During the last edition of Vallarta Real Estate Guide, the basic aspects involved in a Real Estate Appraisal were reviewed, as well as its main functions. In this second part, the real estate valuation process will be explained in more detail in addition to the relationship between the appraisal price and the final purchase price.
To begin with, the most common types of real estate valuation are mortgage, commercial and rent. During the mortgage appraisal, the professional appraiser comes to the property and makes a meticulous inspection of both the house and the surrounding environment. Among other aspects, the construction, its distribution, finishes, quality, state of conservation, remodeling and proximity to both means of transport and access to services are analyzed. The appraiser then looks for a similar property that he or she can compare to the one he or she is analyzing. Once all the information has been collected, the appraisal can be generated. In this case, the appraiser must be registered with the Federal Mortgage Company (SHF).
A commercial valuation also takes into account the aspects of construction, characteristics of the property, location, services and infrastructure. In the case of real estate rent, the price of a rental has to do with many factors, such as location, the number of bedrooms and bathrooms, available parking, physical condition of the property in general, services and furniture (in case of having it).
Relationship between the Appraisal Price and the Final Purchase Price
Ideally, the final cost of a property should be very similar to what is estimated in the real estate appraisal, but other factors often play a role. For example, if the owner has an economic emergency and is urged to sell his property, he can lower the price to try to speed up the deal. On the other hand, if the buyer really wants to purchase the property, they may be willing to raise their offer to secure it. These types of situations are those that, at the end of the road, distort the offer value, the appraisal value and the closing value. This does not mean that the situation is right or wrong, it simply implies that corrections in value will be generated based on these factors.
Requirements for a Real Estate Appraisal
Among the documents that must be submitted for a professional appraiser to carry out his work, are the property deed, the architectural plans, the receipt of the property and water, as well as the documentation of completion of work (exclusively for the new home). However, preferably, it is necessary to make sure about each of the requirements requested by the financial institution that will grant the mortgage loan.
Cost of a Real Estate Appraisal
Currently, different rates are applicable when hiring a real estate appraisal with an independent professional, a company or a bank.
Similarly, there are different methodologies for determining the fees for this type of valuation service. One of the methodologies is carried out by institutions such as INFONAVIT or FOVISSSTE. These companies have a fixed fee for the realization of the thousands of mortgages they grant each year. This amount usually ranges between 1,500 and 3,500 pesos, although the payment of this service can also be calculated based on the extension of the square meters of the property. Another alternative method is an operation called Cálculo al Millar, where fees are set based on a rate of between 2 and 6 percent according to the total value of the property.
Validity of a Real Estate Appraisal
The regulations of the Federal Mortgage Society establish a validity of six months from when the appraisal is carried out. This is because over the course of that period of time, it is possible that the real estate market could undergo some considerable shift and change (that is, some alteration that could really affect the value of a property, either to increase or decrease it).
Currently, the realization of an appraisal on a piece of land is possible. To carry it out, a comparison of market properties must be made, since it is mostly about land uses. The disadvantage of doing this process in large cities or with a high population density is that there is less and less land available. This makes it complicated because it is difficult to find a comparable sample property to be able to estimate a value by homologation.
Although this is a detailed overview of the aspects involved in obtaining and using a Real Estate Appraisal, it is always advisable to have the advice and guidance of a professional appraiser.