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What does a property appraiser value?
When buying an apartment of old construction and applying for a mortgage for its purchase, residents are faced with requests from banks to evaluate the property that is being purchased. It is true that each bank has its own rules about when asset valuation is necessary and when it is not. It depends on the age, the purpose, etc. of the house. However, if you are looking for an apartment in an apartment building built in the Soviet era, you will not avoid valuing the property.
Asset valuation is the process of estimating the real value of an asset. So, if you are going to buy an apartment, during the appraisal of the property, the expert, taking into account certain advantages and disadvantages of this property, determines the real value of the property. It can be higher or lower than desired by the property owner.
According to Audrius Šešplaukis, director of Inreal’s Valuation Department, the valuation of an apartment can take from 1 working day to 3 working days. It all depends on the uniqueness and location of the apartment.
“If you have to drive from Vilnius to appreciate the apartment in Visaginas, then the round trip only takes almost a full day. If the apartment is unique, that is, they are rarely sold on the market similar, you have to request information Records Center – purchase and sale transactions, so the evaluation process also takes more time ”, says the interviewee.
He goes on to say that the key thing an appraiser takes into account when appraising an apartment is location. The following are other factors that are less important than location, but also significant: year of construction, completion, construction of the building, planning of the apartment, building and finishing materials, communications, technological equipment, floor of the apartment, number of apartments in the house and staircase, window orientation and professional view. them, storage room – garage, parking above ground or underground.
It is also taken into account if there is a pantry, terrace, balconies. The convenient communication, the neighborhood, the builder / investor and the general contractor, the economic situation of the country and the world, etc. they are important, ”adds A. Šešplaukis.
What reduces the value of a property?
According to the property appraisal expert, each factor increases or decreases the attractiveness of the apartment, the ability to sell it and the value of the apartment. In each specific case, the appraiser takes into account all the components of the apartment’s characteristics, both physical-tangible and emotional-emotional, and determines the value of the apartment. The value of the apartment does not always match the market price.
“The condition of the apartment is of great importance in the evaluation. If the apartment is abandoned or after a fire, the appraiser takes this into account when determining the value of the property and makes a decision on the value of the apartment in each specific case ”, says the interlocutor.
According to the expert, the extent to which the value of the apartment may decrease if it was abandoned or after a fire depends on the size of the apartment, the installation materials and the degree of flooding or other specific defect.
“If the apartments were bought with a loan, the owners are obliged to insure the apartments bought, and normally the insurance covers the repair costs, and the apartments are sold already repaired. In the event that the apartments are sold with obvious defects, encapsulation, after a fire or another, the price of the apartment can drop by 20 percent. There were cases when it was necessary to change not only the decoration of the apartment, but also the doors and windows, then the price of the apartment fell to 35 percent. Normally, due to deficiencies in the apartment, the price is reduced by 10% ”, emphasizes the expert in property appraisal.
A. Šešplaukis adds that movable property (household appliances, furniture, animals, carpets, etc.) is not valued as part of the apartment. Banks do not pledge this rate, so appraisers do not evaluate it.
Why is property valuation so important?
After completing the procedures, the property appraiser will tell you how much the apartment you want to buy is really worth. This is the value registered by the bank where you want to take out a mortgage, and a loan will be paid from that value. It is possible that the amount at which the property is valued is different from that requested by the person selling the property, for example, the owner thinks that his apartment is worth much more and is not willing to lower the price. In this case, you must accept that the purchase of this particular home will require more of your own funds to cover the difference between the actual value of the property and the amount requested by the owner. The valuation of the property is also relevant for its owner: if the desired price will be much higher than the real value of the property, it will be more difficult to sell the apartment.
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