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| Frequently Asked Questions |
What is a Valuation?
A valuation is Registered Valuer’s professional opinion of how much a property is worth. If you
are a buyer, a valuation report gives you comfort that you are not paying too much and if you
are a seller, you are not letting your property go too cheaply. A valuation will generally be
required by your lender if you are borrowing more than 80% of the purchase price of a
property.
Is a registered valuation different from my (RV) Rating Valuation (formerly Government
Valuation or GV)?
A Rating Value (RV) is undertaken by local authorities to establish relative property values at
a specific point in time to enable council rates to be assessed. All local authorities in New
Zealand reassess property values every three years, the exception to this is Wellington where
the values are reassessed annually. Values are derived using statistical methods and, as a
rule, most properties are not inspected. Registered valuations are different in that the
property is inspected by a qualified person and a value current to the day of inspection is
determined.
What happens when I order a Valuation?
Your valuation instructions are forwarded to one of our Valuers who will make contact with
you. We need to: (1) determine the purpose of the valuation; (2) if you are borrowing to
purchase the property the name and address of the lender; and (3) access instructions to the
property. Generally if you are purchasing through a Real Estate Agent the latter will let the
Valuer into the property.
Does the Valuer need to inspect the interior of the property?
The Valuer cannot ascertain the internal condition of the dwelling without an internal
inspection. The internal condition of the dwelling is an major factor contributing to overall
Market Value. It is very rare for a valuation to be produced without an internal inspection. The
exception might be a mortgagee sale where a disgruntled mortgagor denies the Valuer
physical access to the property. In these rare instances the Valuer will tend to err on the side
of caution and produce a very conservative estimate.
I had my property valued eight months ago and now my lender wants an update, why is that?
You want to vary the terms of your loan such as borrow additional funds. Property values
change over time. A valuation generally remains current for 6 (six) months, after which the
lender will cease to rely on it.
Do I need to pay a full fee again for my updated valuation?
VCNZ will provide an updated report for a discounted fee. The quantum of discount depends
on how long ago we produced the original report. In any event the property will need to be re-
inspected to determine whether there are any changes in condition and we will reanalyse the
most up to date sales evidence to determine current market value.
I wish to have more than one property valued, do I get a discount?
If you want to have more than one property valued at the same time we will generally
negotiate a reduced fee on the second and subsequent properties.
Who does my Valuation need to be addressed to?
This is dependent on the reason for or purpose of the valuation. If the valuation is to be used
for lending purposes it needs to be addressed to the lender (this person is called the
addressee). If it is for personal needs then the addressee is yourself, the client.
Who cares who the valuation is addressed to, why does it matter?
You will note that all valuation reports only accept liability when used by the addressee.
Liability is discliamed if the report is used by any other party. This in effect stops a random
third party from picking up the report from the park bench and using it for their own purposes
without the consent of the valuer. Therefore, unless the lenders name is on the report they
cannot rely on it for lending purposes.
What do I get for my money?
VCNZ will produce two copies of a 7-10 page report which will include: the current market
value; comprehensive property and legal description; comparable sales information; copies of
the Certificate of Title and a colour photograph of the property. If you are using the valuation
for mortgage purposes we will send the original report directly to the lender with a copy going
to yourself.
How long will it take to complete a valuation?
For a straightforward residential valuation from inspection to the completed report is normally
within two to three working days. This is dependent upon the Valuer gaining access to the
interior of the property which is out of our control. For a commercial valuation, you need to
agree to a specific completion date with the Valuer.
The Valuer’s Mortgage Recommendation in the report is less than the amount the bank is
prepared to lend me?
The Valuer’s Institute recommends that all valuations for mortgage purposes include a
Mortgage Recommendation. For trustee lending this amount was limited to 66% of the market
value of freehold property and 50% on leasehold, although these rules were subsequently
relaxed. The Valuer’s mortgage recommendation does not affect your level of borrowing,
which amount is negotiable between you and your mortgage provider.
You did a report for somebody else, can it be addressed to my bank instead?
It depends on whether: (1) the original client gives their permission and; (2) the Valuer has
any conflict of interest. If those conditions are satisfied then we will readdress the original
report to your lender with you as client.
