by Grant Wakelin
One of the things we do is provide our sellers with a real estate appraisal - that is, our view of the selling range of a particular property. In the interests of transparency we think it useful to describe how we actually developed the appraisal - and yes there is a methodology, we don't think the good old fashioned 'guess' based on 'years of experience' is a valid approach.
We provide an appraisal as an input to a sellers decision making and to provide objective backing to any discussions we may have relating to price. At the end of the day our sellers make their own, hopefully informed decisions, our role is to back our advice with objective facts. We stress that it is important for anyone selling their home to take charge of the pricing and decision making process - seek different inputs from professional, qualified people.
The formal requirements for a real estate agency appraisal are outlined in the Real Estate Agents Act Professional Conduct and Client Care Rules, section 9.5 An appraisal of land or a business must be provided in writing to a client by a licensee; must realistically reflect current market conditions; and must be supported by comparable information on sales of similar land in similar locations or businesses. As you would expect our approach reflects those requirements.
We look to be very objective and data driven when constructing our appraisals and we gather data from various sources, including:
- Details from local council records - including information such as land area, Council Valuation (CV) and it's subcomponents, Land Value (LV) and Improvement Value (IV).
- Overall suburb sales trends, and expanded suburb trends from the Real Estate Institute of New Zealand (REINZ) statistics
- Specific sales information from properties in your suburb (REINZ statistics)
- What is currently for sale in your suburb (from www.realestate.co.nz and www.trademe.co.nz/property)
- General market information as broad as national economic factors
- What we don't do is add personal observation to the list - we do not physically visit the property to inspect it
We use CV's as an important benchmark to compare properties, CV's are a consistent valuation measure across your town and suburb. Quotable Value (QV) describe them as Formerly called Government valuations (GVs), council rating values (RVs) are compiled by statute, under the Rating Valuations Act 1998, mainly as a uniform basis for levying local and regional council rates. Rating values also serve as a useful guide for property owners and other interested parties, as they are impartial and independently assessed as at the same date for every property in a Local Council. While CV's are often only done every 3-4 years and can get out-of-date they remain a consistent benchmark for all properties in an area.
The sales of other similar properties are the most important source of information, and we use statistics gathered and reported by real estate agencies who are members of REINZ. We compare these actual sales against CV's to determine how the market has moved over time and therefore how the valuation of your property may have changed since the CV was completed. Of course, the REINZ statistics only include sales completed by members of that organisation and so private sales or those where the agent is not a member of the Institute are not included. The data is also input by those agencies, and so is only as accurate as that provided by them.
What does this mean for you? Our approach has a couple of important benefits:
- Data driven - it is based on published statistics and uses a standard methodology. It is not based on a subjective analysis by the real estate agent relying on his/her personal knowledge of similar properties.
- Objectivity - we are not going to tell you what you might want to hear. Sorry about that!
As you would expect with any process there are limitations and it is important you understand those when reviewing our appraisal and making your decisions:
- We are not valuers, we are real estate agents. We use a structured approach but we do not go into the depth and detail that a valuer does, and while we both rely on recent market sales as the most important factor the valuer adds their training, skills and experience to the mix. After all, that's what you pay them for!
- We have not visited your property and for the purposes of the appraisal assume that the current finished state of your property is in line with the average for the area.
- We rely on published data – so if for example you have installed a new kitchen and bathroom, or some other extensive remodel that has yet to be finally approved through you local council we will not know about it.
So there you have it, our methodology for developing your appraisal. It is but one input into your decision making while selling your house. When it comes to making final price/value decisions on your property remember, selling your house is a major financial decision and we always recommend that you obtain appropriate professional advice. With respect to the value of your property then the only truely objective approach is the one we always recommend to our clients - consult with a reputable registered valuer.
Natalia Artemiev said:
I'm wondering how you can be aware of the state of the house or any improvements that have been done to it if you don't visit the property ?
Posted 31 st March, 2012Brian Turchie said:
FIRST TIME WE HAVE LOGGED INTO THIS SITE...LOOKING FORWARD TO RECEIVING APPRAISAL.
Posted 17 th March, 2013Michael Dix said:
Just in the process of putting in $5000.00 of insulation
Posted 3 rd June, 2013Meera Isaac said:
Insulation in the roof cavity hs been done in the last 3 years. The house has been painted in the last 12 months.
Posted 19 th June, 2013Vince Pittman said:
Eagerly waiting for my appraisal
Posted 27 th August, 2013Jim Radich said:
Our house is in the state of refurbishment but the overall standard of the entire property is very good
Posted 1 st October, 2013Christine Vette said:
Kauri Kitchen, fully restored house with polished Matai floors, xpol under floors, new batts in ceiling
Posted 7 th October, 2013Jack McMahan said:
Interesting website. Now waiting for appraisal. How do we give you additional information about our property?
