Anybody know how banks calculate spanish property costs?

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    • #51535

      I wonder if anybody can help me, I’m told that banks look at m3 area of a property and then mulitiply this be a figure in Euro to come to a property value.

      I would like to know if there is somewhere I can see the value of property by diffrent location per m3

      Also when I look at properties I see various figures given in m3.
      a. Constructed area.
      b. Terraces.
      c. Garden.

      Are all diffrent types of area valued diffrently and if so is there a calculation that can be used to value a property by m3?

      Any help would be appreciated. ❓

    • #60772

      On projects I have worked on in Spain the construction costs are calculated based on the gross built area in m2 (i.e. to outside of walls) with terraces and the like taken at half the normal price/m2. Sales costs however are normally based based on the net usable area, i.e. inside areas.

      Depending on the bank they could use a similar system but normally, for mortgage purposes may use an independent valuer, e.g. a local representative of the company TINSA or similar.

      I have heard of some countries using prices/m3 but have not come across it myself.

      Hope this he;ps

      Best regards

      Terry English

    • #60785

      terryhelvetia thanks for your response, I think it answers my question. If I understand correctly only the living are is used to value a property.

      Does anybody know if there is a guide price per m3 for properties by area?

    • #60787


      Terryhelvetia is right, but one thing is how you calculate construction cost and an other how banks value properties

      When calculating a project or making a construction budget architects or builders calculate by units with different ways of ‘measurement’ (I’m not sure if this is the word you use in English) so you will have ‘X’ m2 of bricks, ‘X’ kilos of iron, ‘X’ m3 of cement each with their own cost… and so on

      This units change little from one area to another, it usually depends on how far you are from the materials deposit or haw easy is to access the working place…

      The banks always use the commercial value, meaning how much profit I could make if I sell this particular property

      To do so as Terryhelvetia says they are obliged to use official valuation companies or registered independent valuators…

      Depending on what purpose you need the valuation for you may be obliged to follow certain rules

      You need your valuation just for yourself, to know how much any property may cost… no problem any appraiser would do fine…Supposing you want this valuation to have ‘official’ recognition your valuer or appraiser has to follow some legal rules.

      The banks have, by law, to follow this rules. There are some regulations but the main one I think is (I’m telling this by heart) the Ministerial Order of 11/30/1994

      There are three different ways to do the official valuation:

      First one, called ‘comparison’ You start analyzing the area, the services, the communications, the environment… then you must do a comparison with the market value of at least four other properties within the area and finally a prediction of the market… at the end you have a value in money per square meters, never cubic (always living and not gross built area) with different costs (built areas, gardens, terraces, etc…) This is the value used mostly by banks (compulsory in mortgages or other kind of loans).

      The second one is used for investment purposes and it calculates the net profit you can make if you had the construction rented.

      Finally the third one, used also for investment and some court processes, starts with the commercial value (the first one) and then discounts the construction costs.

      There is not an official guide price per meter by area but anyone who knows the local ‘market’ can tell you the average Euro/meter cost. The official valuation association publishes a yearly guide (Not to trust blindly as market changes every day) but this is something you can do by yourself just looking at the advertisements in local newspapers.

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