Is there any charge for the above, after all you already have the paperwork on file?
VCNZ will take you on as a new client for a discounted fee. There is a charge for the service
of readdressing the report to a new client as we are extending legal liability to you and your
lender where no such liability existed before. Our charges for this service are always fair and
reasonable.
I want to have an up to date valuation, will your Market Valuation change my rates?
No, a Market Valuation will not change your rates. Rates are assessed based on the Council
rating value, which is calculated at least once every 3 years for all properties in most Council
areas, except for Wellington where they are updated annually. Council rating values are
determined through an independent process and no information from an independent
valuation is shared with the Local Authority.
How reliable is the Rating Value as a measure of market value?
While RVs are based on market sales, they are a snapshot of the property market at a single
point in time so as time moves forward from the revaluation date they become less relevant.
The property is generally not inspected and various statistical methods used to determine
value can lead to anomalies between properties. Rating values specifically exclude chattels. If
you are buying or selling we would advise against placing much reliance on RVs
I think that my RV is wrong, how can I object?
You must lodge an objection in writing before the closing date for objections shown on the
front of your Notice of Rating Valuation. The objection can be either on an official form or in a
letter. In your objection you will need to state the valuation reference number, the address of
the property, a daytime contact telephone number, your mailing address, your reason for
objecting, and an estimate of what you realistically believe the value should be. You may
appoint someone else, such as a Registered Valuer, to act on your behalf.
What happens if I lodge an objection to my RV?
A Valuer acting on behalf of the Local Authority will contact you, and may arrange an
appointment to inspect your property to verify the property records, and update them where
necessary. The outcome of the decision on your objection will be advised to you in writing.
I’m still not satisfied with the decision, is there anything else which I can do?
If you are still not satisfied, you may seek to have your objection heard by the Land Valuation
Tribunal. You will need to pay a hearing fee. At the Land Valuation Tribunal hearing, you will
be required to state your estimate of the value and provide evidence to support your claim.
This evidence would normally be information about sales of similar properties which occurred
at, or near, the date of the valuation being objected to. The Land Valuation Tribunal will make
a decision based on the evidence presented.
What are Chattels?
Chattels are items that do not form part of the real estate, they are items that the seller may
choose to take with them. This obviously includes personal effects and furniture but might also
include more unlikely items such as non-fitted carpets, curtains, etc.
Are Chattels important from a lending point of view?
Clearly they are important to the purchaser in that it is prudent to establish which items form
part of the sale and which items are to be excluded. From a lenders point of view, once as it is
established that an item is to remain in the property, it is now less important than it used to be
to differentiate between chattels and fixtures. A decade ago, most lenders would not take
security over the chattel component of the sale in recognition that (a) a chattel had a much
shorter life than the building itself; (b) they could easily be moved off site. However, in the
present climate most mortgagees will lend on chattels as if they were part of the real estate.
What are fixtures & fittings?
Fixtures and fittings are really the opposite of chattels and are regarded in law as forming part
of the real estate. When the property is sold they must remain in place. The seller has no right
to remove them whether or not they are specifically mentioned in the sale and purchase
agreement.
How do I know whether an item meets the definition of a fixture or fitting?
This is very much a grey area of the law and has been the fodder of many disputes. There
are two legal tests that may be applied. Firstly, the degree of annexation test says that the
chattel does not become part of the land unless it is connected to the land or building in a
substantial way. Secondly the intention of annexation test requires that the chattel has been
fixed to the land with the intention of permanently improving the land. Each item needs to be
measured against these tests. For example if a cabinet is screwed to the wall it meets the
degree of annexation test in that if it were removed it would damage the wall to which it is
attached. However if the same item is resting on the floor and under it's own weigh it does not
meet the test. The second test can be less objective. For example a freestanding stove must
meet the intention test in that a cooker is vital to the operation of the household, but does a
dishwasher meet the test? To avoid disputes relating to fixtures and fittings ensure that the
items to remain in the house are itemised in the Sale and Purchase Agreement.
