Rating Values Of No Real Value To Vendors
By Craig Lowe
Buyers always want to know a house’s Rating Valuation (RV) but sellers should resist revising theirs upwards to seek a higher price. In fact, an RV that is lower than true market value can actually help your home fetch top dollar.
Rating or rateable valuations used to be called Government Valuations (GV), and typically are assessed every three years to help councils set their rates.
They are of use only for this reason – and bear no relation to a property’s market value.
The factors that determine an RV are not the same as those that come into play in a competitive marketing campaign.
That’s why I tell anyone who is thinking about having a low RV reassessed prior to going to market to first consult a real estate agent for professional advice.
Whether or not an updated RV is a good idea will depend entirely upon the marketing strategy for your house.
But rarely would I recommend it as a tactic to drive the price higher.
Indeed, revising the RV up by a large amount can negatively affect the marketing process.
That’s because it sets up a certain expectation in buyers’ minds and can put them off even before they open the front door – which means they never get the chance to fall in love with your home first.
Ultimately, the more intangible the value of a property, the more influence an agent can have over what someone pays for it.
But an updated RV can cap the price of a property because people see it as a market valuation – since a professional valuer has inspected it, analysed sales data, and come up with the new valuation and that becomes a psychological barrier to achieving a higher price.
Occasionally, if you’re not selling your home in a competitive environment, there may be a case for updating the RV. For instance, if you’re selling By Negotiation as opposed to Tender, you may need to anchor people’s expectations higher because they’re probably going to make an offer quickly. In this scenario, the RV will be more influential as an initial starting point.
Otherwise, it makes more sense to capitalise on competitive buying pressures instead of worrying over an irrelevant RV that buyers will soon forget about as they obsess over not missing out on your house.
Buyers will become more committed to buying with every step they take, from seeing it advertised for sale; to finding out more about it; to factoring in what other buyers might be prepared to pay.
Remember, people don’t buy houses in a vacuum. Chances are they’ve already been outbid on other houses.
So a buyer will assess the value of your home based on what its worth to them to acquire rather than an RV set by an anonymous valuer and based on out-dated statistics.
It’s very easy to forget this if you are a seller, because all you’re thinking about is your own property.
But buyers are constantly comparing your home to others in the marketplace and get to the point where the fear or risk of missing out becomes too great.
If you want proof of how irrelevant an RV can be, I recently sold a $1.6 million house for $400,000 more than its RV.
That’s an extraordinary example of how market factors and a property’s appeal are far more important than RV.
The competitive strategies an agent uses to sell your property can be worth tens of thousands of dollars more than revising your RV, which, let’s face it, will only increase your rates if you don’t sell.
It’s far better to let buyers set their own values – with influence from their agent and the competitiveness of the sale – and for RVs to be used for what they were intended: council rating purposes only.
If you’re thinking of selling and want the Right Value for your house, call me on 021 764 647 for a free no obligation appraisal.