Posted on 01 AUG

How much is this property worth? It’s a common (and smart) question to ask. Recently we’ve noticed a lot of confusion when it comes to property valuations. It’s understandable because there many different ways that people value property. Here are three of the more common ones:

Capital Value

Capital value (also known as Rateable or Council Value) is set by your local council and determines how much your annual rates charge is. Capital value isn’t property speciﬁc, it’s a general guide to your property’s worth based on other properties in the same area and the most recent sale prices for the property. This means it won’t include any

appliances, improvements and/or additions you’ve made since you purchased it.

A capital value is often used when buying and selling as an indicative price, although we discourage this – they are notoriously inaccurate and can be very misleading. Keep in mind too that they’re only updated every three years.

Registered Value

A registered property valuation is an assessment of a property’s market worth according to a registered valuer. It will be based upon a full inspection of your property as well as comparable sales in the area.

You’re most likely to need a valuation when you’ve had an offer accepted on a property, and you need ﬁnance (a mortgage). Most banks will require a property valuation done by a registered valuer as part of a ﬁnance application. A property valuation can also be done for other reasons including:

Calculating how much you should pay for

a property

To ﬁnd out how much a property is worth

when selling

As part of a home loan reﬁnancing application. Your bank requests a valuation to get an impartial and expert opinion on the market value of the property. The Valuers Act 1948 ensures that a valuation done

by a registered valuer is reliable so banks count on this. This is important to them when they consider the risk associated with lending you money.

Property Appraisal

An appraisal is carried out by a licensed real estate salesperson and, similarly to the registered valuation, is based on recent

comparable sales. What a real estate salesperson will also take into account is the current state of the market in your area, and how long properties are taking to sell. Remember that real estate salespeople can inﬂate your property’s value to ﬂatter you, so bear this in mind when talking to them about selling.