Date: 28th Nov 2024

In New Zealand, there are two ways to determine how much your property is worth: property appraisal and property valuation. A property appraisal is an estimate of a property's market value determined by a real estate agent. On the other hand, a property valuation is an independent property value determined by a registered property valuer. 

So what are the differences, and which type do you need?

We cover what you need to know about property appraisals and valuations below.

Home appraisals

What is a home appraisal?

A property appraisal is an estimate of a property's market value required before listing a home for sale. A market appraisal helps you make an informed assessment when you set your asking price.

Who can do a home appraisal?

Real estate agents come to your home to assess it before comparing it to recent local property sales. It's important to choose an agent familiar with selling homes in your area, as they will have knowledge of the local, current market conditions.

How much do home appraisals cost?

Most real estate agents offer house appraisal services for free, without the obligation to sell through their company. Some agents may charge a fee for more detailed or extensive services.

What happens in a home appraisal?

The home appraisal process starts with a short in-person assessment from a real estate agent.

Your real estate agent will consider many factors, including:

• Location: Proximity to nearby amenities, school zoning, and other location-based factors that can affect the initial estimation.
• Land size: Your home's square meterage and how much space your property has.
• Features: The number of bedrooms, bathrooms, and other amenities that may appeal to buyers.
• Condition: The age of your home and whether there is any property damage to be repaired.
• Improvements: Renovations or upgrades made to your home.

After having your home appraisal conducted, the real estate agent will research comparable properties recently sold in your area. By comparing your property to other homes with similar features, sizing, and condition, your agent can form a final appraisal that's a good indication of the value of your property.

Property valuation

What is a property valuation?

A property valuation is like a more definitive appraisal that can only be conducted by a registered property valuer. Valuations are more thorough than appraisals. They are more commonly used by potential buyers, who may be required to obtain a valuation for a mortgage application. However, sellers may also choose to get a real estate valuation to determine the selling price of their home more accurately.

Who can do property valuations?

A property valuation must be conducted by a qualified professional who has undergone all the appropriate training and is registered as a member of the New Zealand Institute of Valuers (NZIV).

How much do property valuations cost?

Home valuation costs can fluctuate over time and may be higher or lower in different areas. For example, the average price of professional valuation analysis in Christchurch was $790 in 2021, while the price at the same time in Auckland was $1080.

What happens in a property valuation?

A home valuation is similar to a home appraisal but more in-depth. Your valuer will assess the property to provide a detailed home valuation report. In addition to everything that makes up a market appraisal, a valuation takes into account other factors that may take longer to assess. These could include:

• Environmental risks to the property: Any risks involving hazardous substances in materials, contamination in the building, and so on.
• Hidden property damage: Any damage that may be undetectable without a thorough assessment.

Like an appraiser, a valuer will look at recent property sales in similar locations in their analysis. They'll also look at economic factors that affect prices, such as interest rates and current macroeconomic conditions. At the end of the process, your valuer will present a report with detailed information on the property and its market value.

Do you need a home appraisal or home valuation?

Selling a home

In New Zealand, a home appraisal is required before you list your property for sale. The market appraisal process is usually included as part of your agreement with your real estate agent at no additional cost.

You can choose to have both an appraisal and a valuation conducted if you want a more in-depth report. This can help confirm the estimated value determined by the appraiser, though you should keep in mind that the cost of a valuation varies based on your location.

Buying a home

If you're buying a home for the first time, banks usually require an independent home valuation before you apply for financing (a mortgage). This is so that the bank can ensure that they aren't overlending on a property worth lower than its selling cost.

Home valuations also ensure you don’t overpay on the property. If your valuer's findings show that the asking price is higher than the property's value, you could use this to negotiate.

Get your free real estate appraisal from Tremains

Both a home appraisal and home valuation can help you determine how much your property is worth, but they serve different purposes and are conducted by different professionals.

If you're looking to sell your house, we're here to help. With over 50 years of experience selling properties in New Zealand, our real estate agents can provide stress-free, accurate home appraisals in Hawkes Bay, Levin, Rotorua, Taupo, Tauranga, Wairarapa, or the Western Bay of Plenty. Contact us now to arrange your free property appraisal from Tremains!