What goes into a residential valuation report?

The first step to understanding what is in a valuation report, is knowing the role that the valuer has. Ultimately, the valuer’s role is to provide independent advice, based upon research and experience.

The role of a valuer isn’t a new one, the role goes way back to 1948, when the Valuers Act was written. Since then, every valuer must abide by the code of ethics and meet the requirements in the Act.

Why use a property valuer instead of a real estate agent?

While a real estate agent can provide a residential property appraisal, they do not provide the same independent report that a qualified property valuer does.

‘Independent’ is one of the major differences here, as a property valuer has a responsibility under the Act to provide an accurate and independent report. A real estate agent provides an appraisal and marketing advice on what they believe a property will sell for.

Because a qualified valuer has no financial interests in the property, they are trusted to provide the most:

• Accurate and independent advice,
• Accurate findings based on extensive research, and
• Relevant factors you should consider in valuing your property.

What does a valuer think about when writing a residential report?

The valuer has a large number of standards, rules and ethics that outline what should be included within any valuation report. As no two properties are identical, the nature and context of the report will vary depending on the property type.

For example, a residential investment property of rental flats will look at the income produced. And a new dwelling yet to be built will be treated differently to an existing residential dwelling.

Here are a few key things you will find in a residential valuation report

1. Instructions: this includes relevant dates and a scope of works outlining what the valuer has considered within your valuation.
2. Property description: this will always include title/ownership, land, location, zoning, services, and improvements.
3. Residential valuations: include a copy of the title, now known as a Computer Register, with the owner and a record of Registered interests. Each local authority will have different rules with regard planning limitations and potential use of the property. In some cases further advice will be required around the potential of a property.
4. Comment on the type of ownership: there are a few common forms of ownership: Freehold Fee Simple, Cross Lease and Unit Title. If it’s a Unit Title, the ownership will require detail on Body Corporate rules, levies and review of the minutes from Annual Meetings. Whereas a Cross Lease tenure will include a review of Flats plan and lease document. These additional documents may incur additional costs.
5. Improvements: these are typically around the size, age, dynamics of layout, views, materials and condition. The valuer provides comment on whether the physical improvements are suited to the location and zoning, thereby being highest and best use.

What’s not covered in a residential valuation?

• A structural survey, water tightness issues, and identification of potential contaminants, such as asbestos. This must be done by a Building Surveyor.
• The valuation does not confirm that the property complies with local authority requirements.
• A valuation will include many limiting conditions and policy statement that the read needs to be aware of. Other uses or activities that “may be possible” with a consent.
• The valuation does not confirm that the property complies with local authority requirements.

Information for your back-pocket

The approach

A residential valuation may include one or more approaches to access the market value. Each approach will carry either an equal or varied weighting in the final assessment. This will be determined by the property being valued and its relationship to the evidence used.

Unique property

Valuations of a unique property are more difficult to relate to market trends and receiving a greater range of opinion is likely.

Timing

The date of valuation is the date of inspection, however, it can be an earlier date if required. There can be a requirement for a “defined” date for the valuation around an event or ownership change. A valuation of a dwelling “off the plans” or under construction will assess a value “as if complete” value and the date will be included. This assumes the dwelling was complete at the date of valuation.

It does not assess the value when completed as this may be on three, six or twelve months’ time. Most new dwellings take more than three months to complete and the market can change over this period.

Valuations will not assess a future value.

Information for you

Assumptions and information or documents relied upon that impact on the assessment of value will be listed within the valuation.

A residential valuation will outline the terms and conditions or assumptions and factors individual to that property.

The final assessment of value must be seen in conjunction with all matters reported on and contained in the valuation report.

We have valuers based in all major centres around New Zealand. Whether you’re buying or selling, you can come to our team for answers.

Get in touch with a residential valuer today

This article was originally published by TelferYoung