Buying Guide: What do Property Valuers Look for?
How do they work out what your home is worth?
Knowing what your property is worth is crucial when selling and also when you’re looking to buy. Without this knowledge, it’s almost impossible to price your property properly or to pay too much when buying. In this article, we’ll explore what property valuers do, and the factors they take into consideration when assigning a dollar amount to a home in New Zealand.
Why people use property valuers
Registered property valuers are seen as the authority on assessing the value of property. These independent contractors are typically brought in by buyers, sellers, banks or real estate agents to assess how much a building (and its land) is worth.
According to Alice O’Styke, a registered valuer and Tommy’s Real Estate agent, if you’re a first home buyer with a deposit of between 10 and 20%, the banks will probably ask you to get a professional valuation on the home before approving the loan.
Initially, when looking to buy or sell, you may gauge the price of the property in a couple of different ways:
- Using free tools: Trade Me’s homes.co.nz tool allows property owners and buyers to check out records, rateable values (RVs), estimates and recent sales for over 1.5 million NZ properties.
- Real estate valuations: if you’re selling, during your first meeting with a real estate agent, they’ll do a walk-through of your home and, looking at their knowledge of recent sales in the area, provide an estimate of what your home is worth.
Both of these valuations are useful and free, so we recommend you take advantage of them but if you want to ensure you’re getting the most accurate picture possible, a professional valuation, usually priced from $850 to $1500, is the way to go.
You can do your own research to start with, then call on property valuers if you want a more detailed picture.
What do property valuers look for?
A property valuation is much more than a quick glance at the state and size of your house. These comprehensive reports estimating the home’s value take into account a wide variety of factors such as:
- Its size: both of the property as a whole, and the individual rooms.
- Room types: e.g. number of bedrooms and bathrooms.
- Building construction type and the materials used.
- The house condition: is maintenance needed and, if so, how much would it cost?
- Age: when was the property built?
- Does it have a garage? If not, what car parking is available, and what’s the overall access to the property like?
- What’s the property like? This looks at the home’s interior – its ventilation, natural and artificial light, walls, floors, doors, ceilings and any design features of note. Is it a character home, for instance. On the exterior, property valuers would take into consideration things like the roofing, guttering, fencing and cladding.
Of course, a property is much more than a structure, and property valuers will also look at:
- The size of the land: this is often where the majority of the property’s value comes from.
- The site: is the section likely to flood? What’s the drainage like? Is there a possibility of subsidence?
- What’s the property’s zoning? This will determine how the property can be used (e.g. as future apartments, townhouses or commercial).
- What title type is it? This may include more details around covenants, as well as things like mortgages registered against the home.
- Previous sale prices: If the property has been sold before, how much did it fetch?
- What’s the suburb or town like? Does the immediate area have valuable features like green spaces, transport links and good schools?
- Is it close to centres? Similarly, how easy is it to get from your home to employment hubs?
- The neighbourhood: is the street and surrounding area well kept or rundown?
Property valuers will take into consideration the local area when deciding how much your home is worth.
As well as on the ground features, property valuers will take into account the current state of the property market. As anyone following real estate news in New Zealand knows, the market can change dramatically, which may impact the value of your property.
Property valuers will take into account market trends at both a national and local level as a crucial element of valuing your property. Valuers will often ring an agent active in a particular market and ask for their thoughts, says Alice. Tommy’s agents go to all the houses for sale at the agency and then see what they sell for so they gather very good valuation information, she says. As well as the economic picture, a professional valuer will look at trends around the types of houses people are looking for.
All of this information will make up their overall estimation of how much property is worth. n their report they’ll explain the most important or pressing things to you in person.
If you’re a buyer and the valuation comes in under what you were thinking of paying, you might still choose to pay more because it’s close to friends or family so it’s worth more to you. Value can be in the eye of the beholder, says Alice.
*We hope this article has provided some helpful information. It's based on our experience and is not intended as a complete guide. Of course, it doesn’t consider your individual needs or situation. If you're thinking about buying or selling a property, you should always get specific advice.
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