If you already own a property in Spain and are thinking of selling or you’re looking to buy a property, it’s important to know how property valuation works.
Property valuation in Spain is regulated by a ministerial order approved in 2003 that sets the standards for the “valuation of real estate and certain rights for certain financial purposes”.
The Spanish Association for Value Analysis (AEV) explains that “Appraising a home is estimating the value that it has in the market on the valuation date”. To be able to value a property “normal and local market conditions must be taken into account, long-term durable aspects, the use of the property at the time of the appraisal and its corresponding alternative uses”.
The first step that estate agents take when valuing a property is to confirm that the house or apartment corresponds to the same one in the official documentation, which will be the basis for deciding on mortgage repayments, according to AEV. Tinsa, a professional property appraisal company based in Barcelona also states that it’s important to verify that the house does not have urban planning problems that may affect the value.
The next step is to check if the house is empty, occupied by the owner or rented, as all these factors can affect the value. Both AEV and Tinsa also point out that if the house is under some type of protection regime, its price will be limited by the authorities.
Another factor that can affect the valuation is architectural protection. It’s essential to know if there are any urban regulations that apply to the property since it could have various conditions attached, such as not allowing for home extensions or certain renovations.
To avoid demolition or prevent further works, agents must also verify that the property has been built in accordance with the regulations. According to Tinsa and AEV this means that the appraiser must measure the surface of the house, check the age of the property, look at the common areas and carry out an analysis of the area. Finally, a technical team will review and accredit all the information collected. A property can lose value if it doesn’t meet the regulations.
Once all the above points have been checked, the agents can set a price point. The most common way of doing this according to Tinsa is to compare prices of other similar ones that have recently been sold, in terms of size, location and condition.
The AEV states that location, surface area, age and state of conservation also affect the final valuation. In addition, other aspects will be taken into consideration such as layout, the existence of elevators, views and orientation, among others
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