What’s a home really worth? In the current property market, this could quite literally be a million-dollar question.

Whether you’re a home owner looking at selling, or a first-home buyer trying to determine your path forward, here are some key things to know about working out a price range.

Some methods to gauge a property’s worth

As anyone would tell you, a home is worth only how much a buyer is prepared to pay for it. And there are countless factors going into this decision, including – of course – where the property market stands and the underlying trends that are in motion.

If you’re looking for a ball-park figure, a good way to start is by understanding the different types of property values we have here in New Zealand.

  • Capital value (CV), also known as rateable valuation (RV)

This is the value generated by your local council to set your rates. It’s important to note that this figure doesn’t really provide any clues as to the actual property value. Local councils update CVs every three years, which means they may are unlikely to factor in any improvements made or the current market performance in the area.

In other words, despite sometimes being used by media and real estate agents, CVs are just designed to provide a guide to set council rates – nothing less, nothing more.

  • Online valuations

Buyers and vendors can access a lot of information for free online, including online valuations. Websites like Trade Me’s Property Insights, Homes.co.nz, and OneRoof.co.nz provide an estimated value range, based on recent data from sales of comparable properties, listing details and user activity.

Once again, as helpful as these sites can be, online valuations are based on algorithms and don’t consider the actual condition of a property (e.g., structural issues or improvements that have been made). That said, they can be used as the starting point in determining value – keeping in mind that the market moves quickly.

  • Current market appraisal from a real estate agent

Pricing property involves a number of complex and often emotional decisions, so it’s important to gather as much accurate information as possible. Relying on algorithms alone is unlikely to provide you with the ‘full picture’.

If you’re a vendor and would like to delve a bit deeper, then you can ask a real estate agent (or multiple agents) to supply you with a current market appraisal (CMA). CMAs are based on similar information to the online versions, coupled with the agent’s real-life knowledge of the area.

  • Registered valuation

For a more detailed and accurate estimate of the property’s value, you can pay a registered value to undertake an independent valuation. The report will take into account the valuer’s inspection as well as comparable sales in the area.

This service comes at a cost, but it can give you extra peace of mind. Also, in some cases, the lender will request a registered valuation when assessing your mortgage application (e.g., if you have less than 20 per cent deposit or are building your own home). If you’re a buyer, it may not be worth getting an RV unless asked to do so by the lender. Most lenders will only accept the RV from their approved panel, so it could be a waste of money.

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Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.