A valuation is Registered Valuer’s professional opinion of how much a property is worth. If you
are a buyer, a valuation report gives you comfort that you are not paying too much and if you
are a seller, you are not letting your property go too cheaply. A valuation will generally be
required by your lender if you are borrowing more than 80% of the purchase price of a
property.
Is a registered valuation different from my (RV) Rating Valuation (formerly Government
Valuation or GV)?
A Rating Value (RV) is undertaken by local authorities to establish relative property values at
a specific point in time to enable council rates to be assessed. All local authorities in New
Zealand reassess property values every three years, the exception to this is Wellington where
the values are reassessed annually. Values are derived using statistical methods and, as a
rule, most properties are not inspected. Registered valuations are different in that the
property is inspected by a qualified person and a value current to the day of inspection is
determined.
What happens when I order a Valuation?
Your valuation instructions are forwarded to one of our Valuers who will make contact with
you. We need to: (1) determine the purpose of the valuation; (2) if you are borrowing to
purchase the property the name and address of the lender; and (3) access instructions to the
property. Generally if you are purchasing through a Real Estate Agent the latter will let the
Valuer into the property.
Does the Valuer need to inspect the interior of the property?
The Valuer cannot ascertain the internal condition of the dwelling without an internal
inspection. The internal condition of the dwelling is an major factor contributing to overall
Market Value. It is very rare for a valuation to be produced without an internal inspection. The
exception might be a mortgagee sale where a disgruntled mortgagor denies the Valuer
physical access to the property. In these rare instances the Valuer will tend to err on the side
of caution and produce a very conservative estimate.
I had my property valued eight months ago and now my lender wants an update, why is that?
You want to vary the terms of your loan such as borrow additional funds. Property values
change over time. A valuation generally remains current for 6 (six) months, after which the
lender will cease to rely on it.
Do I need to pay a full fee again for my updated valuation?
VCNZ will provide an updated report for a discounted fee. The quantum of discount depends
on how long ago we produced the original report. In any event the property will need to be re-
inspected to determine whether there are any changes in condition and we will reanalyse the
most up to date sales evidence to determine current market value.
I wish to have more than one property valued, do I get a discount?
If you want to have more than one property valued at the same time we will generally
negotiate a reduced fee on the second and subsequent properties.
Who does my Valuation need to be addressed to?
This is dependent on the reason for or purpose of the valuation. If the valuation is to be used
for lending purposes it needs to be addressed to the lender (this person is called the
addressee). If it is for personal needs then the addressee is yourself, the client.
Who cares who the valuation is addressed to, why does it matter?
You will note that all valuation reports only accept liability when used by the addressee.
Liability is discliamed if the report is used by any other party. This in effect stops a random
third party from picking up the report from the park bench and using it for their own purposes
without the consent of the valuer. Therefore, unless the lenders name is on the report they
cannot rely on it for lending purposes.
What do I get for my money?
VCNZ will produce two copies of a 7-10 page report which will include: the current market
value; comprehensive property and legal description; comparable sales information; copies of
the Certificate of Title and a colour photograph of the property. If you are using the valuation
for mortgage purposes we will send the original report directly to the lender with a copy going
to yourself.
How long will it take to complete a valuation?
For a straightforward residential valuation from inspection to the completed report is normally
within two to three working days. This is dependent upon the Valuer gaining access to the
interior of the property which is out of our control. For a commercial valuation, you need to
agree to a specific completion date with the Valuer.
The Valuer’s Mortgage Recommendation in the report is less than the amount the bank is
prepared to lend me?
The Valuer’s Institute recommends that all valuations for mortgage purposes include a
Mortgage Recommendation. For trustee lending this amount was limited to 66% of the market
value of freehold property and 50% on leasehold, although these rules were subsequently
relaxed. The Valuer’s mortgage recommendation does not affect your level of borrowing,
which amount is negotiable between you and your mortgage provider.
You did a report for somebody else, can it be addressed to my bank instead?
It depends on whether: (1) the original client gives their permission and; (2) the Valuer has
any conflict of interest. If those conditions are satisfied then we will readdress the original
report to your lender with you as client.
Is there any charge for the above, after all you already have the paperwork on file?
