GV QV confusion.

[bob_the_engineer]

I was looking at a house recently and the GV was set at $300k in 2004.
I had a look at the QV website (pointed to by the council website) and this gave an estimated value of $340k.

My question is this, is the QV estimate a good indication of where the GV will be set at the next review?

Many Thanks Bob

[Smiler]

Bob

I haven't a clue, it's something about land and house values differing because a house has been built on it (I think that'll confuse you even more).

But Avalon knows all about this, she'll hopefully be around later.

D

[dean1968]

GV is regarded as the rateable value determine by the council to slug you for rates. They are meaningless. They can be all over the place. One side of the street can have a higher value than another for no apparent reason.

My brother said he felt richer when the rateable value here he lives in Auckland shot up 40 percent. Then I try to put it in context and said to him what was the average for his city and he said around 40 percent. He had to be ahead like 50-60 percent in rateable value to justify selling otherwise it is a zero game. Everyone else's house has cancel each other out in capital gain,

I have seen rateables value higher than the market price people are willing to pay for a property. From a sale point off view some people live and die by them... to help sell the property. Other times if the property market has collasped, the ratable value can be lower that the previously. Has happened, does happen occasionally not very often though.

People use those GV (static -more stable indicator) to work out a price to pay for a property above GV. They say I am only gonna pay X amount of dollars above GV for houses in this area. That can be a mistake.

Whereas quotable value is more dynamic and takes a snapshot at what the market has been willing to pay for houses in the surrounding area in the present. Also can be misleading. A house has already sold in the suburb that you are intrested in and that still might not reflect the true value of a house you might want to buy.

I have had newbie migrants live and die by these misleading indicators. I try to stress that rateable value only looks at the outside of a house. Does not look at the inside which counts far more than GV or QV which doesn't help measure any of this except after it is sold.

A typical example. Two houses are selling just above rateable value I show them two houses roughly the same age, number of bedrooms and say what is the difference. One house (Alpha) has brand new everything, kitchen , drapes furnishings, floors / carpets all the fixtures you can think of, Kitchen appliances, heat pumps the lot. The other (beta) nothing, old, etc. One is bargain the other a steal.

Now if the bargain house (beta) with no new stuff sells first then QV has set the value for all the houses now in this surrounding area. IF the other house alpha sells first with all the brand new goodies that has set the price for this area.

I try to show my migrant friend a house with a million dollar view
and he would not budge above a certain rateable value. He was fixated on a certain amount. He was told should buy above a certain gv amount in this area.The house was selling at $450,000 about $50,000 above rateable value. I shook my head in disbelief and try to tell him the gv is old and said it looks at the outside of a house. It is meaningless. It does not count on the inside. There are $100,000 worth of chattels inside the house alone. Drapes ,carpets, spa pool. the owners spent a fourtune inside the house. A lot of it brand new. The house was snap up in a week. They wanted to get out quick - shift back overseas. Quotable value is meaningless here as well only looking backward at what has been sold in the surrounding area.

Another is fixed price. Will not go above a certain mark. I try to put it in context. $5,000 was peanuts to the overall price and didn't want to go above a certain mark. I knew they had the money but couldn't bend. It happens all the time. Preparation is 80% percent of the property game. I know of two cases where people want to make a serious offer and they have gone to put in a bid and the property is already underofferr and has been snapped up.

Abraham Lincoln said he would rather sharpen an axe for 5 hours and cut a tree down in 1 hour, rather than spend 6 hours cutting down a tree.

[eternalkiwi]

Hello Bob

Traditionally QV provided all government and rating valuations throughout NZ, though now other businesses sometimes provide valuation services for councils.

As the council directed you to the QV site, I would expect they provide the regular valuations that form the basis of Rating Valuations.

In most cases Market Value is higher than GV/RV valuations.

Shawn

[bob_the_engineer]

Many thanks for your answers, really useful stuff.

Cheers Bob

[StevieD]

Confusing innit Bob!!

[Tia Maria]

Dean1968 - What a great response!

Do you know when they are calculating the CV/GV, what they actually take into account?

I'm assuming basics like plot size and building size are considered.

But what else?

The dilemma we face is we have a large, ugly, brick, double garage (with room above), which we might consider replacing with a single garage in a material matching the villa. However, we were concerned that changing to a smaller building might affect CV. Which, as you said, does influence many buyers.

Of course I'm working on the prinicipal that a garage or sleepout could affect CV, but have no idea if this is the case.

I also wonder whether when they bring the new CV rates out there is an increase of properties put on the market, as owners suddenly feel richer?

Cheers

Tia

[dean1968]

"The cynic knows the price of everything and the value of nothing" - Oscar Wilde

The point I was trying to make is not to get too hung up on the numbers but try to look past the numbers.

I want to educate by illustrating with some actual examples so it synchs in.

