How to find out the true value of your home

1 September 2016
In the current buoyant housing market, we have seen an increase in properties being sold at or above the listed sale price. This has been driven by a lack of suitable housing stock in relation to the number of purchasers looking for a property to purchase. The difficulty with such a market is that desperation can often set in, leading to purchasers offering to pay more than the home may be worth. Obviously this is no different to any other supply and demand situation, where a shortage of a product leads to an increase in cost. The difference with house purchases however, is that when borrowing funds to buy the home, confirmation of the property value may be requested by the bank providing the mortgage. This may be because of a smaller available deposit being held by the purchaser or in the case of one bank, a valuation will be required if the purchase price is 10% or more above the rateable valuation figure (Which is generally the case with all purchases at the moment).
There are some lenders who will use electronic or desktop valuations to determine the security value of the property being used as collateral held against the home loan, as Government or Rateable valuations- another means of assessing your property value- are only updated every three years, so they are generally unreliable as an accurate measure of value as they are based on an older assessment and don’t account for market fluctuations or economic factors, such as those we are currently experiencing.
The most reliable way of assessing your property’s worth, especially as far as lenders are concerned, is by a valuation from a Registered Valuer. These trained professionals will determine the value of your property based on the location, condition and comparative sales in the area of similar type properties, and from the information gathered will be able to determine the current value of the home. But even though there are guidelines in place, it is not an exact science, and there can be variations on valuations even from the most experienced valuers. It definitely pays to try and find a valuer who has experience of the market in the area where you are buying, as they will often have a better “feel” of a property’s true worth.
While most often carried out on finished properties for vendors looking for a fair price to sell at, or buyers looking for an even fairer price to purchase at, valuations can be undertaken at any stage. Sometimes, the value of a piece of bare land is required ahead of a building project and may in fact include assessments based on the value of the empty section but also upon completion of the construction project. This can be very useful to make sure that you are not over capitalising on the cost of your dream home, and frequently a "progressive valuation" is required to determine the value of a property during the build or renovation before additional funds can be drawn down. 
Whether purchasing or building your home it may pay to discuss the expected value and type of report that your bank may require with an adviser, who can guide you before you spend money and waste time getting a valuation that provides no true value at all!

Published In Whakatane Beacon

This post was written by

John White - who has written 90 posts

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