A real estate valuation is a report that consists of making an assessment of the price of a property. Given the importance and impact that this report can have on the buyer’s personal finances, the real estate valuation must be carried out by a professional. The type of professional will depend on the property in question that you wish to estimate. For example, if it is a house, the expert will be an architect and if it is an industrial building, it will be an engineer.
There are 4 main aspects that must be taken into account during a real estate appraisal:
Once these factors have been considered, the evaluator must seek witnesses. These are houses with similar characteristics to the one to be evaluated. This way you will be able to know the approximate price of the house.
But a real estate valuation cannot be established solely on the basis of the price of other properties. Thus, after the evaluation and the search for witnesses, the evaluator must enter the collected data into a program which, by evaluating all the information, will generate the final report.
Once the report has been drawn up, the expert will verify the accuracy of the data and their compliance with the provisions of the real estate register. Once verified, the report is given to the client, who in turn will give it to the lending bank to start the mortgage procedures.
Suppose you are interested in buying a house and, unfortunately, you cannot pay cash for it. You must therefore resort to a mortgage.
Do you think the lender will give you all the money you need? The bank generally finances part of the price of the property. Normally, the lender finances 80% to 90% of the appraised value of the property. The rest will therefore be up to you. You should pay the 10% to 20% out of pocket.
The property valuation allows you to convince the bank of the real value of the property you want to buy. This value is taken as a guarantee in case the purchaser is no longer able to repay the contracted loan.