What is the price and period of validity of a property valuation? How to be sure of the value of your home? Who can guarantee that the market value will be the same tomorrow morning? And which are the values to consider when it comes to valuing a house?
How to be sure of the value of your home? Who can guarantee that the market value will be the same tomorrow morning?
We can’t make do with a rough idea of the price, details and potential of our homes. In the real estate sector's golden age, property prices were inflated like balloons. Although it’s clear that no-one can be really sure of the price of a house (only an official valuation for a fixed duration), we can now sleep soundly because it seems that tomorrow the balloon will be just as large as it was yesterday.
Why do we need a valuation? Who can request one? And very importantly, who should we ask to do it?
What distinguishes a valuation from other types of appraisals is its purpose. A property (home, commercial premises, building, estate) should be officially valued in the following situations:
A valuation can be requested by a proprietor or possible buyer, the bank which will provide the loan, the tax authorities, a judge or a notary public.
A property must be officially valued by a valuation company approved by the Bank of Spain. These are the only valid businesses, as they are regulated and supervised in order to provide transparency. The department of control signs off the valuation report. The valuation companies are businesses formed by technical valuators, namely architects, architectural technicians, industrial engineers, or agricultural engineers.
Now we have somewhat clarified the “why?”, there are other values to be considered in a valuation. Values that can move up or down, cause and effect, “the balloon might be deflated by the morning”…
And which are the values to consider when it comes to valuing a house?
What is the price and period of validity of a property valuation?
Valuation companies are free to establish their own prices depending on the size of the property. In the case of a “normal” home, the rate could vary between 100 and 500 euros.
A valuation expires after 6 months, making it very important to order one at the time when we are going to need it.
What dos the valuator want to know about the property?
There are always two areas of focus to a valuation; general and specific.
The general focus
|What are we valuing?||It’s essential to have the property to be valued physically defined, and its geographical location identified by means of an exact address|
|Are there any limitations of restrictions of use?||Here we are looking at the town planning situation, elements that can have a significant impact on the value (land rating, coastal laws, green areas, cataloguing)|
|What is the extent of the property’s ownership?||Are there associated charges (mortgages, easements, usufructs, some kind of protection…) that limit the possibilities of physical or economic use of the property?|
|What is the state of the property’s occupancy?||It must be known if the property to be valued is occupied by the owner, or by another person or other legal entity, and in this case, under what terms|
The specific focus
|Characteristics of the environment||Similarities and differences between the building and those in its surroundings, proximity to public facilities, infrastructure, etc.|
|Characteristics of the building in which the property is located||Age and general conservation, accessibility and condition of entrances, private garden areas, swimming pool, concierge, security, specialised communal rooms or other services, visible construction issues…|
|Characteristics of the building that are valued||Area, number of rooms, bathrooms or toilets, location within the building, attached annexes, preservation of the various elements, orientation, brightness, energy efficiency, quality of finishes, appliances…)|
|Characteristics of the market segment||In which the property is found (supply and demand for similar houses, prices…)|
All those golden years before the crisis, played too much at inflating and deflating the balloon, a practice that brought about the result of inflated valuations to increase profits at the time of the operation.
But how is the market today? Thanks to the errors committed in the past, this practice has been eradicated within the sector and now the simile of “the balloon” no longer exists; the sector changed, and took various measures with respect to guaranteeing the independence of the valuation companies and thereby assuring a price “without air”.
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