We all have an opinion about the value of a property, especially when it’s our own, and that’s the problem! It’s the subjective value that a prudent, knowledgeable buyer will put on the property which is important.
As with choosing a life partner, the attractiveness of any given property is in the eye of the beholder! That is why property 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.
Problems often start when owners mix emotion and ego (and sometimes desperation) with sensible economic reasoning. This will famously lead to people overvaluing their properties.
The problem is sometimes exasperated by Estate Agents going along with the fantasy simply to get the listing / business. However, reality usually strikes home when the potential buyers point out and list what can be bought elsewhere and highlight the fact that the Bank won’t give a big enough mortgage at that price. (The Spanish Banks are not stupid, they have a very good handle on property values).
It is important to bring in an independent, experienced professional specifically trained to accurately value individual properties – H&G can help you here. We work with several trusted chartered surveyor, based in Spain.
In a falling market, which we’ve had for a few years in Spain. (This is now changing). Many have been caught out and ended up chasing the market down, dropping their price eventually.
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.’
So, 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 property for the least money.
Reliable information on actual sale prices and accurate descriptions of properties is sometimes difficult to come by in Spain which is why you require a professional with serious expertise. It is common knowledge that the property market is fickle, it 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 in almost every developed country, the best properties in each range will sell, judged by location, quality and price. Even now, there is competition for these in Spain. On the other hand there are others for which no prudent, knowledgeable buyer can be found at any price.
So, what is the property’svalue?
Value, like beauty, is in the eye of the beholder. Every property is ultimately only worth only what a prospective buyer is prepared to pay for it.
Tel 01832 864-020