When it comes to managing your biggest asset – your home – property valuations are an essential tool for buyers and sellers alike. Property valuations help determine the accurate value of a property and can provide valuable insights when renovating or refinancing. Find out all you need to know about property valuations, including how to arrange one and when it’s the right time to do so. Plus, we’ll share tips on how to add value to your home without overspending, to ensure your property investment works harder for you.
What is a property valuation?
A property valuation is a professional assessment of a property’s market value at a specific point in time. Property valuations are often used for:
- Buying or selling a property: For sellers, a property valuation can help set a competitive asking price. For buyers, it can help to decide if a property is worth buying.
- Securing a mortgage or refinancing: Most banks require a property valuation as part of a financing application, to determine the level of risk in lending and ensure the loan amount aligns with the property’s value.
- Insurance purposes: To ensure homeowners get the right level of insurance cover, property valuations can be used to calculate the replacement cost of the property.
- Renovations: Before undertaking renovations, a property valuation can help homeowners estimate how the planned improvements might impact their property's overall market value.
Where can I find a property valuer?
To find a registered property valuer in New Zealand, you can:
- Search the Property Institute of New Zealand (PINZ) website
- Check the New Zealand Gazette list of Public Valuers
- Use property valuation websites like One Roof and homes.co.nz.
- Ask friends and family for recommendations
A registered property valuer will inspect the property and provide a detailed and objective report based on the condition, location and features of the property, as well as comparable sales in the area and market projections.
What are RV, CV and GV?
Rateable Value (RV), Capital Value (CV), Government Value (GV) are all terms used by local councils for the value of a property for the purpose of calculating property rates.
Here’s what each of these typically refers to:
- Rateable Value (RV): Used by local councils to calculate property rates, typically updated every 3 years.
- Capital Value (CV): The most likely selling price of a property at the time of valuation, excluding chattels.
- Government Value (GV): Less commonly used but sometimes another way to refer to the CV or RV, depending on the region.
These terms should not be confused with market value, which is the price a buyer is willing to pay for a property at any given time. Market value is influenced by factors like demand, recent sales, and unique property features, which may not be captured in council valuations.
Adding value without overcapitalising
While there’s no secret formula to gauging your return on investment when you decide to renovate to add value to your home, there are a few things you should know before committing to a home improvement plan:
- Understand your market. High-spec features may add value to high-end homes but will likely lead to overcapitalisation in modestly priced homes.
- Focus on kitchens and bathrooms. These areas usually add the most value to your home. Just remember to match your renovation spend to your home's value.
- Invest in landscaping. A well-kept garden and outside area can boost street appeal and make your home more attractive to buyers. After all, it’s often the first thing potential buyers see when they view your home!
- Consider garaging. Particularly in areas with limited off-street parking installing a garage could significantly increase your property’s value.
- Preserve character features. Avoid replacing with modern alternatives things like original timber joinery or wood flooring in character homes as these could detract from the overall value.
Making informed decisions
Whether you’re considering renovations, refinancing your mortgage, or preparing to sell, knowing your property’s worth could help you make informed decisions and avoid costly mistakes like overcapitalisation.
Get more expert advice from the team at Mortgage Express. Work with a mortgage adviser today and get guidance at every step of the way whether you’re buying or selling. Contact Mortgage Express today to connect with an adviser near you.