Rustico property valuations massively down.

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This topic contains 7 replies, has 8 voices, and was last updated by Profile photo of Fuengi (Andrew) Fuengi (Andrew) 6 years, 3 months ago.

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  • #55839
    Profile photo of Anonymous
    Anonymous
    Participant

    A good while back I reported that it was close to impossible for us to find a mortgage on rustic property. Well, that situation seems to have improved and we have been offered a maximum of 70% of the valuation figure.

    But now valuations seem to be very low, I just paid for a valuation of a prospective purchase & was really surprised how low this came in.

    The property was last valued in 2004, and came in at 192,000€ (note this is well before the peak in prices. The property has since had some improvement works.

    A couple of weeks ago, that valuation came in at 110,000€ which I must say seems very low even to me (I was expecting a minimum of 140,000€ and probably nearer to 190,000€)

    I’m curious if the trend is happening outside of my area (Alicante & Elche).

  • #100510
    Profile photo of Anonymous
    Anonymous
    Participant

    That’s very interesting.

    It’s just one data point, but it puts prices down 43pc on 2004, 3 years before prices peaked, at least according to your valuer.

    If it is representative of a wider picture, and keeping in mind that valuations drive mortgage lending, then prices must be down by at least that much (I doubt buyers suddenly have lots of their own capital and don’t need mortgages any more).

    Mark

  • #100512
    Profile photo of Chris McCarthy
    Chris McCarthy
    Participant

    @El anciano wrote:

    Well, that situation seems to have improved and we have been offered a maximum of 70% of the valuation figure.
    The property was last valued in 2004, and came in at 192,000€ (note this is well before the peak in prices. The property has since had some improvement works.
    A couple of weeks ago, that valuation came in at 110,000€ which I must say seems very low even to me (I was expecting a minimum of 140,000€ and probably nearer to 190,000€)
    .

    It is interesting but in our area I would describe 2004 as the ‘buying’ peak, up until then there were no discounts or reductions and everything after then was overpriced and completely uncompetitive, true many people still bought in 05-07 but nothing like the numbers previously.

    We see prices falling where Vendors sometimes have to sell, to prices we last sold at in 2000 – 2002. so am not surprised at the valuation especially on Rustico where we can’t even get mortgages at all.

    Can we ask if the valuation is 110k what the buying price is?

    Or if not, did you tell the bank in advance what you would be offering to pay for the property?

    I think the banks will lend only – but only – if they are absolutely certain there is enough of your equity in there to stop you ever walking away.

  • #100514
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    Anonymous
    Participant

    One of the problems the banks have with Rustic properties are what a property is worth in the event of structural problems. I was witness to a family that had bought an older property on Rustic Land which encountered subsidence problems. The family were forced to move out as the insurance company declared the property as unsafe. They had to rent another property and had no money left to be able to keep up with the mortgage payments that were rising and rising. Finally the bank had to repossess the property & would have lost out. They were left with a ruin and a plot of land worth around 80.000 euros. They had lent the buyers over 120.000 euros….

    You can imagen that in the event of a fire, natural disaster or any other type of incident that occurs… All it takes is for the insurance companies to find a reason not to pay out or only partially pay out. The one that is left carrying the can is the bank. Hence the low evaluations and lower lending capacity.

  • #100519
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    Anonymous
    Participant

    Like Chris I’m not convinced that the peak was in 2007 even though that is what is recorded by Tinsa and other indexes.

    Any research I have done shows me that the cracks started to appear in/around 2005. By the time the indices turned in 2007 the market had already been in retreat for some time. I have in fact long argued that Tinsa, whilst arguably the best of the available indices, is running 1-2 years behind what is actually happening in the market.

    The 2004 valuation you have was thus taken at close to the peak of the market. The fall of 43% since then is thus within the bounds of what we generally seeing. Forget asking prices, where sales are going through they are at a discount of 33%-50% from the peak prices.

    It isn’t possible to give any further comment on the recent valuation without knowing more details but it certainly seems to be in the ballpark.

  • #100522
    Profile photo of Inez
    Inez
    Participant

    I would agree with 2004 being the peak. People were still buying but the underlying trend was that resales were harder and harder to achieve – people who bought off plan with the sole intention of selling on at a profit were finding there were no margins as existing off plans were not selling as easily and started to be reduced.

    In 2003 many complexes were completing and suddenly there was a glut on the market. Too much supply overfacing the demand.

    The valuation companies have always been a couple of years behind, especially as they dont work to actual selling prices

  • #100523
    Profile photo of katy
    katy
    Spectator

    I agree with Chris’s estimate too, was shortly after that when estate agents started to close down. Perhaps it carried on for a while longer inland as people were priced out on the coast. Rustic property was even more overpriced than the coast….Spanish were selling wrecks in the countryside for about 50,000 when they were only worth about 20,000. British were then “cosmetically” reforming them and asking about 150,000 when they had only spent about 15,000 on the facelift.

  • #100530
    Profile photo of Fuengi (Andrew)
    Fuengi (Andrew)
    Participant

    @El anciano wrote:

    A good while back I reported that it was close to impossible for us to find a mortgage on rustic property. Well, that situation seems to have improved and we have been offered a maximum of 70% of the valuation figure.

    But now valuations seem to be very low, I just paid for a valuation of a prospective purchase & was really surprised how low this came in.

    The property was last valued in 2004, and came in at 192,000€ (note this is well before the peak in prices. The property has since had some improvement works.

    A couple of weeks ago, that valuation came in at 110,000€ which I must say seems very low even to me (I was expecting a minimum of 140,000€ and probably nearer to 190,000€)

    I’m curious if the trend is happening outside of my area (Alicante & Elche).

    normally the reason for the price should be explained in the actual report you receive. prices of other valuaitons in the area, sales completion prices, 10% or so of the valuation should have been knocked off because of a ruling of BoS, etc…

    also its worth pointing out that in 2004 there were several valuation companies that were quite ‘positive’ in their valuations.

    Best example I can give it a purchase i did several years ago. one valuer quoted 245.000€ while TINSA quoted 203.000€.

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