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Understanding Spanish Property Evaluation by Campbell Ferguson
FOR 47 years I’ve been accused of bias, ignorance or insanity. Sometimes all three!
Yes, I’m a Royal Institute of Chartered Surveyors-registered valuer living and working in Spain, viewing and listening, analysing and giving opinions. Mostly, people require a valuation for a mortgage; or the taxman is chasing alleged hidden assets; or of jointly owned property linked to a divorce; or quantifying their family assets for probate. RICS valuers are trusted by courts, companies and individuals worldwide, confident that they are regulated, qualified, experienced professionals.
In the UK, valuation is easy. Sale prices for the past 10 years are available online at the touch of a button. All a valuer has to check is that the property is still there and what changes have been made since the last sale. The data go into a computer to produce a report with so many caveats as to be unactionable.
In Spain, it’s so different!
Firstly, recorded sale prices are not publicly available. Secondly, if they were, would you believe them? In the past, so much money passed under the table that recorded prices were a work of fiction. Property descriptions could be massaged to produce higher or lower figures. Now money-laundering laws mean data are more accurate.
Our market insight comes from a network of reliable agents, lawyers and clients who provide actual sale prices, which we analyse against asking prices to get an average difference. That’s then applied to the asking prices for similar properties. We analyse the physical differences, the neighbours, the utilities and whether the house is overbuilt or underbuilt or complies with planning and regulations in any way at all.
The differences are endless.
As valuers, we must get into the mind of a buyer. Formally, our task is to find ‘the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.’
But sometimes one person’s prudence isn’t rational to another. Thus we have different ideas of value.
Also you have got to ensure you are comparing like with like depending upon the client’s instructions. Some banks want their valuation to be after tax deductions, selling costs and other unavoidable expenses; so it’s what the bank will actually be left with.
That’s very different from the bundles of money that are going to be slid over and under the table at the notary. Well, that’s how it was done in the old days!
Source: Campbell Ferguson (Olive Press)
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