Caution required with CV Property figure in NZ

29th October 2009

Could there be a danger in blindly following, and basing your initial appraisal assumptions, calculated though they might be, on using the CV figure as a base value of a designated property.

After all, to come to that figure, QV have utilized a heck of a lot more than just my, or your brain alone.

Well to my way of thinking, and I am certainly open to others thoughts on this, you could get yourself into a bit of bother if you blindly & solely follow this “status quo” recipe.

Why do I say “status quo?”

As a generalization, many “newbies” entering the selling industry look to past experience as the best litmus of future success.

Let me tell you, Real Estate is no different.

Can I suggest ours certainly wouldn’t be the first industry to adopt a practice like this. Following in the shoes of past successful champions sounds like a way to “short circuit” mentoring if you ask me.

In a way I guess that’s what Uni is all about, isn’t it – past experience examples, case study history, etc.

I’ve been brought up to emulate the holistic success’s of past salesperson’s like Zig Ziglar,  Og Mandino, et al……if not in habit….then most certainly in principal.

You might note the dynasty of these mentioned names, not for no reason let me tell you.

When I commenced in Real Estate I suspect I was no different either………. my first few weeks after I received my Real Estate Certificate,  I too wanted to know what was “the secret.” I did receive conflicting reports from well intentioned folk, and overall, that suggested to me right there at the beginning, that there may not have been one single 100% path to follow to ensure “guru” status and subsequent  success.

Why?

The why is looked at as the “how” but overall if you don’t have the “passion” to look after folks interest’s at heart, then your time in the selling industry (and that’s not just real estate) I suggest, will be limited.

Which brings me to the point of the post.

Check out this table………..it was one of my appraisals yesterday, and yes, as I have been told many times before over the last few years……….I do go a bit over the top when it comes to these………but hey ………if it was my property, then for me………….frankly this is exactly the sort of detail I’d want/insist to see anyhow.

Simply put you cannot evaluate every property based in core, on its CV value. The above snapshot from my spreadsheet demonstrates this perfectly. Those sold have been in the range 976 to 1500. Those currently “on the market” are priced at 1527 to 1831. Notice something here?

You don’t have to be a Rocket Scientist to note the differences, now do you? The m2 $ for properties on the market when compared to those that have sold……hmmm……bit of a difference, right?

If you are considering placing your property for sale, then you want to make sure your property is “in the zone.”

To sell?

OFF COURSE …..but more importantly to generate that initial Interest………. after all why do people buy?

Logically, because the numbers stack up……..well yes if you are an investor.

However as a home owner more than likely the property decision is an emotional one………..

And just as similarly …..no that does not mean as a seller that you have to accept the first price/offer past the post, …………whats important in this Oct/Nov 09  market is that you do get at least a few offers over the goal line after the first open home.

That’s exactly what happened to my listing in Fergusson St two weeks back.

Taking my advice, my clients opted for the front page of our weekly magazine (distributed in the local paper Friday).

That was backed up by a Saturday colour insert.

I then conducted not only a Saturday Open Home, but followed that up the next day with a Sunday one. I did have interest in the property earlier in the week, but frustrated some other agents by informing them that “in the best interests of my clients” we were going to wait til after the Open Homes to table all the offers.

Long Story short, after calling all offers, the add from our magazine tells the story…………….

……..31 groups through the location, all offers presented, property sold, Monday am……..less than 20 hrs after the last of the two Opens…….for a very satisfactory price……..totally unconditional. SOLD on the spot so to say.

Let me tell you that more than anything I do, I love the fact that my appraisal figure is usually within 2% of what the property sells for.

Of course I enjoy the initial process, the calculations, the appraisal, the listing, the marketing, the ongoing selling, the “reach an agreement” situation, the “follow thru”, and the “unconditional letter” that arrives from the buyers solicitor, but you know what?

Frankly the most exciting thing for me is that the finally accepted price is so close to what I appraised the property originally would sell for.

In some cases, a seller decide’s to go with the “other agent” because she/he said it would sell for $20-30K more…..but 2 months later they’ve got sick and tired of their selected agent telling them “the market isn’t seeing it at that level…….and you need to reduce the price” type of statement…..and I get the phone call.

When oh when will clients/sellers realise it is not that agent buying the property! (perhaps they should ask that agent if they are prepared to buy the property there & then for that price – now that’s a novel thought?)

Time goes on…………..

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One thought on “Caution required with CV Property figure in NZ

  1. avatardavid garratt

    The Rv vs market value debate is one of my pet topics.
    QV have a good page on the subject on their website at http://www.qv.co.nz/propertyinformation/KnowledgeCentre/Not+all+values+are+created+equal.htm

    I quote a snippet
    “Over time RVs have become utilised as property marketing tools, a role which the poor little RV never intended to fulfil. It is constantly being stretched between measuring capital gain, and the home-owner not wanting to contribute more than their fair share to the rate pool. Fundamentally, an RV is an indicative value snapshot in time. Yes, it easily goes out of date in a fickle market, but all properties in the same Council are on an even keel with the same effective date.”

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