When is a home appraisal necessary and what does it consist of?

A home appraisal is a fundamental process within the real estate field that determines the economic value of a property at a specific moment in time.

This value is calculated by an independent professional appraiser, who evaluates various factors to arrive at an objective and fair figure.

A home appraisal is commonly requested in situations that require an accurate valuation of real estate, whether for commercial, financial, legal or tax transactions.

What is a home appraisal?

Let's start with the basics: what is a home appraisal. A home appraisal is the process by which the monetary value of a property in the market is determined.

This value is based on a technical and objective evaluation that considers physical, economic and legal aspects of the property and its surroundings.

It is important to mention that a home appraisal must be performed by a qualified and neutral professional, known as an appraiser or expert appraiser, who uses specific methods and techniques to calculate the value of the property accurately and reliably.

What is valued in the appraisal of a home?

In the appraisal of a home, several key elements that influence its market value are valued. Among these elements are:

·       Physical characteristics of the property. The size, distribution, state of conservation, quality of construction materials, installations and finishes of the property are evaluated.

·       Location. The location of the property is a determining factor in its valuation. The geographical area, urban or rural environment, accessibility to public services, transportation, stores and green areas are considered.

·       Legal and urban aspects. The legality of the property is verified and the current urban planning regulations affecting the property are analyzed, as well as the legal limitations or benefits that may influence its value.

·       Real estate market. A comparative study of other similar properties in the same area is made and market trends are analyzed to determine the current value of the property.

When is it necessary to appraise a property?

A home appraisal is necessary in a variety of circumstances. When a home appraisal is performed, it is usually because there is a request to estimate the value of a property for a reason that makes such an appraisal necessary, such as the purchase of a home.

·       Purchase and sale transactions. Before buying or selling a property, it is essential to know its real market value in order to establish a fair and equitable price. In addition, the buyer has the right to know that the price he is going to pay for the property is in line with market reality.

·       Mortgage requests. Financial institutions request an appraisal of the home as collateral to grant a mortgage loan, making sure that the value of the property supports the amount of the loan.

·       Inheritance and distribution of assets. In inheritance, divorce or other legal proceedings where it is necessary to determine the value of real estate assets.

·       Tax calculation and debt settlement. To calculate property-related taxes, such as Real Estate Tax (IBI) or Transfer Tax (ITP), an appraisal may be necessary, as well as in cases where the properties are used as assets to be seized to settle outstanding debts with the Administration or a bank, in which case it will be necessary to appraise the property to determine its value.

Who can request the appraisal of a property?

The appraisal of a property can be requested by various persons or entities interested in knowing its current market value:

·       Homeowners. They can request an appraisal to obtain an updated valuation of their property, either to sell it, to insure it or simply to know their patrimony.

·       Prospective buyers. Before purchasing a home, buyers often ask for an appraisal to ensure that the agreed price is reasonable and in line with market value.

·       Financial institutions. Banks require an appraisal to assess the viability of granting a mortgage loan and as part of the legal requirements to guarantee the investment.

·       Public Administrations. They may require an appraisal for tax valuations or land expropriations.

How does a home appraisal work?

The home appraisal process follows a series of standardized methodological steps. First of all, a professional team with the necessary resources to carry out an appraisal in the appropriate manner must be consulted. Depending on who is requesting the appraisal, you will have to go to one place or another.

The most common cases, those that have to do with the purchase and sale of houses and properties, involve real estate agencies, and that is why it is vital to resort to a professional agency that offers real estate appraisal and valuation services. In Barcelona, HOFFMANN Real Estate offers its clients its most professional and reliable home and property appraisals.

As a general rule, if you do not know how the appraisal of a property works, you should know that the following steps are followed in order to make an objective valuation:

·       Request and collection of information. The owner or the entity requesting the appraisal provides the appraiser with the necessary documentation, such as deeds, plans, cadastral records and any other relevant information about the property.

·       Inspection of the property. The appraiser visits the property to personally evaluate its condition, physical characteristics and location.

·       Market analysis. The appraiser performs a comparative study with other similar properties that have recently been sold in the same area, adjusting the value according to the differences and similarities found.

·       Appraisal report. Finally, the appraiser prepares a detailed report that includes the valuation of the property, the methods used to arrive at that valuation and the factors that have influenced the calculation of the final value.

·       Delivery of the report. The appraisal report is delivered to the applicant, who may use it for its intended purpose, whether for legal proceedings, real estate or financial transactions.

How long does a home appraisal take?

The duration of the home appraisal process may vary depending on several factors, such as the availability of the appraiser, the complexity of the property and the professional's workload.

Okay, but... how long does a home appraisal take, in numbers? If you want to go for the numbers, you should know that an appraisal is usually completed within 7 to 10 days from the time of the request, as long as all the necessary documents are available and no unexpected complications arise.

In summary: a home appraisal is a technical and objective process that determines the economic value of a property at a given time, based on physical, economic and legal criteria. The intervention of a professional, competent and neutral team is essential to obtain an accurate and reliable valuation.