are any restrictions as to who can complete the valuation, and then do research to find out how long it will take to get a valuation done from the time you first request it. This will be important information to know when deciding how long to allow for your finance condition to be met. In most cases now, banks will order the valuation on your behalf through one of the two ordering systems (Valocity or Corelogic).
Limitations of registered valuations
At the end of the day, a property is only worth what someone is willing to pay for it. Someone who really loves a property may pay over the odds, if there are limited buyers for an amazing property.
Valuations can sometimes be subjective, as they depend on the valuer’s expertise and judgment. It’s important to choose a reputable and experienced valuer to ensure an accurate assessment.
Property values can fluctuate rapidly due to changing market conditions. A valuation report represents the property’s value at a specific point in time and may not accurately reflect future changes.
There is a cost associated with obtaining a registered valuation. However, the benefits of having an accurate estimate of property value can sometimes outweigh the expense.
The cost of a valuation can be based on, but not limited to:
- The location of the property
- The complexity of the home’s design, layout, size and features – and therefore the amount of time to complete the inspection.
- Whether the property has the potential to be subdivided or has hazards such as flooding or land slip
- The urgency of the job (sometimes valuers will conduct their appraisal faster for an additional fee)
- How in demand the valuers are at the time
- The experience and reputation of the valuer
As of 2023 we have seen property valuations cost from $800 plus GST for the more straight-forward assessments.
The Valuation Process
The registered valuation process involves several key steps:
Both buyers and sellers can engage a registered valuer to conduct a property valuation. You should choose a qualified valuer who has experience in valuing properties in the relevant area.
The valuer visits the property to assess its physical condition, size, layout, quality of chattels and fit-out, and any unique features of the home (for example being architecturally designed). This on-site inspection provides the valuer with first-hand information necessary for an accurate assessment.
The valuer conducts extensive research on recent sales of similar properties in the vicinity. This comparative market analysis helps determine how the property being valued compares to others in terms of value.
Based on the property inspection and market research, the valuer compiles a detailed valuation report. This report includes information about the property, its attributes, the valuer’s analysis, and the final estimated value. This is usually emailed to the client who has requested the valuation. The client can then send the valuation on to the bank if required, discuss with the real estate agent if selling or use it during the negotiation process if the client wishes to do so. The valuer will not disclose the valuation to anyone other than the client unless specifically authorised to by the client.
This valuation takes into account various factors such as:
- Size & layout, such as number of bedrooms, bathrooms etc;
- Condition of the property, taking into account age, maintenance & required repairs;
- Chattels and interiors – the quality of the appliances, carpeting, window treatments etc. Specific additions the property has such as heat pumps, HRV systems, air conditioning, underfloor heating, wired home theatre systems, spa pools etc;
- Recent sales of comparable properties in the area;
- Prevailing market trends, both nationally and in the local area, including supply and demand dynamics, interest rates, length of time to sell property;
- Location: The property’s proximity to amenities, schools, public transportation, and employment hubs can significantly impact its value; and
- Development Potential: If the property has potential for further development or improvements, this can impact its valuation.
Who can complete a registered valuation? Why are they qualified?
In New Zealand, registered valuers are professionals who are regulated by the Valuers Act 1948. This legislation outlines the requirements for practicing as a valuer, sets standards for professional conduct, and provides a framework for addressing complaints against valuers.
A registered valuer must have completed an accredited qualification (usually a bachelor level degree such as Bachelor of Property or a Bachelor of Business (Property)), or a post graduate qualification such as a Graduate Diploma in Valuation or Rural Valuation. They are required to be members of a professional regulation body such the New Zealand Institute of Valuers (NZIV) or the Property Institute of New Zealand (PINZ). These organizations ensure that their members adhere to professional standards and ethics in conducting valuations.
Navigating the intricate world of property transactions can be a daunting journey, but you don’t have to embark on it alone. Our dedicated property team at Smith and Partners is here to guide you every step of the way. Whether you’re considering selling your cherished home or embarking on a new chapter with a property purchase, our experienced professionals are poised to offer the knowledge, expertise, and personalized attention you need.
And if you need a recommendation for a registered valuer you can trust, we can provide you with the contact details for the valuers we know and recommend. Contact Kandice Reilly now and set your property aspirations on the path to reality.
09 837 6884