I Want to Have My Property Appraised, but What should I Do?

The appraisal of a property is a key process to determine its real value, whether you need to sell, buy, or apply for financing. If you are thinking of having a property appraised, and you don’t know how, in this post we explain the most common methods, the factors that influence it, and the necessary steps to carry it out correctly.

Property Appraisal Methods

When it comes to appraising a property, it is essential to know the different property appraisal methods. These methods are applied depending on the objective to be achieved, whether to establish a market price, manage a sale, or carry out tax procedures.

There are two main values depending on the objective pursued:

• Market value: The value that a third party is willing to pay through a private contract between a seller and a buyer.
• Mortgage value: The value that a professional assigns to a property through an appraisal. This step is necessary to carry out a sale that requires financing from a bank.

If you want to know more about the market value, we detail everything in our post about the difference between cadastral value and market value.

In addition to market and mortgage values, there are other valuation methods for property appraisal. These values provide key information depending on the context in which the appraisal is required:

• Fiscal value: the method used by the Treasury for the payment of taxes derived from the property.
• Cadastral Value: is an administrative value that depends on the criteria of the municipality, considering aspects such as: location, production body, market values, etc. This value is made from the value of the land on which the property is located.
• Land value: deals with the price of the land of the house and raw material. Any property has land value, even if there is no free space left to build.

Although, in the usual practice in the valuation of real estate, there are four technical methods to perform this estimate: comparison, residual, cost, and update.

• Comparison method: It is the most used method. It includes the comparison with other goods with similar characteristics of known value. The regulations require a minimum of 6 witnesses, weighted by a factor, to resemble the commodities we value. With this, we will obtain a unit value m2 per m2 object of valuation of the property, which will assume the same market value.
• Residual method: When the comparison method is not feasible, since there are not enough real estate witnesses, this method is used, although it is somewhat more complicated. This is the main axis along with the comparison.
• Cost method: Calculates the cost of replacement or substitution of the property being valued. Applicable to the valuation of all types of buildings and building components. In this method, a technical value is calculated, called replacement cost. This cost can be dirty or net.
• Income update method: It is, in a simple way, to calculate the value by updating to the appraisal date of all the net income that the property will generate through economic formulas. It is a complex method and is used only to value large businesses.

What is Taken into Account in an Appraisal?

Approved appraisers rely on many criteria to issue the official appraisal. So, you will ask yourself, what is taken into account in an appraisal? There are several factors, but the most important are the location of the property; the constructed and useful area; the state of conservation; the distribution, installations and qualities; the lighting and orientation of the property and the elevator.

• Location of the property: The location and neighborhood of a property is one of the key factors in determining its price in sales contracts and appraisals. For example, a property in one of the best parts of the city (but on a street with many nightlife bars) will have a lower valuation than an apartment on a pedestrian street with all services.
• Constructed area and useful area of the property: This factor is very important in the valuation of the property.
• State of the property: if it has been repaired or if the property is renovated, its value will increase. The appraisal of a property also depends on the type of building.
• Distribution, amenities and quality of the property: The final value of the property is also affected by the distribution within the property. In recent decades, this standard has changed significantly: in the past, buildings were characterized by their spaciousness, long corridors, and separation of rooms. Now that everything has changed, it is more normal to find homes with square distribution and larger, brighter, and easier to sell spaces. These trends affect the value of properties, although in a limited way. The installation and quality of the building (electrical and plumbing installation) are also taken into account, as well as the type of door and window closures and the condition of the pavement and coverings.
• Lighting and orientation of the property: The orientation of the property is fundamental, since it greatly influences the amount of light, temperature or heat. A house will have a better valuation the more natural light it has.
• Elevator: Another relevant aspect will be whether or not it has an elevator. If the answer is affirmative, its appraisal value will also increase.

It will also be necessary to find out if the property has been affected by any type of expropriation or urban planning, or if the building has been subjected to a technical building inspection.

How to Know the Appraisal Value of a Property?

Knowing the appraisal value of a property is a technical process that requires the intervention of an approved appraiser. This professional evaluates key factors such as the location, surface area, state of conservation, and distribution of the property.

To obtain this value:

1. Hire a professional appraiser: Make sure you choose a recognized company that guarantees a valid report.
2. Submit the necessary documentation: Include deed, energy certificate, and IBI receipt.
3. Allow the inspection of the property: The expert will analyze its characteristics and apply the most appropriate method (comparison, cost, etc.).
4. Receive the certified report: The document will include the final value and will be ready for use in legal and financial procedures.

Calculate the Value of Property with Espígul

The best way to calculate the value of a property is through a real estate appraisal, which includes a legally binding technical opinion; this document presents a commercial appraisal of a property, reflected in monetary figures.

Once the appraisal value has been issued, the expert will send the report to the technical control department, and the appraisal department will be responsible for supervising and approving the appraisal.

During the verification process, check all the information provided in the report, registration documents, and valuation method used. Once all checks have been carried out, the evaluation report will be approved and sent to the client signed and certified.

There are many factors that influence the appraisal of a home, which is why at Espígul we want to help you and accompany you in the process. Contact us to ensure that your property is valued accurately and professionally.