New Rateable Values dropped!

[KIMI]

I bought my property in Wanganui almost two years ago and have been renting it out for a decent return and I have now found out the new rateable value from the council and I am quite shocked! The RV when I bought the property was $105,000 and I bought it for $75 now the RV is $80,000 and all Wanganui properties have gone down. So I have basically just lost any equity I had in the property am I correct on this?

How is it possible for RVs to go down by so much?? I was planning on selling the property in a few years after I put in a new bathroom and kitchen for around $120 but now I don't know what to do.The new RV doesn't take effect until July 2014 but anyone can look this up on the council website so I don't think that helps much.

My question is - should I try to sell it now? or do you think it would still get a decent price in a few years after a reno? and do you think most buyers use the RV as a price guide when buying because I know I did? Have other cities RVs dropped so significantly?

Any info on this from experienced property people would be greatly appreciated.

[DazRaz]

You lost the equity you thought you had. You paid $75000 and that sale info helped contribute to the new rating valuation. The old was was too high when you bought. You have possibly made $5000 since you purchased.

Rating valuations are just a guess and with the work you have done, it may be worth more.

[eri]

you

and everyone else

have been buying below the last RV

which has brought down the new RV

that's how it works

in auckland it seems people are averaging about 30%? over the current RV

so the next RVs will rise about 30%

[Learning]

And? The RV is just the number the council use to workout how much rates to charge you. When I'm looking at property I pay as much attention to the RV as I do the colour of the wall paper. They are too easily influenced by the owner. Phone up the rates team at review time and with a little 'evidence' you can swing the value by tens of thousands.

$30K below RV, did you really manage to steal such a bargain? I bet that if you look up your past rates valuations there will be an 'anomaly' where the value suddenly jumped. A couple months before it listed for sale I bet. The new valuation will have been greatly influenced by your purchase price which, less than two years old, would closely 'reflect' the true value.

If you are not happy with your new valuation, just look up the RV's of all your neighbors and similar properties in the area, make up a list of those about the price that best fits your needs and present this evidence to the review panel.

[speights boy]

So I have basically just lost any equity I had in the property am I correct on this?

No.
Your equity in this property remains at 100%. (or thereabouts )

[KIMI]

Thank you for the replies. I offered 30k less because it needs a new bathroom and kitchen and to also be rewired but now even if I do that work I may still lose money. I know that the RV is not the same as a registered valuation and it is only used for rates purposes but alot of buyers look at this number unfortunately.

So I looked up the other houses on the streets new RV and there are two that are higher than mine. One is valued at $93 and the other $85 what I don't understand is how they come up with the valuation because mine was valued higher than these before and mine has a double garage where as those houses have no garage and mine is a four bed and those are only three and mine rents for more as the tenant from one of these houses moved into mine two years ago when I purchased it and was happy to pay a higher rent.

I can see that one of these houses has had a recent paint job and the other a brand new fence, does this play a part in the new rateable value and does whether you pay your rates on time affect your new rating? How do I go about collecting evidence for the review panel and what info would help my case as my property has had no major construction or renovations, the only thing I have been able to do so far is install new carpets and do some landscaping but I would like to get the RV up to around $95 as I would rather pay more rates and have a higher RV.

Thanks in advance for your advice!

[Orpheus1]

Similar situation for me with regards to CV vs RV.
bought a house in Queenstown pre- auction in 2010. It was not finished but only needed flooring, driveway, landscaping etc. agent told me the vendor would take 650k ending up settling on 670k had a CV of 820k at the time.
one month later after I had done the landscaping and had some carpet layer we had it valued and it came in at 775k.
About a year later when the QV revalued properties in the area and after the driveway and a number of other upgrades had been complete the CV was revised to 670k. ( the guy just did a drive by to value)
i contested and after much bitching he finally came around to be shown through and he agreed it would come up a bit but wondering why I was contesting if I wasn't selling?.
new valuation came in at 705k.
3 months later had a new RV and it came in at 800k.
6 months ago new RV came in at 830k.
we have just added a 70sm deck so will be interesting to see the next valuation?

CV mean nothing but buyers do definitely look!

cheers

[Learning]

KIMI, you already have the evidence, 3 bed vs. 4, garage. If you want or need more you'll have to pay for a registered valuation from an accredited valuer.

Council/rateable valuations are worked out by a computer program over seen by some person sitting behind some desk who has never driven down your street, let alone seen your house. Same goes for QV unless you pay for a physical valuation. They have thousands of houses to 'value'. A computer program takes the last valuation, last sale price or registered valuation if recent, price trends for the area and, by some seemingly random logic only known to the programmer, comes up with your RV/CV.

These valuers have as much a clue of the true value of your property as the postman.

[Perry]

Which is why those in the know refer to the outfit as Questionable Value. It's
not even fair to call it an educated guess. More like a property horrorscope.

[Simmo]

Here's some figures on a recent deal I did,

Council Valuation $280K
Registered Valuation $180K
I paid $125K

So I tend not to take too much notice of Council Valuations. Contest it and back up your conclusions.

[Perry]

I have a really odd low-ball QV figure. But as it's a buy-and-hold
I'm not complaining as it keeps the rates down. QV have even
breached copyright by 'stealing' a PM's rental pic off Trademe to
use in the QV on-line reports. Gives you an idea of their ethics.

[Simmo]

Yeah a low council valuation is good for the rates bill alright!

The only issue I've struck is the desktop valuations that banks like to use (same, or very similar to the QV E-valuer) use council valuations as a variable, so if it's low your value may come up short deflating your LVR.

Funny how in the example above it didn't work the other way. I had to get the valuer in because the desktop value was too high against what I was paying in the agreement.

I love dealing with banks

[speights boy]

Simmo
In your case, what were the causes of the difference between the registered value and what you were able to buy for ?

[Simmo]

Short version :- The Bank

Long version :- The vendor was a local business owner who had 'diversified' into residential property investment. I'm guessing things weren't going terribly great as the bank had given them a nudge to offload these ^^^ assets. A full marketing campaign ensued, then it went to auction. I bid against another guy and it got passed in. 6-8 weeks later I get a call from the agent as the nudge was fast becoming a heavy handed push, the vendors head was still firmly in the sand. I made the offer cash and included the neighboring property which the vendor also owned (only 105K below council valuation this time) to help tidy up the vendors affairs.

Outcome = Vendor gets to keep his livelihood and I get a couple of reno's to do. Good enough in my book.

[speights boy]

Ahh, good work.

Yes, they are the deals to find....patience is a virtue.

If the OCR rises over the next 2 years then these will become more frequent.
Especially if LVRs (in some form) are still around.
The "we'll just top up the mortgage to get us through this rough patch" will be a great deal more difficult.