Although in a few cases it is not mandatory to resort to certified or authorized professionals, the truth is that, without their presence in the appraisal process, the margin of error grows considerably and can cause serious economic losses to the owners.
The fact of valuing something implies carrying out an appraisal
To value the price of movable and immovable property it is essential to carry out an appraisal. This type of reports made by qualified professionals serve as justification of the value of the good and are made through previously established methodologies and criteria.
In addition to the value of the property, the appraisal certificate may also contain observations, conditions or warnings regarding different aspects related to it.
Which companies carry out these appraisals?
Home appraisals are carried out by appraisal companies approved by the Bank of Spain, or also called approved appraisers.
The action of this type of company is mandatory by law in most of the cases in which an appraisal is required: mortgage loans, bankruptcy proceedings of companies, exits to the stock market, etc.
Once the appraisals have been carried out, the approved appraisal companies send their reports to the Bank of Spain, which is responsible for supervising and approving them.
Years ago there were up to 200 approved appraisal companies in Spain, a number that has been reduced to only 32 today due to the increase in requirements by the Bank of Spain and the legal prohibition that banks and financial institutions can own or have shares in this type of companies. As a result, their complete independence is assured.
Main factors that determine the appraised value of a home
There are many aspects that are taken into account when carrying out the appraisal of a home, such as its constructive characteristics, the quality of its materials and facilities, the value of nearby and adjoining properties, its common areas, the state of the real estate market at the time the property is valued, etc.
Among these factors, there are three that have a greater weight in the final valuation of a property: the state of the building, its location and its surface.
State of the building
The state of conservation of the property largely marks its value. As a general rule, new homes tend to have a higher value than older ones of the same characteristics.
However, there are many exceptions to this unwritten rule. An old apartment that has been recently renovated and that is in a listed building, can reach a higher price than a new apartment in the same area.
Only a professional appraiser can have enough data to assess all possible variables in the appraisal of a home.
Location
It is not the same that a house is in a central area with all the services and communications than in a recently built or industrial area where schools, health centers, sports centers, shops or catering businesses have not yet been installed.
It also has a lot to do with the valuation of a property the socioeconomic environment of the area and the degree of citizen security.
Surface
Logically, the higher the property, the higher its valuation, the euros it costs per square meter. But it is not only the size that makes the difference in an appraisal, it is also very aware of how the distribution of the house is. No matter how many meters you have of surface, a bad use of the rooms can devalue the house.
Main methods to appraise a home
To understand the methods used in the appraisal of homes we turn to a post from the Sociedad de Tasación Arquitasa. Let’s see the most common.
Comparison method
It is the most used appraisal method today and consists of comparing the house that is going to be valued with 6 others in the same area and with similar characteristics.
In order to apply this method, two circumstances must be met: the existence of a representative real estate market in the area and data on real estate offers or transactions.
Of course, this type of appraisal is complicated when the property is a country house or a single-family house without nearby houses.
Cost method
This type of appraisal is very common in the cases exposed at the end of the previous point, when the property to be valued is an isolated single-family house. It consists of the sum of the cost of each of its components.
The costs that are taken into account are the updated values of the land and construction, administrative expenses, taxes, fees, licenses, etc.
Residual appraisal method
It is the method used to calculate the value of plots and buildings under rehabilitation. Basically, it consists of calculating the value of the completed construction and subtracting the total expenses that will be needed to build the house.
As a homeowner, you can influence the value that an appraisal company places on your home. Although it is not possible to change its location, environment and square meters, good maintenance will always contribute to its higher price.
Finally, you should know that the higher the quality of your home, the higher the appraisal price. Sometimes we doubt whether to make higher quality reforms thinking that it will not compensate, but it is an investment that will revalue your home.