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Real estate valuations

28 Jun , 2014,
benno
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Real estate valuations Costa del Sol and Costa de la Luz

Not only are we experienced architects, but we also perform real estate valuations for Spanish property. Our constant professional training in the field of real estate valuations earned us our status as chartered real estate surveyors for Arquitasa, recognised by the Banco de España. But we also draw up real estate valuations as real estate and building surveyors, in court and before an arbitration board. Apart from our private clients, we also carry out real estate valuations for public institutions, such as the cadastral office (Catastro) and the tax office, who have consulted us several times in order to retroactively find out the property value.

Real estate valuations are only allowed to take place in financing operations if the responsible surveyor is registered through a Public Limited Company; Benno Bühler has been a chartered architect and real estate surveyor through Arquitasa since 2010, with his head office in Valencia. Since 2008, the rules implemented by the Banco de España have been made stricter in order to avoid overvaluations in real estate, which, as most people know, have been common practice in Spain before the collapse of the real estate bubble. Through overvaluated real estate (and the respective real estate valuations), not only the house or flat, but also furniture, kitchen and maybe the car was paid.

In Germany as in Spain, real estate valuations are carried out using either the comparative method or the asset valuation method. The comparative method is used in real estate valuations especially when appropriate values are available for comparison. That is, mostly with flats or residential buildings. However, the search for sources is a bit more complicated in Spain, as there is a lack of renowned committees for real estate surveyors for information on property or land values. This is why we have to rely mostly on competent statistics, which are available for us to establish average values. The asset valuation method is applied when no comparable objects for reference or other sources are available. When using the asset valuation method, individual prices (building or purchase price) are determined separately and then added up, so that the result gives us a sound value for the property, in consideration of the age (current value).

The gross rental method is applied when earnings are made through a building, which means that it is rented. Through the gross rental method, we find out the return of an object, which lets us establish a realistic purchase price. The rule of thumb has been that a property should make a 5-7% profit net a year, in order to be considered an interesting investment. The value changes according to times of boom (or the collapse of the real estate bubble, like here in Spain in 2008).

Gross return = Earnings (gross rent) x 100 / invested capital (incl. mortgages)

Net return = Profit (earnings – expenses) x 100 / equity capital (excluding mortgage)

Earnings = earnings x 100 / desired gross return

Apart from the gross rental method and comparative method, real estate valuations can also be done by evaluating the construction value, market value, balance-sheet value, official value (here, it is important to distinguish in Spain: cadastre value and construction value in planning permissions), insurance value and land value.

German