In a market where the majority of properties are marketed by Tender / Auction / Deadline Sale, it is critical that you become proficient in valuing property as quickly as possible, so you can:
A: Avoid missing out on your dream property by pitching your offer too low, and…
B: Avoid paying too much for a home you fall in love with.
First up: Valuing property is not an exact science. 2 weeks ago a property sold for $100k more than I had appraised it for (whoops!). Don’t beat yourself up if your offer gets beaten by $50 or $100k. Every property is worth a different amount to different people depending on their needs and motivation. Eg. A cashed-up retired couple might pay more for a single level home that is close to their grandkids which they plan to stay in for 10, 15 years, as opposed to a young couple who have just started looking, are in no hurry to buy and who are scraping every last dollar together to make up their 20% deposit.
So, it’s important to think in price ranges with any home. Now that we have that cleared up, how do you figure out the range?
By the age old approach of comparison shopping of course! In this post I am going to take you through a detailed look at 8 recent sales which should help you to establish an accurate idea of value for any similar properties that you look at over the coming weeks.
Note: Past sales are just that – in the past. In this market prices are on the move so once a sale is 2/3 months old you will probably need to adjust upwards if using it as a comparison. By my estimation prices in the Northern Suburbs have increased by around 10% or more in the last 6 months.
Starting from lowest value to highest, hopefully there is something here for everyone…
46A Ohariu Road, Johnsonville
Sold By Negotiation in the high $200’s (15.5% above RV) on 20/1/2016 – after 36 days on the market (4 offers received).
RV: $250k, floor area: 90sqm (probably includes garage), Tenure: Unit-titled. LIM report provided up front.
What happened? Being on the market over Christmas can be make or break. This home, while recently repainted inside, still needed renovation to the kitchen and bathroom along with new carpet and an exterior re-paint. It had a garage underneath (not internal access) and a small porch area but no garden. Properties don’t get much more affordable than this! It had been previously rented out at $350 per week to tenants with a large dog.
22A Woodridge Drive, Woodridge
Sold by Tender in the mid $400’s (13% above RV) on 16/2/2016 – after 33 days on the market (over 100 buyer groups came through this home during that time)
RV: $410k, floor area: approx 83sqm (not including garage), Tenure: Cross-leased. 3 bedrooms, 1 bathroom, open plan living with attractive modern kitchen. LIM and builders report provided by owners.
Beautifully presented 3 bedroom home, North facing for maximum sunshine. This home had been bought just under 3 years ago for $412k, showing the recent rise in values in this area. While on a small-ish cross leased section it still attracted a lot of interest (10 offers in total) due to it’s impeccable condition and single level layout.
56 Glanmire Road, Newlands
SOLD by neg in the mid to high $400’s (5.5% above RV) on 13/2/16 after 18 days on the market (3 offers received, 27 buyer group visits)
RV: $450k. Floor area: approx 105sqm. Well presented 3 bedroom home with 2 bathrooms and a large sloping section. LIM and Builders report provided.
Why did this one only sell $25k over RV? Having just sold 2 years before (at $448k) the RV had been revised by the Council to $450k. Once RV’s go up this much it can have a big influence on visitor numbers and offers as most buyers looking in the mid 400’s presume it will sell for $50 – 100k above RV like most other homes and therefore be out of their price range.
I find the relevance of an RV will depend on the sales history of the property. This is not a hard and fast rule but usually if a property has been sold in the last 2 – 5 years the RV will be slightly more relevant (RV’s were last reviewed in 2015). This may be because RV’s often seemed to be realigned with recent sale prices. If a property hasn’t sold for 10 / 20 / 30 years the RV can often be very very low, even if the home is dated or run down.
82 Newlands Road, Newlands
Sold by Auction for $522k (15% above RV) on 22/3/16 after 21 days on the market (49 buyer groups visited this home, with 4 registered bidders attending the Auction).
RV: $455k. Floor area: 130sqm approx. Tenure: Freehold. 4 bedrooms plus study with 1 bathroom (2 toilets). The most attractive feature was the large open plan living area with modern kitchen which opened out onto the deck pictured above. LIM and builders report were provided up front.
What happened? A high moisture reading in the builders report almost scuppered the process, however after investigation (read: cutting a hole in the wall) it was discovered that this area was completely dry – some sort of substance found on the back of the gib was reacting with the moisture readers (3 different moisture meters were used and all showed a high reading). If you get a moisture reading don’t automatically think it is the end of the world – it is worth investigating and getting specialist advice before jumping to conclusions. This home attracted spirited bidding, particularly from investors even though the builders report showed maintenance work was required to the roof and the exterior paintwork.
71B Clifford Road, Johnsonville
Sold by Auction for $590k (20% above RV) on 16/2/16 after 21 days on the market (47 buyer group visits with 4 registered bidders at the Auction).
RV: $490k. Floor area: 180sqm approx. Tenure: Freehold. Modern 4 bedroom home with 2 bathrooms (3 toilets), a large open plan living area and an internal access single garage on a low maintenance section. LIM and builders report provided by owners.
A good example of a well presented home attracting good interest. Buyers love modern (therefore hopefully warm) homes with low maintenance sections where they can still enjoy the sun. If you can present your home in a ‘ready to move in’ clean & tidy state it will always have a positive effect on the sale price.
54 Tarawera Road, Johnsonville
Sold by Auction for $510k (27.5% above RV) on 8/3/16 after 18 days on the market (49 groups through with 4 registered bidders at the Auction).
