Spanish Property Valuations - Confused?

Published on 19/11/2007 in Buying Process

Property valuationFirstly, I’ve got to admit that this article is probably only going to add to your confusion by initially clearing the ‘fog’ by giving an easy definition and then bringing in the 1001 items that can change the result!

There is only one market value for a property and that is what a prudent person would pay. A market valuation is an opinion. Nobody can say exactly what price two other people are going to agree to sell and buy at, at some time in the future. Valuation has been described as ‘part art, part science’. The latter is the easy bit, in gathering, filtering and prioritising relevant information. The ‘art’ involves relating all the worldwide financial influences to a single property market and then focusing that onto one particular building. Also, the valuer has to ignore all the various influences pushing and pulling his opinion in various directions and finally settle for something he feels is fair and supportable by evidence.

How often do we hear in conversation and even radio adverts – “Valued at 500,000€ euros, but we’ll sell to you at 400,000” - or something similar? How can it have a value of 500,000€ euros if you can buy it at 400,000€ euros?! No wonder people in general are confused!

Valuations are personal and must relate to the client requesting it. The valuer must know for what purpose the valuation is required. If it's for a bank, it's got to be conservative as the bank will be selling the property only after ‘troubled times’ and thus it and the market may not be at it's best. But if the valuation is for a buyer it has to be at the top end of the scale as, assuming that there is competition for the property, it's value is what the top bid will be for it. For a seller, the value has to relate to the price of other comparable properties in that a prudent buyer will pay the least he can for identical property.

And this is where the art comes in. Each property is unique as none are identical in location. How does one place a value on a view? On a golf frontage? On a ‘retreat’ location? One person’s ideal location is close to shops, restaurants and general ‘buzz’. That could be close to hell to another to whom ‘buzz’ only means constant noise and invasion of wider private space. It's all a balance. So when it comes down to it, everybody’s value is different and that’s why a valuation is a personal document.

Then we have to add ‘Hope’ Value (the chances of improving its physical or planning permission), ‘Forced Sale’ Value (now more properly defined as ‘Restricted Value’), Insurance Value (the cost of rebuilding and not related to the property market), Marriage Value (joining adjacent properties together and finding their combined value is higher than the sum of the individual values), etc. All of these and many other variations have their official definitions according to The Royal Institution of Chartered Surveyors (RICS) in the UK and the International Standards of Valuation (ISV), which is a coming together of valuation bodies around the world to agree standard valuation definitions and methods.

Coming to Spain, the Bank of Spain dictates that valuations for Spanish registered banks can only be carried out by Tasador companies registered with them. To register, a Tasador company has to place a substantial bond with the Bank of Spain, which bond the company will probably obtain as a guarantee from a private bank, thus potentially obliging the company to that bank.

To provide consistency, there are very strict guidelines that the valuers have to follow, which can have the unfortunate effect of ignoring the individuality of each property. In addition, the guidelines are open to use by the Bank of Spain as part of the Government’s economic policy, by dictating that values reported for banks must be reduced or increased (rarely that!) according to certain formulas with the aim of reducing the rise in property values. Thus the reported value strays away from the market value. It's really the banks that should be requested to reduce their lending % of value, but that would be interference with private businesses! Over valuation could also occur if the private banks want to lend and put pressure on the valuer to ‘aim high’. Like everywhere, valuations in Spain ultimately depend upon the professional conscience of the valuer.

So, that’s a start. Make sure that you know what the valuers’ instructions are and you may know more about valuation differences. We at Survey Spain Chartered Surveyors are regulated by RICS, have a professional conscience and value to our clients’ instructions, based firmly on market value.




Written by: Campbell Ferguson

About the author:Survey Spain are Independent, Experienced, Professional Chartered Surveyors based in Marbella on the Costa del Sol, Spain, who speak both English and Spanish.




Right arrow icon Send to friends   Right arrow icon Printer friendly version    Right arrow icon Submit your own article


Comments:

Only registered users can comment on this article. Please Sign In or Register now.

Comment Using Facebook:




Related articles in this category

"Ever Thought of Retiring to Spain?", She Asked

10 Year New Build Property Insurance - Seguro Decenal

2007 – The Outlook for Spanish Property….

4 Ways To Help Your Kids Enjoy Their Spanish Holiday

A Quick Guide to Spain's Autonomous Communities

A Room With A View

Agent Property Sharing Systems Cost You Money

Aparthotels - Touristic Apartment Legal Requirements

Bank Guarantees for Spanish Off Plan Developments

Being a Film Set Extra in Alicante

Bored In Spain? Not The Spanish

Breach of Contract - Off Plan Success Story

Building Defects in New Properties

Bullfighting in Spain - On its Last Legs?

