Problems and methodology for appraising an apartment in Spain: everything you need to know

Entrada de blog   •   ene 02, 2017 10:28 CET

Factors that influence the valuation value of an apartment.

The fact of obtaining the market value of an apartment does not attend to a set of fixed characteristics, but it enters into a set of variables much more complex variables that have to be measured accurately for a correct appraisal.

The fact of assessing a flat is complex and must be guided by a set of established regulations. That is, they must be taken within the framework of legality.

Although the situation of each Apartment is difficult to stipulate a number of specific factors that may affect you, we will list those that may be more common:

1. The nearest housing market. It is one of the fundamental factors, and it is that the current regulations are stable in one of their valuation methods that it is possible to make a comparable sampling of the different apartments, with similar qualities of the area, to establish the assessment of the Apartment. The appraiser notes and relies on real estate portals to know the pretensions of the sellers of each zone.

2. Conservation, current status and age of the apartment. It analyzes the quality of all the elements as well as the exterior aspects: balconies, facades, etc. It is also advisable for the apartment appraiser to specify whether the apartment is rehabilitated or not.

3. Location of the Apartment. If the apartment is located in a good area will reflect when appraising an apartment. Here the equipments are essential: green areas, places of leisure, school, transportation, medical and commercial services. The better and more numerous the services, the greater the value of the property.

4. Current surface and distribution. The size of the property is measured, although not all square meters are worth the same, it will earn points if they are well distributed between rooms, bathrooms and areas of passage. The value will be influenced also if it is reformed or well preserved. In addition we will be able to include the store and the garage as long as they are registered in the registry or the writing.

5. Characteristics and conservation of the building. Quality and finishes of the building come into play: building architecture, common areas, elevators, intercom, easy access.

6. Lighting and other factors. Having many hours of light will make the value of assessing a flat a little larger, so it will be necessary to analyze the orientation of the Apartment (south, north or east). The last aspect to mention is the type of housing in question, whether single-family or non-family.

An interesting article could be How to make your apartment appraised correctly

Documentation needed to assess an apartment.

When we contract an appraisal of our home it is advisable to have the necessary documentation prepared before the real estate appraiser visits our apartment, thus ensuring that the process is carried out as quickly as possible.

If we hire a company to perform the appraisal, most often it is that before the appraiser visits your apartment, the client is informed about the documents that will be required for that process can be completed.

So the most common documents required when appraising a flat are:

- For the accreditation of ownership of the property will require the updated simple note or writing the apartment.

- Cadastral documentation.

- In case of being an OPH (Official Protected Housing) the final qualification certificate for finished homes and the temporary qualification certificate for those that have not yet completed the construction or constructions.

- In case the apartment is rented it will be necessary the lease, last receipts of the rent, state of payments and expenses.

For other appraisals in which the property subject to qualification is not an apartment, other documentation will be required.

What happens when the price at which an apartment is bought is overvalued? Flat appraisal to the low.

When we ask for a mortgage to buy a living place, the appraisal of that apartment in question serves the lender or the bank to know the guarantee that will have in case of a default by the buyer. This means that when the bank lends us money is going to keep their backs telling us that only grants a maximum of 80% of the appraised value of the house, since in case of payment default, the property will always have that property secured as well as the money lent.

Well, when we are ready to buy our future home, if it so happens that the seller valued that apartment for a value of 130,000 € for example, since on many occasions we let ourselves be carried away by our feelings and empathy towards that new home, the law requires all financial institutions to have an approved appraisal and it is possible that once the appraisal of that apartment corresponds to a value of 110,000 €.

So assuming the bank gives us 80% of the value of that apartment, that 80% will correspond to the monetary amount of 110,000 € and we will have to take care of the remaining part.

I would like to make a small point here and it is that the appraisal of the approved apartment does not have to be done by the bank in question, it can be done by an appraisal company as long as the current regulations are complied with, and they usually present a more economical price.

One solution to this type of problem is to renegotiate the terms of the sale agreement for that apartment and try to reach a fair valuation agreement. Numerous times having a team of appraisers experienced in apartment valuations can help you increase that bargaining power.

Judicial expertise. Requirements for an effective assessment in court proceedings.

In some occasions, we may encounter the difficulty of having to solve problems related to inheritance division issues, expropriation of public administration, separation of property in case of divorce as well as bankruptcy proceedings or equal distribution of assets in the case of some companies, which requires a judicial procedure that allows us to solve the problem.

A harsh reality is that this type of judicial procedure is not easy, and usually requires the help of a real estate expert who specializes in the matter to provide us with a report about our apartment.

This report, commonly called "expert report", is necessary in this type of process with the purpose of determining the market value of our apartment for its later contribution to the judicial process.

So when is it feasible to ask the expert report to an expert?

- When it becomes necessary to analyze if we have material reason and that an expert advises us on the possibilities of success.

- Since it is more advisable to contribute along with the demand. Providing the document at a later time based on allegations to the contrary can be risky.

Generally, any person or entity can request a judicial expert to carry out the appraisal of the apartment included in the subsequent expert report and to guide it in the process, thus increasing the probability of success.

Problems with the value fixed by the Administration.

Some of the questions to be resolved in this section will be: What happens when the Administration sets the value of our apartment above its real value? What are the resources and solutions that we can turn to?

There are countless occasions in which the Administration estimates the value of the property well above the market value of the Apartment, thus applying coefficients to the cadastral value. There is then an increase in the amount of tax payable, this is because when you set a value higher than the corresponding, it directly affects the amount of tax payable, tax such as IRPF (Personal Income Tax) The IBI (Property Tax) and IP (Property Tax), among others.

It is well known it is a tax to be paid will be for life in the event that the property of that house remains ours. This will result in overpaying our share for years in case of not solving the problem.

To solve the problem, a Contradictory Expert Appraisal is used, this is a procedure whereby an appeal against the administration is filed. It will be necessary to have an expert who advises you on your case, since this involves more than just the appraisal of the apartment.

Assess an Apartment in case of mortgage loans.

The person in charge of regulating all types of mortgage appraisals is the Bank of Spain, stipulating a series of conditions to be fulfilled that the appraisal of the property is homologated.

When we are ready to apply for a loan, then the mortgage appraisal will be an essential requirement since the bank's financing is made based on the value of the appraisal and it must be updated, i.e. no more than 6 months. So if you want to buy a future home, its appraisal will be mandatory.

Who chooses the appraiser? As stipulated in the current legislation, the client will have the right to choose it, as long as it is homologated by the Bank of Spain. Therefore, they are obliged to admit any valuation provided by the client, as long as it is certified by an homologated appraiser.

Assessing an online apartment has no legal validity, only as a reference, since to carry out it is to follow a process:

1. The appraiser must visit the apartment: it will not be valid if there is no evidence that the appraiser has visited the property.

2. The plans of all the rooms of the apartment, private and common, must be analyzed.

3. The mortgage appraisal report must include 6 witnesses of the area or real offers.

4. Identification of the property.

5. Check that there is no urban illegality.