HOW MUCH IS MY PROPERTY WORTH?
It’s the first question on most people’s lips when they start thinking about selling their home: How much can I get for it? To get a ballpark figure, many would-be vendors start by looking at the council-issued CV (capital value) as a guide to what their property is worth.
New Auckland CVs released on March 8 are likely to have pleased some homeowners who are considering selling if they’ve gone up substantially since the last ones were issued in 2017. And anyone who paid attention to what the housing market was doing last year will know that some properties were selling way above CV. In a few cases, some houses were going for almost double.
But that’s not the case anymore, and homeowners need to exercise caution before they use the CV as a way of determining what their home
could fetch, say real estate experts from Barfoot & Thompson.
“A CV is a figure the council comes up with to set rates,” says David Kelly, manager of Barfoot & Thompson’s Epsom office. “They’re not intended to be taken as market value and don’t reflect factors such as improvements that have been carried out or school zones, for example.
“Plus, they’re outdated pretty much as soon as they come out, and Aucklanders need to remember the CVs that have just come out were actually set in the middle of last year.”
Kelly’s office has been carrying out its own in-house analysis of local sales and looking at whether CVs had any relevance to the market value of properties that have sold.
“Looking into the statistics,
sales prices are all over the place compared to CVs and we can’t see much of a correlation between them at all.
“Even for similar properties on the same street or nearby area, their sale price to CV ratios might be different.”
The best way to get an idea of what your property is likely to sell for is to get appraisals from agents who know the area, advises Kelly.
They have their fingers on the pulse and will do a CMA (comparative market analysis) that gives an estimate of a home’s value relative to comparable properties in the area. Then they’ll add to that their own experience and knowledge of the market, often combined with that of their colleagues.
“To us, property prices are more affected and determined by factors such as the current economy, market supply and demand of housing, interest rates, lending policy and buyers’ expectations on market movements,” says Kelly.
“And agents see a lot of properties, they actually go and look inside, they know what work has been done and what will appeal to buyers. In our office we have over 40 agents who share their knowledge and market insights, and as we currently have a 61% market share, that’s a lot of collective information.”
Kevin Coppins, one of Barfoot & Thompson’s top South Auckland agents, says it makes a lot of sense for vendors to tap into the expertise of agents, who know an area inside and out before setting their expectations.
“Yes, there is information that anyone can look at online but it’s not always accurate. I work in Hill Park, Manurewa, covering an area of about 1000 homes. I go into the houses, I talk to the potential buyers as well as owners and get feedback from them, and I consider multiple factors to help determine what these houses are worth in the current market.”
Coppins adds that both buyers and sellers need to bear in mind that CVs aren’t necessarily an accurate reflection of a property’s worth as they can’t take each home’s unique aspects into account.
“You can end up with situations where a really beautiful, renovated house is a great buy for a family at $1.7m, but because its CV doesn’t take into account any improvements it only comes in at $1.4m. Yet, the house next door, which has had no renovations, has a CV of $1.55m. So basically, the CV shouldn’t be taken too seriously.”
Meanwhile, sellers need to be aware that change in the market over the last few months is going to have an impact on what buyers are prepared to pay for their homes.
Kelly says there has been a shift since the end of last year, agents who did appraisals in November or December for homeowners who then held off putting their property on the market until after the summer holidays, have had to revise the figure they gave.
He says while it may be disappointing to find that your home may not get quite as much as it may have if you’d listed it before Christmas, the good news for vendors is that if they haven’t yet bought, they will be buying in the same market.
“If you are buying and selling in the same market then it doesn’t really matter because the price of what you’re buying will have also shifted.”
“ACVisa figure the council comes up with to set rates. They’re not intended to be taken as market value.”