November 3, 2006 at 9:37 am #52418
Classic story! We have had an offer accepted on a property in Ibiza. However when the bank surveyed the property for the mortage, the apartment was valued at 39,000 euros (15%) less than the offer price.
Obviously now we can’t afford to pay the full price but don’t want to loose the property…
Has anyone got any advise on what our next move should be?!!
Thanks in advance
November 3, 2006 at 10:02 am #67218
Try a lower offer?? Try another bank??
November 3, 2006 at 10:42 am #67221
If buying via an estate agent have you asked what their commission is? Could this “shortfall” be that commission?
Either way, this should surely be telling you that the property is overpriced and you should reduce your offer accordingly. That “full price” you were prepared to pay was the amount of money the vendor would love to get for his house plus the agent’s commission – not necessarily a realistic valuation which is what you now have from the bank.
Would you pay over the odds for a house in the UK? If not, why are you even considering doing that here?
November 3, 2006 at 1:23 pm #67222
Whilst of course it should be, valuations do not seem to be an exact science. The major banks use a selection of independent valuers, companies such as Tabimed, or Cohispania, I have seen valuations varying wildly relative to each other and to purchase price, one house was sold at 545k valuation 980k at the time I estimated current market value at circa 650k. rule of thumb (in this area at least) Cam valuation always on the low side.
November 3, 2006 at 6:20 pm #67228
My experience of bank valuations is that they can be very unpredictable.
However, the bank is often able to phone the valuer and talk him into raising his valuation. If you are not happy with the valuation try another bank.
I would not accept that a valuation lower than the agreed price is proof that you are paying over the odds. In the same way as a valuation over the agreed price does not necessarily mean that you have found bargain of the century.
In my area, Valencia, the CAM bank is famous for being the most generous valuer.
November 4, 2006 at 9:36 am #67232
Ibiza is out of my real knowledge zone but I do know that on the Costa del Sol banks have recently seemed to be downgrading their valuations. Also, with the advent of interest-only mortgages they are protecting themselves so downgrading further.
So, looking at the specific case of the apartment you wish to buy:
1) What % of purchase price were you looking to borrow? If this is over around 65% now then the valuation will suffer.
2) Interest-only? Again, downgraded.
3) Did the valuer get all the correct info? I.e. are you buying furnished as this will increase the value marginally… Is there a garage on the escritura or on a separate escritura? Again, make sure that the valuer got every pernickity detail.
4) Did the agent you are working with accompany the valuer to the property and take with them examples of apartments withn 500m which have sold and at what price?
5) Did your agent phone around a whole bunch of banks in the area you are buying and ask if they have recently done any mortgages on apartments and what the valuations were coming in at on a price per sqm basis?
Hope the above info helps you to get the apartment you’re after. Am flinching about Katy’s comment re agent’s commission but if you’re buying off-plan and the agent is getting paid on exchange and not completion then asking how much commission they are making isn’t necessarily out of order these days . Ditto if its a resale and your apartment is heading up to the million euro mark then you can certainly negotiate with the agent on their commission.
Kind regards and good luck with it all.
November 4, 2006 at 11:47 am #67235
Hi Sarah, it was Hillybilly who commented on commissions, I suggested trying a lower offer 🙂
November 4, 2006 at 11:47 pm #67238
Thanks for all your replies. After many hours of amateur translation of the survey, I discovered a sentence saying that the 60m roof terrace had not been included in surface area of the property outlined in the document. Is this normal practice in Spain?
I might just be clutching at straws but it seems a bit strange that the part of the property I found the most attractive and one of the main reasons for buying the place isn’t included! If the property was in London the roof terrace would be integral to the property and the price.
The more I read, the more confused I get…any advice would be very welcome.
November 5, 2006 at 12:48 pm #67240
Asking an agent how much commission they are making is never “out of order”, new or resale, why should it be? Every would-be buyer should ask this question IMHO. Ask to see the selling agreement they have with the vendor too for proof.
November 7, 2006 at 8:43 am #67265
I stand to be corrected Van, but I believe that although you will have exclusive use and access to the terrace of your apartment and this would be stated in the deeds, that legally you will not own it therefore it will not be included in the valuation.
November 7, 2006 at 2:57 pm #67273
The outside terrace doesn’t have the same value as that of roofed floor (by that I mean closed with walls), it’s more or less half the value. You do own the terrace, naturally, and it should be included in the deeds as part of the description of the dwelling. Perhaps they did reforms in the house and this were not communicated as “obra nueva” and inscribed in the Land Registry so as to avoid paying taxes. The terrace also has a price included in the sales price on selling obviously.
In any case, try another -spanish- valuer independent from the bank if you are not happy. Should cost you between 350-450 Euros. The valuations differ a lot depending on the banks lending criteria. The same valuer could establish two different valuations for the same property for two different banks, because they have different criteria to lend.
November 10, 2006 at 12:21 pm #67299
Probably of very limited value but I came across this website today whereby for 10 euros you can obtain an online valuation of your property in Spain.
Would be interesting to see how accurate their virtual “valuations” are. Maybe someone who’s recently had their property valued in the flesh, so to speak, would care to throw 10 euros at it to see how it tallies. Or not!
November 10, 2006 at 6:42 pm #67314
Personally, I don’t think these “valuation” websites work. We did one here in the UK based on a previous mortgage valuation. We put in our postcode and up it came. WHOOPEEEEEEEEE!!! 😆 😆 😆 £124,000 more than our estate agent valued it….fat chance!! 😥
November 14, 2006 at 6:54 pm #67372
Just to update you all. I informed the bank about the roof terrace not being included in registration documents and it immediately agreed to give us all the money we need for the mortage if the vendor agrees to register the terrace. Hurray!!
I then emailed and telephoned the estate agent, who expressed ‘suprise’ at the situation and slight annoyance of the extra hoops that now have to be jumped through. Anyway, I’m now waiting to hear back from the vendor…fingers crossed crossed that they will agree!
Thanks again for all your help.
December 3, 2006 at 9:11 am #67614
Can anybody give me a rough estimation price per m2 for a linked villa in central cds region. I’m looking to buy at the moment and notice there is a wide variation of prices for similar properties. For example two almost identical properties on the same small urbanisation I viewed have a price difference of 30% or 135.000eu, the more expensive is through an estate agent the cheaper one a private sale.
December 7, 2006 at 9:59 pm #67702
The main reason why the evaluations are lower now, is because with the new tax law, the Tax authorities will take the evaluation price as market price, so if you declare lower value on the title deed, the tax authorities will take the evaluation price as the real price and you will pay more money in taxes.
December 8, 2006 at 8:39 pm #67740
Simply use another lender, tell them how much you need and see what they will come up with. Make sure you know the going price first. i am on my third property in Osona, avoid the coast like the plague, and see no reason for prices to stop rising inland as demand is still high. :). ventury classic, i dont think that is quite the case, you pay the tax on the official price you pay not the valuation. I,ve managed to get valuation of over 150% of the actual price, but pay tax on actual price.
December 9, 2006 at 10:15 am #67743
It is worth remembering that your tax liability on purchase is initially calculated as a percentage of the declared value.
But this is subject to revision. I have seen a case where a Spanish buyer declared the full price paid on a flat purchase and then received a supplementary tax demand three years later. The buyer had made a good purchase from a slightly distressed seller and the taxman noticed that the declared value was below the average value for the size of the flat and the area. Hence the subsequent tax demand – which had to be paid in full before any appeal could be made.
I believe you will find that transfer tax liability (stamp duty) is assessed on market value and not declared price. Although the initial assessment, and for many buyers the only assessment, is based on declared price.
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