What are the pros and cons of looking at the CV when buying a property?

CVs are often out of date, sometimes even on the day they are launched.

But that doesn’t mean they are useless.

As a buyer, the CV can still give you a rough starting point, especially when the listing doesn’t include an asking price.

The reason CVs are so tempting is that buyers often don’t get much else to work with.

A property might be listed as “auction”, “price by negotiation”, “deadline sale” or “tender”. That means the agent isn’t putting the seller’s expected price on the listing.

And even if you call the agent, they might still be cagey. They may not give you a clear idea of what the property will sell for, even though you know they’ve probably had that conversation with the seller.

So buyers look for clues.

They check the CV. They look at Homes.co.nz. They compare whatever numbers they can find online.

That’s understandable. Buyers just want to know how much a property might cost. They want to avoid the disappointment of thinking they can afford a house when actually, it’s going to sell for much, much more.

The CV gives you something to anchor to. It can also be useful in a negotiation. A buyer might say: “I don’t want to pay more than the CV.”

Even if everyone knows the CV is out of date, it still gives you a reason to push back.

But this is where buyers need to be careful.

A property selling below CV can feel like a bargain. But that doesn’t automatically mean it is. You might still be paying more than the property is really worth in the current market.

If I shouldn’t rely on the CV, what should I do instead?

A better place to start is by looking at what similar properties have recently sold for, because that shows what buyers are actually paying.

You can find these sales on websites realestate.co.nz.

Use the tool to look at properties that have sold recently in the same area, then compare them with the property you want to buy.

For example, say the property you want to buy has a CV of $1 million.

But when you look online, you find three similar properties nearby have recently sold for $890,000, $910,000 and $920,000.

That tells you the CV might be too high.

But then you need to go one step further.

Compare those homes to the one you want to buy. If the property you want to buy isn’t as nice, maybe it should sell for less. If it’s been renovated or has better views, maybe it should sell for more.

It takes more time. But that’s how you become an educated buyer.

How often do councils update their CVs?

Most councils update their property valuations around every 3 years.

If a council only recently updated its valuations, there’s a better chance those estimates are more accurate.

The property market may not have moved much since the valuations were set.

But if the valuations are old, the market could have moved considerably.

That’s when CVs become less useful.

How do councils set their CVs?

Councils don’t physically value every property. There’s no council worker with a clipboard walking past everyone’s house.

They generally use data companies to estimate values at scale. Think of it a bit like Homes.co.nz, OneRoof or Valocity, where you type in an address and the website gives you an estimated value.

Some councils use companies like Quotable Value or Opteon to provide these estimates.

That means CVs are usually computer-generated estimates. They’re not a valuer walking through the front door, checking the kitchen, looking at the view, and deciding what the property is worth.

Ed’s view: What does an economist think?

Buyers should generally ignore CVs, or at least take them with a very small grain of salt.

People pay attention to them because they assume that, since the council came up with the number, it’s the official value of the property.

But that’s not really the case.

A CV might arrive in November, but the actual calculation could have been done six months earlier. So it’s really telling you what the property may have been worth back then, not what it’s worth today.

And because CVs are usually updated years apart, they can jump around quite a bit. That can be a shock if you’re not closely following the property market.

So I think of a CV as a Homes.co.nz estimate of your property, except it’s already out of date. 

You wouldn’t look at a value on Homes.co.nz and think that’s exactly what the property will sell for. And you wouldn’t look at what the estimate was 18 months ago and think that was accurate either. 

But that’s what buyers are doing when it comes to CVs.

That doesn’t mean CVs are completely useless.

They can still be a bargaining tool. Some sellers will even challenge their CV to get it higher before they list their property because they know buyers use it as a shortcut.

But ultimately, buyers are better off looking at recent comparable sales and making their own judgment.

Most people probably won’t do that because it takes more work.

They’ll keep looking at CVs, even though they’re not the best guide.

But if people want the data, here it is.