VCNZ will take you on as a new client for a discounted fee. There is a charge for the service
of readdressing the report to a new client as we are extending legal liability to you and your
lender where no such liability existed before. Our charges for this service are always fair and
reasonable.
I want to have an up to date valuation, will your Market Valuation change my rates?
No, a Market Valuation will not change your rates. Rates are assessed based on the Council
rating value, which is calculated at least once every 3 years for all properties in most Council
areas, except for Wellington where they are updated annually. Council rating values are
determined through an independent process and no information from an independent
valuation is shared with the Local Authority.
How reliable is the Rating Value as a measure of market value?
While RVs are based on market sales, they are a snapshot of the property market at a single
point in time so as time moves forward from the revaluation date they become less relevant.
The property is generally not inspected and various statistical methods used to determine
value can lead to anomalies between properties. Rating values specifically exclude chattels. If
you are buying or selling we would advise against placing much reliance on RVs
I think that my RV is wrong, how can I object?
You must lodge an objection in writing before the closing date for objections shown on the
front of your Notice of Rating Valuation. The objection can be either on an official form or in a
letter. In your objection you will need to state the valuation reference number, the address of
the property, a daytime contact telephone number, your mailing address, your reason for
objecting, and an estimate of what you realistically believe the value should be. You may
appoint someone else, such as a Registered Valuer, to act on your behalf.
What happens if I lodge an objection to my RV?
A Valuer acting on behalf of the Local Authority will contact you, and may arrange an
appointment to inspect your property to verify the property records, and update them where
necessary. The outcome of the decision on your objection will be advised to you in writing.
I’m still not satisfied with the decision, is there anything else which I can do?
If you are still not satisfied, you may seek to have your objection heard by the Land Valuation
Tribunal. You will need to pay a hearing fee. At the Land Valuation Tribunal hearing, you will
be required to state your estimate of the value and provide evidence to support your claim.
This evidence would normally be information about sales of similar properties which occurred
at, or near, the date of the valuation being objected to. The Land Valuation Tribunal will make
a decision based on the evidence presented.
What are Chattels?
Chattels are items that do not form part of the real estate, they are items that the seller may
choose to take with them. This obviously includes personal effects and furniture but might also
include more unlikely items such as non-fitted carpets, curtains, etc.
Are Chattels important from a lending point of view?
Clearly they are important to the purchaser in that it is prudent to establish which items form
part of the sale and which items are to be excluded. From a lenders point of view, once as it is
established that an item is to remain in the property, it is now less important than it used to be
to differentiate between chattels and fixtures. A decade ago, most lenders would not take
security over the chattel component of the sale in recognition that (a) a chattel had a much
shorter life than the building itself; (b) they could easily be moved off site. However, in the
present climate most mortgagees will lend on chattels as if they were part of the real estate.
What are fixtures & fittings?
Fixtures and fittings are really the opposite of chattels and are regarded in law as forming part
of the real estate. When the property is sold they must remain in place. The seller has no right
to remove them whether or not they are specifically mentioned in the sale and purchase
agreement.
How do I know whether an item meets the definition of a fixture or fitting?
This is very much a grey area of the law and has been the fodder of many disputes. There
are two legal tests that may be applied. Firstly, the degree of annexation test says that the
chattel does not become part of the land unless it is connected to the land or building in a
substantial way. Secondly the intention of annexation test requires that the chattel has been
fixed to the land with the intention of permanently improving the land. Each item needs to be
measured against these tests. For example if a cabinet is screwed to the wall it meets the
degree of annexation test in that if it were removed it would damage the wall to which it is
attached. However if the same item is resting on the floor and under it's own weigh it does not
meet the test. The second test can be less objective. For example a freestanding stove must
meet the intention test in that a cooker is vital to the operation of the household, but does a
dishwasher meet the test? To avoid disputes relating to fixtures and fittings ensure that the
items to remain in the house are itemised in the Sale and Purchase Agreement.
Innovation + Experience |
| PO BOX 9018, Wellington 6141 | phone: (04) 240-0124 | fax: (04) 232-4414 | email: valuer@ vcnz.co.nz Innovation + Experience |