[clg]

I need some help understanding house prices/values. We have talked to realtors who say something like the GV is 370,000 but it will sell for 500,000 or so.

First off, what is the GV and how is it related to the price? Second how do you figure out what the fair value of a house is? Are there services that tell you what houses have sold for? Given that buyers have no representation that I can find how do you figure out what to pay for a house?

Thanks!

Chris

[acisman]

Chris

My understanding is that the rateable value is always much lower than the price asked and is the figure used to sent the rates for the property. So the 370,000 would be the rateable value, while 500,000 would be the asking price.

With regard to how much a property is worth, well I guess the answer is as much as the seller can get. Agents usually have a feel for what prices properties are going for in a given area, based on the number of bedrooms and state of the property. However it is usual for the seller to state how much they wish to get for the property and the agent will guide them.

There are real estate valuers in NZ and they may be the best bet for getting a realistic price for a property.

Dave

[GeorgeM]

My understanding is that the rateable value is always much lower than the price asked

Not necessarily - it depends on when the GV was last reviewed. In Chch this was within the last year, so prices aren't now as adrift of the GV as they were 12 months ago.

A registered valuer will do a valuation for you which will give examples of recently sold properties in the locality for about $300 which could be a good idea if you don't have a feel for the local market and/or don't trust the estate agent.

[veronica]

I understood the rateable value was the value of the land regardless of the house on it. anybody else heard that

[GeorgeM]

I understood the rateable value was the value of the land regardless of the house on it. anybody else heard that

In Chch the value is split between land and improvements, with improvements = building.

See http://ratesinfo.ccc.govt.nz/index.aspx

[acisman]

On the house we are buying for $375,000 the LIM lists the land value at $53,000 and the capital value as $178,000. Make what you can of that.


Pam & Dave

[richard]

A registered valuer will do a valuation for you which will give examples of recently sold properties in the locality for about $300 which could be a good idea if you don't have a feel for the local market and/or don't trust the estate agent.

You can also buy local house sales data from Quotable value (www.qv.co.nz)

[clg]

Thanks for the info. I have a feeling this will take a lot of learning on my part to get comfortable enough to be at the point where we feel we are getting a fair value for a house.

One more question when they say BBO 430,000 (buyers budget over) I am guessing that is sort of a point of negotiation so they are looking for around 430 or are they looking for significantly higher? I have seen some BBO's listed now for a few months so they are not moving all that fast.

Chris

[Chicken Legs]

Not sure if this will help, but it's a link to a glossary of terms from the Real Estate Institute of NZ:

http://www.reinz.org.nz/reinz/public/buyers-&-sellers/terminology.cfm

[baboonworld]

If the GV is somewhere near the asking price i thought it meant that the house wasnt in a particularly good area

[GeorgeM]

If the GV is somewhere near the asking price i thought it meant that the house wasnt in a particularly good area

Not necessarily - it depends on when the GV was last reviewed. In Chch this was within the last year, so prices aren't now as adrift of the GV as they were 12 months ago. Is there an echo in here?

[sarahw]

GeorgeM - I was told that the GV doesn't take into account the view you have so the same house in the same suburb (same plot size) whether it be in a quiet cul-de-sac, having stunning sea-views or next to a rubbish dump would be same GV - is that right or wrong? :?

CLG with regards to BBO - we were told by an agent that they're usually looking for $10-15K over BBO (we're looking in the $4-500K range) - however, we have heard of people offering under BBO and getting the house so I guess it all depends on the seller's circumstances. We've noticed some houses haven't moved in the 5 months we've been keeping an eye on the market - some of the prices have changed dramatically (one by $75K!) some not at all. Guess somone might take an offer if the house has been on a long time & they're not getting any bites! You can always try it on & they can only try to negotiate you upwards...

[GeorgeM]

GeorgeM - I was told that the GV doesn't take into account the view you have so the same house in the same suburb (same plot size) whether it be in a quiet cul-de-sac, having stunning sea-views or next to a rubbish dump would be same GV - is that right or wrong? :?


Not absolutely sure about that one, but I would have thought that the variation in houses here would make the application of such a standard quite difficult. You don't get the sort of housing estate common in the UK where a builder develops a whole site and puts in 600 houses split between 4 types - everything tends to be far more individual.

I'm not an expert on GV but I just wanted to point out that revaluations do take place and the variation you can expect to get (if any) in price paid vs GV needs to be mindful of this. If the housing market goes backwards at any stage (as some are predicting) it is possible that houses could change hands for less than GV.

When I bought my house in 2002 I paid 18% more than GV based on a 2001 valuation. (I was very uncertain about this at the time having just 'got off the boat' and not knowing the local market). The 2005 revaluation is 55% higher than the 2001 one, so if I wished I could accept less than GV for the house and still turn a 30% profit over the 3 years we've been here. GV helps you to judge relatives not absolutes.

CLG with regards to BBO - we were told by an agent that they're usually looking for $10-15K over BBO (we're looking in the $4-500K range) - however, we have heard of people offering under BBO and getting the house so I guess it all depends on the seller's circumstances. We've noticed some houses haven't moved in the 5 months we've been keeping an eye on the market - some of the prices have changed dramatically (one by $75K!) some not at all. Guess somone might take an offer if the house has been on a long time & they're not getting any bites! You can always try it on & they can only try to negotiate you upwards...

Buyers can ask what they like in whatever terms they wish ("offers based on $x", "offers over $x", "$x (no offers)" etc) but if they want to sell in a slow market they may need to move significantly from their original position, especially if they have a pressing reason to sell. It's very difficult to accept that one may need to drop the price by 10% to shift a house if the calculations regarding one's future life have been based around achieving a higher figure based on what the market was doing 6 months earlier.

Although much maligned the market does work reasonably well - bargains are snapped up and houses that are overpriced for the prevailing conditions hang about - we just might not like the implications of what the market is doing when we want to sell/buy. The impact of relative market shifts is softened for those who are buying and selling within the same sector - you sell high and have to buy high or sell low but benefit from buying at a discount also. The losses and gains happen when you're either just selling or just buying, or when you're selling in one place and buying in another. For some even this works out well, for others not so.

[clg]

Thanks for the BBO info Sarah, I was hoping it was something like that. I have been watching listings and there are some houses that do just sit while others go fast. The ones sitting do seem to be a pit pricier so that is good to see.

We are hoping to buy fairly quickly if the right house in the right place comes up so I want to learn all that I can about this before we arrive.

Chris