How do you value a property in Spain?

By Campbell D. Ferguson of Survey Spain Network
January 2012

We all have an opinion about the value of a property, especially when it’s ours, and that’s the problem! It’s the value that a prudent, knowledgeable buyer will put on it that’s important.

Homeowners, mixing emotion and ego (and sometime desperation) plus the money they have spent on it, into the equation, will famously tend to overvalue their property. An agent may go along with this to get the listing, but reality strikes when the buyers list what can be bought elsewhere and the bank won’t give a big enough mortgage at that price.

Therefore, it is important to bring in an independent, experienced professional specifically trained to accurately value individual properties – the chartered surveyor, based in Spain.

Bearing in mind that cost does not equal value, a starting point can be the cost of land plus construction plus charges for taxes, permissions, professional fees and, often forgotten, the cost of financing the land and construction when it’s being built.

Obviously in practise these factors are variable depending on the market and the individual property.

  • Land cost – if this can be registered for uses other than merely residential, the value may be greater
  • Desirability of the location and technicalities such as ease of access and availability of services will also affect the price.
  • Construction – the cost of this can vary considerably. At times of high demand the cost of materials and labour charges will increase. However, during periods of economic crisis the cost of getting work done will be noticeably lower.
  • Permissions – these should be relatively constant.
  • Recompense for the hassle and risk of construction – it takes a long time between buying the land and getting the permission to occupy the property and there has to be some recompense for that.

However, if there is a similar property that is being offered at a lower price, the ‘builder’ has two choices – either drop the price and accept less recompense or hold on and hope that the cheaper properties will be sold, demand continues and thus the house becomes the best that that price can buy. In a falling market, as we’ve had for a few years in Spain, many have been caught out and ended up chasing the market down, dropping their price eventually, but always finding somebody willing to sell a similar property at a lower price.

As with choosing a life partner, the attractiveness of any given property is in the eye of the beholder! That is why property (we do not ‘value’ life partners!) can only be valued on a comparative basis, with the valuer judging, from experience, how the average buyer and seller, the ‘market’, will react at the time of the valuation. The Royal Institution of Chartered Surveyors’ (RICS) definition of market value is: ‘The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.’

A professional valuer forms an opinion of value based on what else the buyer could do with the money; what other property could be acquired for the same investment and how does this particular property relate to all the others on the market? If there are more buyers with finance and willingness to purchase than there is available real estate, there will be strong competition, with the ‘winner’ being the one who offers the highest price. On the other hand, as now, if there is more property than buyers, the successful seller will be the one who offers the best for least.

Reliable information on actual sale prices and accurate descriptions of properties is difficult to come by in Spain. The Survey Spain Network of twelve Chartered Surveyors around Spain has the advantage of our reliable records of the thousands of our own building surveys, valuations and assisted sales conducted over the past eight years, which have enormously augmented our bank of knowledge. Many of our valuers have personal records that extend many years further back.

It is common knowledge that the property market can vary enormously depending on considerations of location, which can be as specific as on which side of the street the property stands or even which view is obstructed by trees or not. In all markets, the best properties in each range will sell, judged by location, quality and price. Even now, there is competition for these. On the other hand there are others for which no prudent, knowledgeable buyer can be found at any price.

So, what is value? Value, like beauty, is in the eye of the beholder and every property is ultimately worth only what a prospective buyer is prepared to pay for it.

© Campbell D. Ferguson, FRICS, is a chartered surveyor in Spain. His company Survey Spain Network arranges valuations and surveys anywhere in mainland Spain, the Balearic and Canary Islands, and Gibraltar.



16 thoughts on “How do you value a property in Spain?”

  1. Chris Thorpe

    What a load of old tosh! Only the last paragraph makes any sense. This is a buyers market and a serious buyer will have done his homework and will KNOW what he wants to pay. I would have thought that a chartered surveyor would be busy trying to find a + in the poorly constructed concrete meat lockers that pass for houses in Spain.

