RV’s – a reliable value indicator or not?
As agents we constantly get asked what the RV (or GV) is on a property. The RV is the Rating Valuation – a figure which the local council uses to set the rates payable each year on a property. The RV is generated by the council based on the Land Value and Improvements (buildings) Value of the property. The land value is relatively easy to calculate based on recent sales similar to the subject property, however improvements are trickier. The assessors aren’t generally aware of the exact state of the buildings on a given property. Perhaps the owners have installed a brand new, high-spec kitchen or bathroom, the driveway may have been re-done, or extensive landscaping on the home. Essentially anything which didn’t require resource consent will not be considered when the RV is set.
And herein lies our problem. Buyers focusing on the RV of a property are quite possibly being misled as to the actual value of it. Property prices are not a static thing. They are a figure based on the current market, which is negotiated between buyers and sellers. The price of a property can vary from a seller’s perspective based on what they want to do following the sale, and from the buyer’s perspective based on what else they can get for the same money.
As agents we encourage buyers to consider their priorities in the purchase, alongside local relevant sales when formulating a price they wish to offer. Market value is determined by making comparisons, and is in a large degree based on a personal point of view. The value of a property in any given market is simply what buyers are willing to pay in order to own the property, not what the council perceives the actual value of the property for revenue-gathering purposes.