What Is A Rateable Value And How Relevant Is It?
By Craig Lowe
Rateable values are the “value” your home is given by Quotable Value for the purpose of providing councils with a means to assess the rates bill for each property. The secondary purpose is to provide a rough guide as to the properties actual market value for buyers and sellers. Because it is impractical for every property to be individually inspected, the values are adjusted upwards or downwards based mostly upon median sale prices for properties of similar size, age etc. They will also take into account improvements that have been formally approved by the council. This process now happens once a year in the Wellington region, with the record date being the 1st of September each year, although the figures are not usually released to homeowners or the public until approximately December the same year.
The Rateable Valuation (RV) is the equivalent of the old Government Valuation (GV) and should not be confused with a Registered Valuation. Sometimes the Rateable Value is called the Capital Value or (CV) to help avoid this. Registered Valuation’s are carried out by an independent Valuer who will inspect the property and research recent sales to provide an indication of a properties current market value, usually for someone purchasing a property or a homeowner who is refinancing with their bank.
It is important that homeowners, purchasers and property professionals understand that these processes are far from perfect. Valuing properties is more of an art than a science and actual market value will nearly always differ from a valuation. There is no way that anyone can tell you what your home is really worth until it has been exposed to the market and received bids from genuine buyers.
There are many misconceptions about property prices and RVs. Sometimes rising RVs can give owners unrealistic expectations which can ruin the sale process from the start. Also, properties can and do sell for a lot under respective valuations. A very comparatively low Rateable Value could cause an inexperienced marketer or homeowner to even undersell their home if it has caused them to “price” their home too low.
Market value is the price that a “willing” buyer and a “willing” seller agree upon to complete the transaction, after all due diligence is performed. More often than not this is a completely different figure than the agent, the owner or even the Valuer think is fair value. When deciding on price, buyers make comparisons with what else has sold in the area, what else is on the market and the affordability against how much they like the home. RV’s and Registered Valuations usually play a very small part in that decision making process.
This is the main reason why it is so important to avoid pricing your home when you take it to the market. Pricing a house is as good as throwing darts. If the price is too low, it will sell very quickly and your loss will be intangible. If the price is too high then the house will sit on the market for weeks and become harder and harder to sell.
If you have been thinking about putting your home on the market, or would like to discuss the best marketing options available, feel free to call me anytime for obligation free advice.