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The Value in a Valuation

July 5, 2016

Valuation

A reader of this blog asked whether a relationship home should be valued by a registered valuer or by a getting a number of real estate agents and whether the Court had a preference. Property valuation? Property appraisal? They’re the same, right? No, they are not and the distinctions between them can be important when it comes to making decisions about what is often the largest asset in a relationship property pool – the family home.

Firstly, let’s look at the differences between a registered valuation and a real estate agent’s appraisal. A valuation report can only be prepared by a registered valuer. A registered valuer will have undertaken considerable education and experience in order to be able to arrive at a definitive value for your home, taking into account a wide range of factors. A valuer will charge for his or her services. The valuer is legally responsible for his or her valuations and will base it on relevant evidence and information about the property (having viewed it), the market, Council zoning and any legal issues.

An appraisal can be done by a real estate agent and is an indicative estimate based on recent sales of properties in your area. It is not a true indication of the actual property value and often appraisals by different agents can vary considerably. An agent does not usually charge for an appraisal – it is often seen as part of their marketing to get your listing. An agent is also not legally responsible for the appraisal in the same way as a valuer is for a valuation.

So, faced with a relationship property division, when would you use an appraisal and when would you use a valuation? In large part the answer to this depends on what you intend to do with the home. If you and your spouse have agreed to sell the home then the market will ultimately determine the value of the home. Obtaining a number of real estate agents’ appraisals will help you decide on an agent to list with, how to market the property and the price range you may expect to sell for. If you and your ex cannot agree on these aspects of selling the home, then you may need to ask the Court to decide these issues in which case you will need a valuer’s report and recommendations as expert evidence for the Court.

If you are getting an appraisal, don’t rely on just one – get a number of them, take out any that are wildly varying from the rest and then take an average of the remaining appraisals. Being estimates, you will usually find they vary. I have seen clients impressed by a high appraisal only to be disappointed later when the market didn’t live up to the expectation this created.

If one of you is going to buy the other out of the home, then a registered valuation should be obtained as it will assist you each to make a properly informed decision about the purchase price to be paid. For the buying party, a valuation gives peace of mind that too much is not being paid for the property.  For the selling party, a valuation gives peace of mind that an appropriate payment is being received for the home. Banks will usually require a registered valuation when considering an application for finance to purchase one party’s share of the home. Again, if there is an issue about the value to be attributed to the home for one person to purchase the other’s interest in it then valuations will be needed as expert evidence for the Court.

Some clients baulk at the prospect of paying for a valuation. However, most see the value in getting a valuation when they consider the peace of mind it gives them in being able to make informed decisions about . Often the valuer’s fee is more than recovered when the client receives the valuation and, recognising it differs from their estimate, revises their settlement proposals.

Got a relationship property issue? Call us at Family Law Results on 0064 9 297 2010 or lawyers@familylawresults.co.nz

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