Buy Property Safely In Spain...NOT!

Buying a Property in Spain - 10 Points to Consider

Buying a Property in Spain - The Private Contract

Buying A Property in Spain Just Got Safer - And Much More Affordable!

Cave Houses in Spain - ADSL Included!

Completing a new property purchase

Consumer Law - Abusive Clauses In Your Contract

Costa Brava Holiday Ideas

Currency Exchange from Sterling to Euros

Deadly Secrets And Those Books About Spain

Decreto 218 - What It Is And How It Affects Buying Property In Andalucia

Deposit Contract

Dispelling The Myths Of What Is And Isn’t A Snagging Defect And Some Amusing Responses From Builders

DIY snagging - Some pointers on how to ‘Do-It-Yourself’

Do Not Move to Spain if…..

Documento Informativo Abreviado. Brief Informative Document (DIA)

Don't Blame Spain

Don't Criticise the Junta's Actions, Only the Delay in Implementing Them

Eco-Friendly Holidays

Financial And Currency Overview - 2012

Furnishing your Off-Plan

Getting Planning Permission in Spain

Getting The Best Euro Exchange Rate

Help! I'm Busy But Poor!

How to Choose an Architect in Spain

How To Spot The Timeshare Fraudsters

In Times Of Recession Some Imagination Is Needed - Option To Buy

Is Anyone Still Moving To Spain?

Is Disney Coming to Spain? That'll be No.

Is it Dangerous to Buy Property in Spain?

Is Spanish Residential Construction Showing Signs of Recovery?

Is There More To Spanish Wines Than Just Rioja?

It Is Possible Not To Pay Enough For A Property - According To The Tax Man!

It's a Buyer's Market

It's A Good Time To Start Selling Property in Spain

Licence of First Occupation and Completion

Mallorca Property - The Cost Of Buying Explained

More on Consumer Rights When Buying a Property

Most Commonly Asked Questions on Completions and Snagging Inspections

Must Have Common Spanish Phrases To Spice Up Your Spanish

New Regulations Protecting Spanish Property Buyers

No Money? No Problem!

Off Plan Consumer Rights - Sample Purchase Contract

Paramount Theme Park In Murcia - What You Need To Know

Prices Soften As Mortgage Approvals Fall In Lanzarote

Private Purchase Contract - Resale Property

Problems Found by Residential Surveyors in Spain

Property Management - Who Needs It?

Publicity - Part Of The Contract

Real Problems Buying Property in Spain

Result Of Building Standards Survey

Snagging Horror Stories

Snagging Trends & Analysis

So, you want to sell your off plan?

Spain Top Choice for Second Home Abroad

Spain, a Gone Conclusion

Spanish Property Market Stalls On Exchange Rate Strength

Spanish Property Valuations - Confused?

Stimulating The Spanish Property Market – Please Take Note Mr. Zapatero

Taking Better Pictures of Your Property

Taking The Developer To Court - Jan's Story

The art of a successful Snag

The Beginner's Guide to Snagging

The Death Of The Spanish Estate Agent

The Do's And Don'ts Of Buying A Mobile Home In Spain

The Euro - Looking Back and Looking Forward

The Licensing Process For Off Plan Properties In Spain

The Mystery of Spanish Property Online

The Other Side of the Coin

The Right Groups’ – The Costs of Buying in Spain

The Rights Group’s Guide to Buying a Property in Spain

The Spanish Property Crash – Was This What Was Really Happening?

Time to Complete

Time to Complete? - Part 2

Top 10 Reasons To Buy In Spain

Top 3 Budget Restaurants In Central Madrid

Try Before You Buy

Try Before You Buy - A Change In The Property Market

What to do Before and After You Complete on Your New Property

What You Need To Do If Your Spanish Developer Goes Bust?

What's In Store For Spanish Property In 2011?

Where Are All The Property Bargains In Spain?

Who Is REALLY Looking After Your Interest In Spain?

Why Buy On A Golf Resort?

Why Buy Property On A Resort

Why Choose Interest Only For Your Spanish Mortgage

Why You Need a Website To Market Your Rental Property

Click here for a list of all the articles from our magazine 

Spain insurance services


This site uses cookies. By continuing to browse you are agreeing to our use of cookies. More information here. x