What Type of Valuation do you Need?

3 May 2017
Recent news media has stated that there has been more stability in house pricing values, although growth in property values across the country is still continuing to rise. Certainly, locally the housing market is still buoyant with prices being driven by a lack of suitable properties to purchase, which has not been helped by recent natural disasters. For many people the decision on selling and buying properties is being supported by changing values, but there has also been a lot of confusion around what the true values of properties are and what the different types of valuation often requested by banks in relation to home loan lending mean. 
A Market Valuation can be arranged through a Real Estate agent and is an assessment or estimate of an expected sale price in the current market. Usually this is based on the agents experience and knowledge of the local market and sales statistics. Consequently, market valuations from agents working for the busier agencies will generally provide the most accurate assessment, although we are lucky in the Eastern BOP that there are a large number of very experienced sales people who can give you guidance on the price that they can expect to sell the property for. One thing to be mindful of with this type of valuation is that it can sometimes be over-inflated by an optimism and expectation to sell at the top of the value range and may not fully reflect the buyer’s perspective of value.
Rateable Valuations assess your property at a specific point in time, and is used by councils to help them calculate your rates. There are legal requirements that determine how rating valuations are calculated and this differs from that of a current market valuation. In most cases, rating values are updated every three years, and all rating values in the district will have the same ‘as at’ date e.g. 1 September 2016, and the property value won’t change until the next rating valuation in three years’ time – that’s right - they get out of date very quickly as housing markets are constantly moving, which means you cannot always rely on it as a guide to the market value of a property.
To calculate rating values, properties are assessed using sales close to the ‘as at’ date of the valuation to determine values for properties in a specific area. A market trend is then established and applied to similar properties. After review of any recent changes and locality influences the final values are approved at audit by the Valuer-General. However, rating values do not include chattels while market valuations do. Often an Electronic version of this valuation will be updated and stored on file and may be used by banks to determine security figures for lending which will give a more accurate current value.
Registered Valuations are the most reliable way of assessing your property’s worth, especially as far as lenders are concerned and are carried out by an inspection by 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. 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.
The reason that you require the valuation will determine which type you will need and what cost will be incurred, but it is best to get the advice of a professional such as a solicitor, mortgage adviser or accountant earlier on in the decision making process to avoid unnecessary costs or delays later.

Published In Whakatane Beacon

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