  2. SAinsworth

    I agree with C Thorpe. This article is not vey helpful. Value is exactly the same as Market Price. i.e. the average price a similar thing will really fetch on the open market. The only published data available to guage that in Spain is the information on average sale prices per square metre, plus the info that the difference beween new and old is around 25% i.e. new is the more expensive. That is the starting point, everything else is a bit of a guess – nearer to the sea is more expensive than inland, good condition is better than poor condition,a good view has some cash value etc. Any valuation too wildly different from the published average needs clear justification.

  3. Ed Allen

    Not withstanding what has already been said… much comment in the article about professional valuers and valuations is made.

    The reality is the so called professionals clearly continued to over value properties grossly in the period leading up to the crash despite many international warnings from financial advisers that the market was overheating and likely to serious correction.

    So what “value” the advice of so called professional chartered surveyors as valuers any way?

    It is worth what a buyer is willing and able to pay at the end of the day and there is not many of such buyers about in proportion to available properties.

  4. S Ainsworth

    My sense is that many ‘professonal’ valuers in Spain were (are?)quite happy to sign a valuation certificate at whatever price they were asked to say was the case. This might or might not have been anything like the genuine market value i.e. the true average sales price of similar properties in an area. When people say ‘my apartment was valued at E150K but I sold it for E75k’ they are just kidding themselves. It was worth E75k i.e. the market price measured by what things actually sell for, and not some hyper-optimistic figure that one so often sees in Spanish estate agents windows. ‘For sale at 25% below valuation’ is a quite meaningless statement – a thing’s value, its ‘worth’, is no more than the best price it will actually sell for at any given point in time.By definition any property will sell if advertised at its true valuation price i.e. the current market price.

  5. Flemming

    Selling a property with a “reduced price” tag does make sense in a market where buyers want to know how long a property has been on the market and at what price.
    However there are a few problems in the Spanish market as we have many players in a sale, all with an opinion: The owner, the buyer, the real estate agent, the valuation company and of course the bank who rely on the valuation company.
    In a market with such a low turnover as we have now, it can sometimes be impossible to make a correct valuation. This means some home owners will sell at a very low price because they think they are too expensive, just because it takes longer to sell today.

  6. Lionel Westell

    It’s quite simple really, half of the price given in 2008/9. Then some more if the sale is urgent. It’s a buyers market and the Banks are offering properties they have at hugh discounts, plus facilities, so it’s hard out there. If you don’t have to sell then hold on but for maybe 5 years !

  7. Campbell D Ferguson, FRICS,

    Thorpe – everyone to their opinion, but basically agreeing with what I said in explaining how the buyer should do his homework.
    Sainsworth – what I was trying to get across was the value is personal, with everybody having their own idea according to circumstances. Market Value does not necessarily equal market price as often the price is too high or too low. Published data is accepted as useless as its swayed by black money. See
    The published average is just that and rarely is specific enough in location or property type to be of much use in individual values, but is useful for trends.
    Allen – I’ve been valuing property for 40+ years and so think on these matters daily and have to be responsible for my opinion of value. We independently value on the basis of what the market is doing, from the evidence of sales, asking prices and trends. We don’t make the market. Some valuers, owned, obliged or regulated by 3rd parties can be instructed on how to value in order to influence the market. Survey Spain Network are totally independent, only regulated on ethics and methodology by RICS in London. Read the other articles on the Survey Spain website and you’ll see that many contain warnings of unsustainable prices. But if people are paying those, there are buyers out there and we are asked to value the property next door, what is its Market Value?
    Ainsworth – If I do that I get thrown out of RICS and criminally charged with fraud.
    Below Market Value. Most of the time all that means is, “it’s ?% below the highest price that we didn’t/Couldn’t sell it at”. Check
    Flemming – And that low sale price sets the Market Value

  8. poul kyhl

    My wife and myself plan to buy a small flat around 50-70 square metres on the Costa Brava cost, budget around 140-160.000 euros. This implies that the flat will not be anything particular. With your experience how many percent do you expect that I bargain off the official price ?
    And if I can pay cash ?

