Hi folks,

I recently had an unconditional offer that I had prepared and was set to meet the potential buyer when I received a call from them prior to our meeting. The buyer wanted to reduce their offer by $20,000 as they saw the 2010 GV had dropped by $20,000 from the 2007 GV.

The house in question was a doer upper and we had discussed what its eventual value in the market would be with a renovation completed. My point was that the eventual selling price was not going to be affected as a new GV should be ordered upon completion of the works. The house after renovation was obviously going to have a far higher market value than in its current state. The sale did not happen, the house has since sold to another purchaser who will likely renovate and sell later making a handsome profit. In my opinion my buyer put too much emphasis on the GV and lost a great little project.

The common misconception about GVs is that they are an actual valuation and that they determine the price of the property, this is simply not the case. The GV figures seem to be set arbitrarily and go up or down every 3 years. No-one goes to inspect a property, Quotable Value, the company who set the GVs don’t send out their valuers unless specifically requested by homeowners and they, quite rightly, charge for their service.

To assess the value of a property that is to be sold it is not the GVs that are looked at it is previous sales. Every house sale is recorded, price, dates, time on the market etc and while no real estate agent or professional valuer can say to the exact dollar what your house is worth, we can with our experience and use of existing data be very close using a range, i.e your house should be valued etween x and y, the gap not being very large.

So to any purchasers out there that see a home they like but are hesitant about buying because the GV is lower than the price being asked I have a couple options for you, the first is to have a registered valuation, then you will know with certainty that you are not overpaying or ask your real estate agent for 3 months of local sales information in the specific area you are looking to purchase, educate yourselves as to actual sales values rather than rely on a random figure which sometimes is accurate but wrong an awful lot.