Real estate valuation

The real estate valuation allows the institution providing the loan to verify the value of the property it wants to buy in order to decide on the granting of a housing loan. The request for a property valuation has a cost that is borne by the buyer of the property, at the beginning of the house purchase process.

The total amount charged to the consumer (MTIC) helps to provide an idea of the cost of the financing you want. MTIC indicates all the costs associated with the loan, and the costs of property valuation are already included.

There are several factors that can influence the valuation of property and there are specific situations where it is required. Before embarking on a housing loan you should carry out this assessment and know all the important aspects related to financing.

Who carries out the property valuation?

The property valuation is paid by the buyer of the property and must be done by a competent authority. The banks themselves carry out the property valuation, charging a commission, to decide on the terms to be granted to the housing loan.

Appraisers

As you have to provide the financial institution with an approximate value of the house, before the bank from which you are going to apply for the loan, you are advised to carry out a property valuation on the initiative of the house buyer, who can use these appraisers:

• Specialised or expert companies with a degree in Real Estate Management, Engineering, Architecture or a relevant area related to real estate valuation;
• Property valuation websites offering this process free of charge;
• The Tax Department's portal also provides a geographical area assessor, assigning a value to housing and a tax amount to be paid;
• Some banks are also starting to offer a property valuation service independent of their home loans.

It is advisable to choose a specialised agent to obtain a detailed and more complete report, one for you and one for delivering to the bank. Remember that it is always required by the bank, whether or not you make an independent assessment by a specialised agent.

When is a property appraisal carried out?

Property valuation is carried out in two different cases:

1. When the buyer needs to arrange a home loan. Whenever someone wants to buy a property they must bear the costs of the home valuation;
2. When it is necessary to transfer the mortgage credit. The bank to which you will transfer your mortgage must confirm the valuation value and, if the house is already a few years old, its valuation value may be different. When transferring mortgage loans, it is possible to reduce the monthly installment as well as increase the payment term and reduce interest rates. So it is a less time consuming and simpler process.

It is not compulsory, but property valuation can also be carried out in order to share the inheritance for the heirs to agree on the value of the property, and also for when an individual wishes to sell the property (for the value to be the most accurate taking into account the current property market).

If by chance, the buyer wants to buy a property from the bank, there may be a possibility that he will not have to pay the commission on the property valuation. In addition to this advantage, a bank house has others as an exemption from initial fees and financing of the entire value of the house (100% financing).

Which factors influence the property valuation?

There are several factors to assess to identify the value of the property. The more and better variants of these factors the house has, the higher the value of the house will be. A real estate appraisal must take into account the following factors:

• The location of the property, including the floor/ground-floor, the view that is possible to have from the dwelling, the solar orientation and the accessibility;
• The quality of construction materials and finishings;
• The construction date;
• The state of conservation (this factor applies to used houses);
• The land where it is inserted;
• The typology and layout of the house;
• The interior finishes and equipment/technology/ household appliances included;
• The amenities of the house, i.e. parking, swimming pool, lift, green spaces, among others;
• The state of the market, i.e. current supply and demand.

In the house search process it is of high importance to choose the one that best suits your needs but always taking into account your payment capability. The most important factor in the valuation of the house is the location. Sometimes two houses with similar characteristics can have different market values. The bigger, more recent, modernised and well located the house you want to buy, the higher will be its value and proportionally higher will be the monthly payment you have to make to the bank for your loan.

If you want to buy or sell a house, the ideal is to use an agent specialized in real estate valuation to have a more detailed report, both for you and for the credit institution.

Buy House Portugal can help you through this process!