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Topic # 183651 25-Oct-2015 12:43
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I'm buying a house, and mortgage hinges on a full registered valuation coming out at least as high as my offer.

Excluding Auckland, is a valuation generally likely to come out higher than the GV?

In my case the GV is 10% higher than the agreed purchase price.

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  Reply # 1413470 25-Oct-2015 13:07
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No way to really tell. Is it a market valuation? Possibly ask some agents which are known to over values the price on houses, compared to others. Usually it is good to get a local value who is aware of local markets, but I'd you are in a depressed area, then a valuer from outside the area who may value it higher, maybe better. But agents should be able to help you. You can get big variances with the value that they put on houses, especially if the house isn't you bog standard house so you may need a couple.

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  Reply # 1413497 25-Oct-2015 13:45

It is important to realise any valuation is an approximation at one point in time. The true value of a property is what the market is willing to pay when you want/need to sell.

GV (aka rateable valuation) is a coarse approximation. Think of it as a valuation based on external metadata. Most notably it does not take into account the inside of the house and it is static (the accuracy can depend hugely on how old the GV is).

Registered Valuations are generally more thorough approximations but they depend on subjectivity/competency of human beings.

There are too many factors to say outright where the chips will fall.

You should think about what you are trying to achieve and mattwnz's advice is good re external or local valuer. Personally if someone is shining a turd I'd want to know up front - I'd go for a local valuer with a proven track record in the area.


 
 
 
 


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  Reply # 1413523 25-Oct-2015 14:40
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In our experience the valuer has asked us what we have offered, gone off to do their thing and come in at just above the number. Are we bang on? 

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  Reply # 1413526 25-Oct-2015 15:06
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RV (rateable value) valuations do not include the condition of the property, the decor, the landscaping, etc. These are all things that differentiate houses and, as we're regularly told on TV shows, can add (or subtract) significant value. So it is to be expected that MV (market value) will usually be higher than RV, and even if the RV were 100% accurate, the MV would still be higher.

Advertisers/vendors usually only show the RV if it indicates the MV.

The purpose of a property valuation will affect the valuer's estimate because the intended use (buy, sell, renovate, insure, rate, etc.) will attribute different values to some features of the property.

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  Reply # 1413527 25-Oct-2015 15:16
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kingjj: In our experience the valuer has asked us what we have offered, gone off to do their thing and come in at just above the number. Are we bang on? 

 

That doesn't sound right. I believe it should be totally independent of who is commissioning the valuation. Reminds me of those finance companies that were building apartments prior to the financial crisis, which were way overvalued by valuers.

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  Reply # 1413529 25-Oct-2015 15:21
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Hammerer: RV (rateable value) valuations do not include the condition of the property, the decor, the landscaping, etc. These are all things that differentiate houses and, as we're regularly told on TV shows, can add (or subtract) significant value. So it is to be expected that MV (market value) will usually be higher than RV, and even if the RV were 100% accurate, the MV would still be higher.

Advertisers/vendors usually only show the RV if it indicates the MV.

The purpose of a property valuation will affect the valuer's estimate because the intended use (buy, sell, renovate, insure, rate, etc.) will attribute different values to some features of the property.


I believe the RV presumes that the house should have been kept well maintained. This is why a poorly maintained average house will often sell for a less than the RV, at least in areas outside auckland. But the RV often won't look at things like whether it has been architecturally designed, and has premium finished and fittings, and a premium design. The age of the house also will negatively affect the value. So if have a 50's house, and you have an extension added in the 90's the RV will still price the house based on it being a 1950's house. The RV is still however what is considered to be the market value of the house, if it is an average house. The RV is also the price that the government / councils may buy the house back from you at, if they need to buy it back. eg The christchurch earthquake, the government purchased some houses back at the previous RV, which left many people out of pocket after they hadn't had their RV updated to reflect changes they had made.

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  Reply # 1413534 25-Oct-2015 15:29
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For RV they don't survey the property so they don't know the actual condition particularly for the interior or any other enclosed areas of the property.

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  Reply # 1413537 25-Oct-2015 15:34
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Hammerer: For RV they don't survey the property so they don't know the actual condition particularly for the interior or any other enclosed areas of the property.

 

Not unless you object to the RV, and many people these days will object if they are wanting to sell in the near future. So in that case QV send someone out to look at it (free unless you want it doing quickly)), and from my experience they can adjust the value a lot. Other people don't bother, because the lower the RV, the less rates you pay.

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  Reply # 1413541 25-Oct-2015 15:45
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mattwnz:
kingjj: In our experience the valuer has asked us what we have offered, gone off to do their thing and come in at just above the number. Are we bang on? 

That doesn't sound right. I believe it should be totally independent of who is commissioning the valuation. Reminds me of those finance companies that were building apartments prior to the financial crisis, which were way overvalued by valuers.


unfortunately no. well, yes and no, but, no.

you see, the agent sets the price based on comparing the property with other comparable properties. then there is a margin, a percentage of "give", a range.

so the valuer just puts his signature down and takes your money. a lot of your money.

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  Reply # 1413552 25-Oct-2015 16:24
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Alas QV didn't when we bought our current house, agreed price was 375 but valuer placed the value at 350 even though it was purely cosmetic the issues with it.  Still, now worth over 800 in this highly volatile Auckland market.

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  Reply # 1413912 26-Oct-2015 12:29
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In order to get over the 20% point when shifting banks our valuer (cost covered by bank) knew what figure we needed and put his optimistic hat on.






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  Reply # 1414041 26-Oct-2015 17:13
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The bank is the one requesting the valuation, yet I have to pay ~$600, and they organise it using their valuer... I probably won't even get provided a copy.

I was told if the valuation comes under the agreed price its "big trouble", but I didn't ask what "big trouble" meant exactly.

If it means bank will still do mortgage at ratio of 80% of valuation, but I just need 100% cash over that figure, then this would be no issue unless something silly like 30% under GV.

I also am not sure whether the cost will be sucked out of my account immediately or whether it gets tagged onto the mortgage?

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  Reply # 1414258 27-Oct-2015 00:50
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Geese: The bank is the one requesting the valuation, yet I have to pay ~$600, and they organise it using their valuer... I probably won't even get provided a copy.

I was told if the valuation comes under the agreed price its "big trouble", but I didn't ask what "big trouble" meant exactly.

If it means bank will still do mortgage at ratio of 80% of valuation, but I just need 100% cash over that figure, then this would be no issue unless something silly like 30% under GV.

I also am not sure whether the cost will be sucked out of my account immediately or whether it gets tagged onto the mortgage?


They did this to me too - ie my bank insisted on a valuation which was actually organised by a 3rd party (Core Logic I believe) so that neither the bank nor I knew in advance who the valuer would be, therefore neither of us could influence the outcome. Big win for Core Logic who takes the $600 payment via credit card and passes it on to the chosen valuer (minus their cut of course) before the valuation takes place.

Because my bank insisted on the valuation, I insisted they cover the cost by giving me cash back once finance approved/settlement completed. In my case my bank gave me $2000 cash in my account to cover valuation and legals etc. If your bank hasn't offered this I suggest you ask - and threaten to go to another bank if they won't. You'll find competition is too fierce amongst the banks for them to say no at the moment.

Oh and you definitely will get a copy of the report - after all, you're the one paying for it!




The views expressed by me are not necessarily those of my employer Spark NZ Ltd

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