Posted 8 th October, 2013Sharon Veld said:
Has HRV System and heat pump. Recent kitchen appliance upgrade gas stove top, oven, dishwasher.
Posted 27 th October, 2013Spa pool & swimming pool option available.
sv said:
Seems to me that the valuation paradigm is working well and producing excellent accuracy. It is of course entirely up to the seller to point out features and improvements which cannot be seen or included in the 2000square evaluation, then adjust the target selling price accordingly.
Posted 11 th February, 2014Max fernando said:
two heat pumps in two rooms-garage tiled to be used as a separate kitchen with hot water-hall way isle is tiled-brand new carpet laid-aluminium fence all around with remote controlled gate-landscaping with paved stones
Posted 25 th March, 2014Deidre Webber said:
does having 2 bathroom & 3 toilets change the price???
Posted 8 th April, 2014D B Tunnicliffe said:
Has been refurbished inside and outside. New bathroom. Kitchen was upgraded about 8-9 years ago. Has been painted inside and outside in the last 5 years. New windows in family room and dining room. Basement garage, carport attached to garage. David Tunnicliffe
Posted 8 th May, 2014Alexander Cohen said:
CV cannot represent the true value of sellers' homes. It seems from the above comments some sellers may have made some significant upgrades to homes which cannot truly be valued into the price solely by the CV. I am keen to know how my recent Council Valuation of the Waimakariri District will match up (or not) to 200 Square's Appraisal. Eager also to know how satisfied Mr Tunnicliffe, just above my comments, will be (or is) with his 200S evaluation and whether it matches, meets, or surpasses CV. Thank you. Alexander Cohen
Posted 14 th May, 2014Alexander Cohen said:
BTW why isn't 200Square making remarks about these comments? Eager to know YOUR comments to these comments.
Posted 14 th May, 2014Alexander Cohen
Grant Wakelin (Author) said:
Hi Alexander
Thanks for taking the time to comment.
To answer your second comment first - we tend not to respond to specific details about a property in the public forum here, but address those directly with the home owner.
To your first comment - CV is an estimate of market value at a point in time. It is not always current and become less so as time goes on. However, it is a useful benchmark and a tool to compare properties because the same valuation formula is used. We do look at variations from CV - for example if todays prices on average are 10% above the 12 month old CV that tells us something about what the market has done over time. Thus if a similar property to the one that is being evaluated has recently sold at 10% above CV that is an indication that the subject property may be also valued currently at 10% above CV.
While the Waimakariri District CV's are fairly recent the value of your property will depend upon recent sales of similar properties in your area. That may be close to the CV given, but it also may not.
Where upgrades have been done that are not reflected in a CV we adjust the property.
I hope this answers your queries - very happy to chat directly and I look forward to talking with you about your specific appraisal.
Posted 14 th May, 2014Maria van Dingenen said:
Kia ora,
I contacted the council valuation people in the period after they did their last appraisal concerned that extensive renovations were not reflected in the council valuation. Some weeks later following a site visit the amount was increased by $30,000. However I was expected to pay $200 to have the changed amount recorded. As I wasn't committed to selling at that stage I held onto the $200 and the email conversation thread - this was in January/February 2011.
I trust there will be opportunity to incorporate those changes and further work and improvements achieved in and outside the house since then. For example, the Google maps images are very dated and the house and garden look very different from those images now.
Regards, M van Dingenen
Posted 27 th November, 2014Shontell Ropiana said:
Just curious on behalf of my partners parents who could possibly be looking at selling the property we currently rent off them.
Cheers :)
Posted 11 th October, 2015John Terrill said:
I have just requested an online valuation. I had a Registered valuation done on the property some months ago. Can you get access to that when you do a valuation?
Posted 12 th October, 2015Delwyn Bailey said:
our cv is very low - have done major renovations - $30K
Posted 4 th March, 2016Is an area downstairs suitable for extended family to live essentially in a self contained flat. Would appreciate that being taken into consideration when doing your appraisal.
Chee K Yong said:
I am currently upgrading my property with lots of features - solar panels, garden landscaping, underfloor insulation, replacing old garden fences, kitchen reno, laundry reno, garage reno etc and perhaps to put in a conservatory.
Posted 18 th October, 2016verner thomassen said:
would I be better of if I subdivide my property at 40 witham st Island Bay ,,I think the cost would be about $ 50000 ,
Posted 8 th March, 2017Lorraine Rouse said:
We are in the process of a total refurbishment, it is practically a new house. New kitchen, 3 new bathrooms, paint inside and out, new decks, new carpet, insulated and double glazed, landscaped, new carport and driveway.
Posted 25 th October, 2017Nadine said:
we bought a do up and so how can you assess the price now, also the properties around us are built by same builder of same age so we know how much we want for property as we can compare with what has sold around us
Posted 14 th August, 2018