They are the bane of the estate agent’s and developer’s lives, and also, of course, the confused buyer who finds that he/she can’t get the mortgage they expected because of a low Tasador valuation and only Tasadores valuations are accepted by the Banks, Registrars and Courts in Spain.
The latest check of our RICS valuations has shown that, on average, our valuations over a four-year period are approximately 98.5% of known actual purchase prices supplied by client buyers. Over the years we’ve had various ‘discussions’ with Spanish valuers regarding mortgage valuations that have been substantially different from Survey Spain’s fully researched current market values. We’ve known various reasons for this difference, but I thought that it would be useful to provide you with a summary explanation, resulting from a detailed conversation and explanation with a co-operative Spanish valuer with whom we have been jointly valuing two apartments in Marbella.
As you may be aware, Spanish mortgage valuers have to value according to strict regulations and methodology laid down by the Bank of Spain. At times, it’s been suggested that amendments to these regulations have been more aimed at financial control of the Spanish economy, than seeking to improve the accuracy and consistency of values.
As a result of this conversation, a number of principal reasons were ‘discovered’ relating to these particular valuations, but which will also apply in general.
- Because part of the gardens of the urbanisations in which these properties were located, were within the green zone of the Coastal Law (Ley de Costas), the tasadores are obliged to make a deduction, with the % depending on the severity of the encroachment. In these cases, 10%, despite recognising that the individual apartments were outside the restricted areas and that, as the Promenade (Paseo) is already created, it is highly unlikely that there will be any need for action by the authorities. This 10% amounted to a deduction of more than 60,000€ euro in each case!
- Covered Terraces – despite the formal explanation on the Catastral site of how they judge the 50% or 100% inclusions, relating to the number of surrounding walls, the tasadores are obliged to work on the following basis:
- If the terrace is more than 15% of the area of the rest of the apartment, its value is taken at construction cost plus expenses (licence, architect, etc)
- If 15% or less, then it’s taken at 50% of the apartment value.
Without detailed knowledge of the comparable properties, where they will have to depend upon the Catastral measurement, this must make accurate comparisons difficult.
(Incidentally, the planning definition of terraces is different again, when calculated to ascertain the area of construction permitted in relation to the ratio applied to the site area. The definition states, ‘Fully covered porches and terraces are included at a rate of 50% of their surface area if they are enclosed on three sides and are not included if they are enclosed on one or two sides.’ Where it is a retractable roof, if it can retract more than 75%, then the terrace is not covered.)
- If the tasadores measure with laser meters the net internal area, excluding walls and stairwell. (Útil), then, depending upon the thickness of the walls, they multiply that by between 1.15 and 1.20 to get the gross overwall area (construido), which is the one used in Title descriptions (Nota Simple) and Tax description (Catastral). Where at all possible, Survey Spain’s valuers measure the external size directly with a tape.
- The big one! They deduct up to 15% from the final valuation to account for selling costs and expenses to give the net amount that the bank will receive.
- With there being such a volatile market, why do Tasadores guarantee their values for 6 months? – It’s so that it will still be current when the mortgage document is passed to the registrar. Otherwise, they can be obliged to revalue at the client’s cost.
- Though not stated, from information provided, the individual tasadores are paid so little for each valuation that they have to pack the maximum number into their day to make it worthwhile. Accordingly, they often don’t have the time to fully research and contemplate the results, having to depend at times on comparables found by automation.
So, when clients ask why the Tasación is so different from the current market value (our valuation), those are possible reasons. That’s ignoring the fact that they may be less rigorous in identifying and applying true comparables!!
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