Despite being different concepts, it is common for there to be confusion between the appraisal and the valuation of a property. Whether we want to apply for a mortgage or if we want to sell our house, it is necessary to know what each term means to avoid confusion and know at all times what we are asking for.
The legal nature of each makes the difference
The main difference between a real estate appraisal and a valuation is the legal nature of the former. Although with both we can know approximately how much a home is worth, only with the appraisal we obtain a report that certifies the value of it in the market.
What is real estate appraisal and what is its purpose?
The appraisal is an official document where the value of a property is certified. The calculation is carried out by a professional authorized to do so following technical valuation methods that are regulated in Order ECO/805/2003.
Appraisals can only be carried out by companies approved and supervised by the Bank of Spain.
The purpose of these is not always the same. In the case of wanting to sell a home, the appraisal will help you set a fair price and avoid overvaluation of it.
If what you intend is to acquire a property through a mortgage loan, the appraisal will be a mandatory requirement for the bank to grant it. The capital that the bank gives you to buy the house is the result of applying a certain percentage on the appraised value.
What is valuation?
The valuation of a property is a process with which the approximate price of this in the market is determined. It is a non-legal estimate that helps us to have an orientation on what we should ask for our house.
It is not necessary for a technician or an architect to visit the property, nor is it necessary to make a detailed study of its characteristics. Valuations can be made online by simply entering cadastral data.
When should an appraisal be made and when is a valuation?
The valuation of a home is requested when we are interested in putting a purchase price to be able to sell it. It is advisable to make several to have a comparison and thus establish a value more accurately.
There are a number of factors that influence the price and that must be taken into account when making a valuation. Among them we can highlight:
- How is the supply and demand in the area where the property is located.
- The exact location of the house to know what services it has nearby or what is the price of the properties that are sold in the area.
- The characteristics of the property and the farm.
- The state in which it is and the extras it has.
If in spite of everything we still have doubts about the sale price of our house, it is better to go to an appraisal company to tell us its value. A technician or an architect will go to the property and determine what it is based on a series of factors. Among them are:
- The registration status of the property. To do this, a simple note must be requested from the Land Registry to check the data of the cadastre, corresponding town hall and the general state of the property, possible charges, etc.
- The state of the property: if it is newly built, second-hand, if it has been rehabilitated, if it has passed the technical inspection of the buildings (ITE), etc.
- Your location.
- Its surface and certain characteristics such as lighting or orientation.
- The environment where it is located and what services are in the area.