When they originally buillt Christchurch City all the plans to contruct the buildings were conceived in Mother England. They forgot about the sun faces North in the Southern Hemisphere. You might laugh but history does repeat itself. If you ever get to Queentown you will see some apartments facing the wrong way with the dining room and bedrooms hard up against the hill. The toilets / bathrooms are all facing the lake which is completely the wrong way. The architect never bother to travel down and have a look. The story I heard the builder had a grudge and just build it the wrong way facing as stated on the plans without informing the architect of his blunder . You've got to do the legwork and visit properties so you know more than anyone else. You know why it is selling for X amount? You have yo have a feel for the market. Numbers are not going to give you the full picture. If something is selling above market. I want to know why? MAybe they have just put down bamboo flooring in the whole house. Or have increased the room size. Or spent $20,000 on new bath room fixtures. People will be surprise. Get yourself down to a hardware store and figure out the pricing of any metal fixture. Believe me the value is priced in gold. Or maybe they put Italian marble down. You have got to do the groundwork. I can illustrate another example a suburb near an estuary / sewage pond. The smell is unpleasant. Numbers are never going to tell you any of this on paper

My friend from Korea a property / millionaire visits NZ and I show him some potential real estate. He takes one look at the area not the property itself and says "Bad area". HE just stepped off the plane and having never visited NZ tells me this. This lesson took me a while to learn before it sunk it.

Years later I am look at an interesting property the rent checks out everything looks fine on paper. The most interesting thing or the first thing that catches my eye is the property has a security system. I contact a friend who lives in the actual street and he tells me to stay away and don't buy it.
He tells me 'Bad area". Apparently the street address had a high number of burglaries / break ins which explain the security system.

I know someone who bought a really bad house that is falling to bits. The land is worth $900,000 in GV and the house next to nothing. The house is on coastal lake property in Wanaka. The numbers would never stack up but he looked past the house and the numbers. HE bought the property for the site.
The whole are was opened up for subdivision.

I met this property guru. The wisdom that I learnt from him that not only do you analyse the facts but you also look forward. Things change. Look at the big picture not just the micro details. For example one side of the street can be selling far higher in GV than the other. Find out why? Or if it is just anomaly. The reason, it might be in a school zone that families usually pay a premium to get their kids into that school zone. School zones can change nothing is ever static or lasts forever. You might find your side of the street suddenly gets push into that school zone. Sonething could make your area more desirable or undesirable in the future.

I am looking at a property on the West Coast of the South Isaland. Looks great everything appears to stack up including those "Magic Numbers". The day I visited the property was in glorious sunshine. I talk to a local and he tells me to stay away, most of the year it rains and is freezing cold on the West Coast of the South Island and about the sandflies. You can't walk outside without getting bitten. The numbers don't show you any of that.

I am cynical about Real Estate agents, about showing your cards. I have know about a potential sale before the real estate agent. It was on the Market for $325,000 and I didn't like the negative about the property being near powerlines. I contact an agent and say I am looking at properites around $350,000. Lo and behold he shows me the very same property that is now muti listed for would you believe it $350,000. When it was selling for $325,000. Or |I contact an agent who I know is selling a property below $450,000 around $400K that I am interested in. I contact them and they sell the property is gone. How much money have I got to spend $450,000. Nothing on their books for $400K but can show me properties around $450K. You leave your self wide open to getting fleeced.

At the end of the day you should know more than the agent because he or she is on the sale side. You have to know what things sell for and why. You have to do your homework. If an area is shooting up. You should be asking wha is it shooting up in value? There is usually a magnet? I can tell you areas / suburbs where 50 percent are overseas born they are pushing up the market. In my area Asian migrants are keen on education so anything in the University / excellent school commands a premium.They are not local NEw Zealanders. Some migrants try to buy a property and then use this a way in (to buy themselves a NZ passport) to get residency. The property was bought say 3-4 months ago and then goes straight back on the market when they are refused residency.

I can't answer your question. You should do everything in your power to find out as much as you can. Imagine you were presented with this option. Would you buy it? Who is your market? Is there a market? What is the drawcard? Is it an affluent area? Who would want to live there and why?
In Queenstown there is plenty of jobs available but no one can work there because the real estate is so expensive. There are plenty of jobs but no places to rent or houses too expensive. Reason why there are lots of jobs up for grabs.

Many years ago I am looking at a meat company and I visit the company and has state of the art technology. The numbers loook great. It is doing 24 hour processing of meat. I am about to invest and I read a trade journal and the local paper says the company refuses to give the workers a small wage salary increase. That got the alarm bells singing. If the company can't afford to pay a small cost of living increase, something must be wrong. I refuse to invest. This company subsequently went bankrupt. The point I am trying to illustrate here is that now a company that finances the whole town has gone broke. Houses / rental will subsequently collapsed. Wants the incentive to stay if you have lost you job.

I don't want to get into specifics. Registered valuation / tender can tell what the market is willing to pay which can be in a euphoric or doom / gloom state. House can sell above GV or below GV depending what phase you are in the cycle.

I want to say something funny here:-)). When they discovered gold in the New World (America)1600's or whatever and the Spanish weres shipping it back home to Europe. Someone thought it was strange that inflation seem to kick in, with all the gold being flooded in, everything seem to soar in price for food, property etc. IF the NZ government wants to be taken seriously and help the average NEw Zealander buy a home, I say curb the new migrants or curtail the number of new migrants :-)) Prices for property would drop like a rock. It works both ways. NEw Zealanders have a love affair with property. Policitians are not going to spoil the party. :-))

Anything that requires knocking walls or changing the shape of the building requires building consent. It gets duly noted by the council / lodged and rv will reflect. I know owners who plan to live a long time at the property, deliberately want to keep the GV rating down. That is why I quoted the Oscar Wilde. They are not interested in hiking up their GV paying the council hefty rates. You can always disagree with you GV and get a Registered valuation
which I stress does not look at the inside / chattels just the building and surrounding area which can be misleading. Even the councils confess it is not an exact science.