Buy­ing? Get a val­u­a­tion

Manawatu Standard - Property Weekly - - Property Weekly - By Emma Good­win

If you’re spend­ing hun­dreds of thou­sands of dol­lars on a prop­erty, it pays to get a mar­ket val­u­a­tion. That’s the ad­vice of Paul van Velthooven, man­ag­ing di­rec­tor of Mor­gans Prop­erty Ad­vi­sors. A val­u­a­tion can save you time, money and prop­erty headaches down the track.

Mr Van Velthooven says that when peo­ple buy a car they of­ten have it in­spected – to en­sure that all is well with the ve­hi­cle. But para­dox­i­cally, they some­times balk at pay­ing a few hun­dred dol­lars for a val­u­a­tion of the home they are about to buy.

‘‘When you are in­vest­ing hun­dreds of thou­sands of dol­lars, it makes sense to en­sure you are pay­ing the right price,’’ Mr Van Velthooven says.

Many banks won’t raise a mort­gage with­out a mar­ket val­u­a­tion. This means that if you’re re­ally keen on a prop­erty, a mar­ket val­u­a­tion is of­ten a must.

‘‘When the real es­tate mar­ket goes up, banks are happy to lend. But when the mar­ket goes down, the banks want a reg­is­tered val­u­a­tion to en­sure their in­vest­ment is safe – like any pru­dent lender would.’’

A val­u­a­tion is a pro­fes­sional as­sess­ment of how much your prop­erty is worth. A val­uer will in­spect the prop­erty, con­sider all the fac­tors that af­fect its value, and write up a pro­fes­sional prop­erty re­port and val­u­a­tion.

There can be a sig­nif­i­cant dif­fer­ence be­tween the reg­is­tered val­u­a­tion (RV) that is on your rates in­voice and a val­u­a­tion from a reg­is­tered prop­erty val­uer.

‘‘The RV is a com­puter-as­sisted value, which is used for rat­ing pur­poses. It’s func­tion is to ap­por­tion rates among prop­er­ties. It re­ally is a tool for coun­cils.’’

In the real es­tate mar­ket, one could ar­gue that, be­cause of the mo­bil­ity of the mar­ket, an RV is out of date as soon as it is pro­duced. In other words, a rat­ing value is no more than a mea­sure of a prop­erty’s value at the date of the last reval­u­a­tion.

Mr van Velthooven says an in­di­vid­ual prop­erty val­u­a­tion is more spe­cific and up to date.

‘‘If you have up­graded your house in any way, the up­grade may not be taken into con­sid­er­a­tion by QV for your RV if there has been no build­ing per­mit in­volved.’’

Val­uers look at the con­di­tion of the prop­erty, the lo­ca­tion of the prop­erty, and re­cent sales in the area, and de­liver an in­de­pen­dent val­u­a­tion.

As pro­fes­sion­als, val­uers must meet rig­or­ous tests of ed­u­ca­tion, train­ing and com­pe­tence, and fol­low a pro­fes­sional code of prac­tice. That’s be­cause there could be le­gal ram­i­fi­ca­tions if they get it wrong.

This fac­tor also un­der­lines the dif­fer­ence be­tween a val­u­a­tion by a reg­is­tered val­uer and an ap­praisal by a real es­tate agent.

‘‘A real es­tate agent’s ap­praisal is not recog­nised by lend­ing in­sti­tu­tions and is not recog­nised in a court of law,’’ Mr van Velthooven says.

He rec­om­mends buy­ers have a prop­erty val­ued be­fore they make an of­fer.

Some­times, peo­ple make an of­fer and then go to the bank with an ap­pli­ca­tion for a loan, which is then re­jected.

‘‘Make an of­fer con­di­tional on a val­u­a­tion. Then, if the val­u­a­tion doesn’t match [your ex­pec­ta­tions], you can rene­go­ti­ate.’’

Prop­erty agent Gill Welch ad­vises her ven­dors to get a val­u­a­tion or to speak to some­one at QV, to make sure their val­u­a­tion is ac­cu­rate, be­fore putting their prop­erty on the mar­ket.

‘‘That way, they know they are get­ting an up-to-date as­sess­ment of their prop­erty’s value and can mar­ket it ac­cord­ingly,’’ Mrs Welch says.

‘‘The RV is not an ac­cu­rate as­sess­ment of sale price.

‘‘A real es­tate agent gives an ap­praisal, and a val­uer gives an in­depth, in­de­pen­dent and ob­jec­tive as­sess­ment.’’

Price es­ti­ma­tion time: If you have re­dec­o­rated your prop­erty, you may need a reg­is­tered val­u­a­tion to re­veal its true value on the mar­ket.

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