When we face the purchase or sale of a home we always have the same doubt: is it expensive or cheap? How do I calculate it? It does not matter if you are the owner, the buyer, the landlord or the possible tenant, everyone doubts about what would be the appropriate price of a house for sale or rent.
At some crucial time in one’s life this could be an essential question. It might be because a large sum of money is required for an emergency, or it might be that an exchange for a larger or smaller property is wanted or simply just because you want to know the value, full stop.
Well, if you read these coming articles you will find in the last part an approximate method to put a value to your home which can be reasonably accurate but a degree of impartiality is required during the calculation.
Now, it will be important to bear in mind that there are several formulas for the calculation and that the valuation value of the real property varies, both in time and by the purpose of that valuation.
Same house, different valuations done by experts
As mentioned earlier, your home may have a different valuation depending on its goal. Thus, for example, the value that the property can achieve for sale and the value that is set in a sale to request a mortgage will not be the same.
The difference is established by the rules applicable to the valuation of housing in Spain; Order ECO / 805/2003. This regulation argues that market value is simply what a third party is willing to pay, an aspect that will have a lot to do with market conditions at that time.
For instance a mortgage appraisal is done by a bank. The value will be obtained by a professional and prudent appraisal normally is carried out, which will take into account the market conditions and many other aspects. An important point for this calculation is that it will exclude all speculative elements.
To the previous valuations ones can add more valuations for the same property, as for example the fiscal value. In this case, the method that Hacienda will use for the settlement of taxes will depend on the autonomous community in which the house is located. The application of a coefficient on the cadastral value of a dwelling or the establishment of a minimum per built-up meter are some of the systems used to calculate the value for taxes purposes, which may not coincide with the real value, in fact it rarely coincides.
Methods to value a property
When you want to present an alternative appraisal to a bank or an official body, or in cases where a legal valuation is required (divorce or inheritance, for example), it will be necessary to commission an official report, namely a property valuation performed by an accredited professional.
Normally it will be an architect, who will be responsible for the that appraisal, in the case of housing, will generally be carried out following the comparison method, which is delimited in the regulations and which will take into account six market values or sales of comparable properties.
But this will not be the only criterion to establish the price, since issues such as price developments, the market situation and everything the technician can extract from a home visit will come into play. Its age, if improvements have been made, its energy efficiency, its distribution or the services of the building will be determining factors for the result of this appraisal, which, in addition, has a short period of time due to the fluctuations of the market.
So, as you have seen, it is not only possible to know how much your home is worth, it is very likely that at some point you will need to request an appraisal of it. Therefore, when you need it, do not hesitate to consult several experts who, do not forget, will have to be accredited professionals.
Do it yourself valuation
In the following articles I will explain other methods that might not be as exact as that carried out by a professional but it might give you an approximate estimation of the actual market value of the property.