  9. Campbell D Ferguson, FRICS,

    Poul, it depends on where it is. In some popular locations there will be a number of buyers, but in less popular areas there may be few. Best to find the ideal location you want and check with the agncies and internet as to what’s available. Make sure that you don’t just look at the first web page as often the poorer marketed ones are also less well positioned. It seems to be that no matter how realistic is the price offered, the standard is to offer 20% below that and then negotiate or stick to that and wait for the seller to accept that. However, every sale is different as are the characters and finances of the buyer and seller. Only you know whether that’s the only house for you or if you’d take another similar just along the road.

  10. Mexberry

    I can understand a bank making use of a surveyor, whose report will enable them to determine the amount of a mortgage. Otherwise the only meaningful value is determined by the urgency of the sale and the desire to purchase.

  11. Janice Lagowski

    These discussions are quite interesting – but there is another factor to consider, as we have learned recently. That is the “value” given to a house by the tax authorities.In our area of Almeria it is said to be the catastral value multiplied by a “co-efficient” which for us is 2.2.We bought a resale house ( much reduced) in July 2011 and declared the full value ( ie no black money). We have now recieved a further tax bill as the tax authorities say it is worth almost double according to calculations done in 2007. This clearly ignores reality and so we have appealed. However I have seen nothing about this situation on any property forums. Has anyone else come across this action by the tax authorities

  12. Vernon White

    My partner and I found a house we like last year , on for 195000 euros, Agent said has been reduced from 295000 ! its a townhouse house in a Village , no huge patios or garden , just a nice house ,we said to Agent it was never worth 295000 so has not been `reduced` at all but now a price still over the average value , we were told another couple were interested as they didnt know it had been `reduced`, needless to say its still on the market and when we said if the other `purchasers` offered over 165000 the Vendor should have ripped their arms off ! Agent said Vendor owes Bank and cant sell for that price , we said that no one is going to pay over the odds just to clear Vendors debts etc , surley better to sell at a sensible price than wait for that purchaser who may come along with no brain, meanwhile silly Vendor is running up more debt, we just think these people are either so greedy or just plain nuts ! Its still on the market , as is every other place we looked at so it seems no one is willing to take their heads out of the sand, by the way , most Vendors who expect others to even negotiate their overpriced properties are hoping we will either top up there pensions or clear their debts ,no not Spanish ,most of whom do not need to sell but as ever the Brits who no doubt have made a propfit over the years but dont want to realise that prices have dropped, A LOT !
    Given up now, looking at other countries where the rules are observed and not terrified of bent Lawyers , Agents and Local Councils !!

  13. gtibruce

    “You know, it often make’s me wonder with these so called helpful articles when written out in a neutral fashion to us which surley must be a majority of buyer’s Who’s side are they really on? I suspect they are always on an eye even now to business and that can only mean the seller achieving their best price

    But in a buyers market (at last! after all these greedy and ruthless yrs of over inflated property prices, throughout the world We the buyer’s will justifiably beat them all down i.e the sellers and those in-betweeners who make out the they are here to help and be impartial!???

  14. S Ainsworth

    Poul. Published average sale price, and therefore genuine market ‘value’, is now little more than 1700 Euros psm. Paying in cash and hiding part of the cost is to the advantage of the vendor, but it is disadvantgeous to the buyer taxwise when they in turn come to sell. It is also illegal. Some say (vendors, estate agents and deluded owners) that genuine values are 30% higher than published because of black money. I’ve looked for evidence of this for years and found very little. The best I can come up with, from evidence, is that black money may well have under reported prices by just ten per cent (given that some transactions involved 20% but others zero). The only guide to valuation worth anything is the average published sale price psm – it isn’t perfect, but everything else is pure guesswork, vendor’s hype or bar room fantasy.

  15. poul kyhl

    thanks for the feedback. I am not talking about black money, but considering that it is a buyers market with a heavy excess of property compared to demand, the fact that it is getting very difficult to get a mortgage, increasing unemployment, general increasing taxes etc. sellers/agents should be willing to sell to much lower prices than the inital prices they claim right now. I do not see any illegal in this as long as the official sales price is reported to authorities.

  16. Sainsworth

    I’d say the genuine market value of any property in Spain is to be found by checking advertised prices of all similar property in an area, finding the cheapest, then deducting at least another 20% from that lowest price. This final figure will be about half the price of the most expensive (and hopelessly optimistic) advert.

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