RV: $400k, land area: 718sqm. Tenure: Freehold. Charming 2 bedroom home on a good sized, private section with awesome afternoon sun and indoor / outdoor flow. A really cute Johnsonville home. LIM and Builders report provided by owners.
Immaculate presentation makes all the difference again! The owners here put in hours of work de-cluttering, tidying the section and completing maintenance jobs around the home to present in it’s best possible condition. Preparation is key, making it easy for buyers to fall in love with the home.
5 Haumia Street, Johnsonville
Sold by Auction for $511,500 (44% above RV) on 5/4/16 after 21 days on the market (85+ visitor groups, 8+ bidders at the Auction).
RV: $355k, floor area: 120 sqm approx (likely including garage). Land area: 596sqm. Solid 3 bedroom weatherboard home with magic sun aspect. In need of a creative owner to provide finishing touches and some indoor / outdoor flow. LIM and Builders report provided.
A very low RV can create a lot of interest and as a seller a low RV can be your best friend if your selling processed is managed the right way by an agent that knows what they are doing. We had a packed Auction room for this one with investors, first home buyers and a few developers fighting it out to the very last for this fine example of a good solid Johnsonville home.
3 Haumia Street, Johnsonville
Sold by Tender in the low $800’s (15% over RV) on 19/2/16 after 24 days on the market (72 visitor groups, 7 offers received).
RV: $710k. Floor area: 215sqm approx (not including garage). A 5 bedroom, 2 bathroom home with 2 living areas, lots of character and a separate single garage. LIM and Builders report provided up front.
The open plan living area with huge modern kitchen was just stunningly attractive. Of all the houses I have ever marketed (in my 9 years at Harcourts) this is probably my favourite. My dream home! The owners painstakingly worked to present this home in wonderful condition completing an extensive amount of painting and de-cluttering before going on the market. Before 2016 it was extremely rare for a home to sell for more than $800k (I could only find 1 previous instance of this happening) however since the start of this year that plateau has been broken multiple times already.
1. Providing a LIM and Builders report will likely get you more offers to start with, and increase the chance of those offers being unconditional. Why is this? Buyers love how easy it is to buy a home when all the information is provided up front. They can still get their own builder to go through the home as well but at least from the start they can feel relaxed about falling in love with a home knowing what they are dealing with up front. There has been a little bad press about this lately but I believe providing more info up front can only be a good thing for everyone involved. I have never met a buyer who didn’t want a builders report to be provided by the owner. In fact in this market, when one isn’t provided the buyers often get a tad upset and start asking ‘why not?’
2. Your builders report doesn’t have to be perfect. Buyers expect there to be little jobs that need doing and repairs due in the next 6-12 months. Even a roof replacement doesn’t scare most buyers off. They just want to know as much as possible before they offer or bid so they can make an informed decision on price.
3. Auctions are starting to take off in Wellington. I have met multiple buyers at our Auctions who say they have given up on Tenders and deadline sales and while they may miss out at an Auction it is at least more of a ‘fair fight’ as they can see exactly what they have to pay to buy the property. From a Sellers point of view, Auctions can help educate buyers on the fly, showing them how high they need to get to. In a Tender situation buyers often pitch their offers too low not realising they are going to be outbid by $20 – 100k. It is hard to back yourself to go higher without the positive reinforcement of other buyers in the room.
Before you go… A quick note on RV’s
Chances are any Wellington property’s Rateable Value is far too low. The most recent updated RV’s (released Nov 2015) are already well out of date and most of them weren’t very accurate to begin with. As at March 2016 – the average sale price in the Northern Suburbs is now 20% above RV (based on all sales submitted to REINZ since Feb 1st 2016).
So the average home with an RV of $400k is now selling for $480k+, and this difference is rising fast. Some properties are selling for $150 – 200k over RV, we will take you through a few case studies shortly.
Please note: This 20% figure is not a hard and fast rule, only an average. The fluctuation from house to house is massive.
2 important questions to ask when looking at any RV…
1.When was the RV done? Has it been re-inspected?
Most RV’s are generated without anyone ever the visiting the property so it’s a credit to the system used that they can even be slightly relevant at all. Owners can pay $250 to have their RV ‘re-evaluated’ at any time to take into account renovation work and make it more in line with RV’s for similar homes nearby. When you visit a property it is a good idea to ask if this has been done. If it hasn’t then the current RV is unlikely to reflect any work these owners, or even previous owners have undertaken. The last City-wide review of RV’s was completed in 2015 (note: this didn’t involve physical inspections of each property).
Owners: Be aware that increasing your RV will mean you probably have to pay higher rates and it can decrease the amount of interest you get when it comes time to sell. How is this possible? Well a lower RV attracts more visitors to an open home, and more visitors usually means more offers. More competition = a higher sale price.
2.When was the property last sold?
As mentioned above I find the relevance of an RV will depend on the sales history of the property. This is not a hard and fast rule but usually if a property has been sold in the last 3 – 5 years the RV will be slightly more relevant (RV’s were last reviewed in 2015). This may be because RV’s often seemed to be realigned with recent sale prices. If a property hasn’t sold for 10 / 20 / 30 years the RV can often be very very low, even if the home is dated or run down.
Thank you so much for reading. Buying a home isn’t easy right now with so much competition around but I still think it is a great time to buy with the Wellington market (hopefully) poised to keep rising with low interests looking like they are here to stay and with more and more buyers coming into the market as a result of their kiwisaver helping them put together their first home deposit.
Stay safe out there!
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