What is the Relationship of Price to Rateable Value?
Rateable Value (RV) is a figure placed on every property within New Zealand every 3 years, and represents the combined value of the land and any improvements (house, garage, driveway, fencing, landscaping etc). Although I quote the RV frequently, you may be surprised to find that it is not designed for agents like myself to market houses, but in fact is used by the local authourities to set the annual rates, or land taxes.
Three-yearly, each local authority in New Zealand contracts a valuation company to assess the RV on every property within their patch The RV on a given property will be based on the sales over the three years preceding that date, and will take into account sales of similar properties within the same location.
The Rateable Value is therefore assumed to be the market value of any given property, as at the valuation date, LESS chattels, such as fixed floor coverings, any kitchen and laundry whitewear, light fittings, heat pumps, and so on. I assume that’s because chattels are not fixed to the house, so may be added, renewed or subtracted, and also because there is a degree of depreciation with chattels that doesn’t necessarily apply to other property improvements.
In the ensuing three years that follow the RV being set, the market will move up or down in relation to that figure, and so it follows that sales will tend to follow a trend in relation to RV. Establishing just where that trend sits for both the location and the particular price band is always helpful in establishing what an individual property may be worth if you are planning to purchase it. That is why I frequently quote the RV on a property in the new listing material I send you.
When you get close to making an offer on a property, its always helpful therefore to have some idea what other similar properties have sold for in relation to their RV, and because it’s public information I can easily provide you with that sale information at the appropriate time.
What’s a Deadline Sale?
A deadline sale is a variation on both auction and tender, but like both those marketing methods, is intended to make clear to buyers that it is the vendors’ intention to be sold on or before the deadline date.
Whereas with an auction all bids must be unconditional, and bidding is public, with deadline sales offers are protected by client privacy provisions and so are not disclosed to other buyers, and may be either conditional or unconditional.
Deadline sales vary from tenders as follows – when a property is marketed by tender it cannot be sold before tender date, offers must be on a tender form and accompanied by a 10% deposit, and must remain valid for 5 working days from the close of tenders.
With deadline sales none of these things apply – offers can be made (and accepted) at any time, they are made on a normal sale and purchase agreement form, and can be withdrawn at any time prior to acceptance by the vendor. There is no requirement to attach a deposit cheque to the offer.
In the normal course of events, if the property has not been sold by the deadline date, the agent will assist all interested parties in preparing their offer and at the appointed time on the deadline day, all offers will be submitted to the vendors for their consideration.
I will assist you to make your offer as competitive as possible with any other buyers, without breaching the privacy of other buyers.
On receiving the offers, the vendors have three choices – they may reject all offers, they may elect to negotiate with one of the buyers, or they may simply accept one of the offers, in which case the property then is either under conditional contract, or if the accepted offer is unconditional, then the property is sold.
How do I go about buying a house in New Zealand?
When you find the right property, I will prepare a written offer for you to sign.
Offers can be unconditional (which if accepted is then binding on both buyer and seller – no gazumping!), or conditional on a small number of factors such as mortgage approval, solicitor checking the property title, sale of other property, valuation, structural inspection, and a local body written report which is called a Land Information Memorandum (LIM).
Once any conditions are satisfied the agreement is then considered unconditional, and again, the sale is now binding on both buyer and seller, at which point a deposit is payable – normally around 10% of the purchase price although this can sometimes vary according to circumstances.
If your offer is conditional upon arranging finance with a bank, you will find this easy as New Zealand banks process applications quickly.
The balance of the purchase price is payable on settlement day, and in most cases this is the day you take possession of your new home and get to move in.
Having a lawyer act for you is an essential part of the process of buying or selling a house, and on settlement day, it is your lawyer who facilitates the payment of the remaining money to the seller.
How is a survey different in New Zealand?
Here, someone who does a survey simply marks out the boundary of a property and places white survey pegs at each corner.
If coming from the UK, the “survey” you may be familiar with is an optional inspection of the property structure by a qualified building inspector, and is referred to here as a building inspection.
In some cases it may be appropriate for you to obtain a report from a geotechnical engineer on the underlying ground.
No-one requires that you complete such inspections of the property prior to purchase, but sometimes, if you are borrowing a high percentage of the purchase price, your lender may require a registered valuation.
If I’m New in Town How Will I Know What a House is Worth?
The selling price of houses sold in the past is public information, and if you find the home of your dreams I can easily provide you with the sale prices of similar homes that might have sold in the same location.
Alternatively you may wish to engage a registered valuer to provide a report on the property’s current market value.
Are House Auctions Very Common?
Less than a quarter of all properties on the market are offered for sale by auction.
How Do I buy a Property being Sold by Auction?
You can make an offer before the auction and the seller has the option of accepting your offer, or declining it and continuing to market the house until auction day.
If you decide to wait until auction day itself, you need to be aware that your bids at auction are unconditional so that you need to have checked the building structure, spoken with your lawyer, and arranged your finance prior to auction day.
At the fall of the hammer, a 10% deposit is normally payable?
Generally the settlement date is pre-determined on the auction documents, which you should get a copy of before auction day. However if you prefer a different settlement date, you need to tell me well before the auction so it can be arranged with the seller.
Where Do Most of Your Buyers Come From?
It’s quite a mix. Consistently, around 40% of my buyers come from within Nelson, another 40% come from overseas (mostly the UK), and the remaining 20% comes from elsewhere in New Zealand.
The high percentage of UK buyers is due primarily to the selling trips I make to the UK twice a year, and so of the almost 2000 buyers on my database, at least half of them are migrating Brits. To assist that buying process for migrants, I have created Migrate2nelson Limited www.migrate2nelson.org which is a one stop shop for migrants who wish to move to Nelson, and of course, buy a house once they get here.