What is the appraisal value of my home?

We'll explain the factors that determine the appraised value of your home

A home appraisal is the process by which a professional authorized by the Bank of Spain determines a home's value on the real estate market. How can we know the real value of a home? Many factors influence the appraised value, and only licensed and certified professionals can determine the value of a home fairly and objectively. However, certain key factors are always taken into account, and these will be used to establish the appraisal value of your home.

During the home-buying process, a home appraisal will always be requested by the bank. This is because the amount of money the bank will lend the buyer is determined by the appraisal value established by the authorized professional. We are talking, therefore, of a key component of the transaction, and one which is almost always used in purchase-and-sale transactions on real-estate.

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You may also want to get a home appraisal if you decide to sell your home. As the owner, it will give you an idea of how much your home is worth.

For the bank, an appraisal has two purposes:

  • To provide certainty regarding the actual value of the home. This guarantees the bank that, if the borrower should default on the mortgage and go into foreclosure, it will be able to sell the home to recoup the money it lent.
  • Lenders want to ensure that the amount of money requested by the borrower is appropriate. This amount is generally established at 80% of the appraisal value, not 80% of the sale price. If the mortgage involved is for a secondary residence, this percentage tends to be somewhat lower. For example, if the sale price is €100,000 and the appraisal is for €80,000, the 80% will be applied to the €80,000 figure. In other words, the bank will grant a mortgage for a maximum amount of €64,000. 

Documents required in order to perform the appraisal

Make sure you have all the documents required to make the job of the appraiser easier:

  • The deed for the property.
  • A certificate from the property registry showing ownership of the property and any encumbrances that may have been placed on it, as well as its full description including the property rights and their limitations.
  • Extract from the registry entry.
  • The plans for the property.
  • If a building still in the planning phase is involved, the plans approved by the competent professional association.
  • If the building is under construction, a photocopy of the construction permit and plans approved by the corresponding professional association and city government, and the final certificate for the completed work.
  • For government-regulated housing, a qualification certificate or administrative document verifying the maximum sale or rental price.
  • In the case of buildings, a document verifying issuance of an insurance policy covering material damages and losses, and if use of the building has been fully or partially ceded in some way, the leasing contract or occupancy permit.
  • If the case involves a buildable lot on which you are planning to construct a home, the written urban planning document or query results and the land registry plan or survey drawing; and for rural land, the land registry documentation related to its operating regime, irrigation rights, and yields.

Once all of these documents have been submitted to the appraiser, the work of appraising the home can begin. The Bank of Spain establishes that the party with final responsibility for selecting the appraiser is the owner of the home or the party interested in requesting a mortgage from the bank.

The appraisal process:

  • The appraiser must visit and inspect the property. Any appraisal made from a distance, for example through an online appraisal, is non-binding in nature and is merely an estimation.
  • The appraiser must analyze the plans for all of the spaces in the home, including both private and common-use areas.
  • In the appraisal report it must be verified that the land registry parcel being appraised is the correct one.
  • The appraiser must also verify that there are no urban planning violations that could affect the property being appraised.
  • Finally, the appraisal document used for a mortgage must have six real examples attached of other appraisals from the same area. 

Elements that an appraiser will tend to focus on

Only an appraiser authorized by the Bank of Spain can produce an appraisal for your home. However, being aware of the elements of the home that any appraiser will tend to focus on can also be helpful when the time comes to produce such an appraisal:

  • The condition of the building: when calculating the value of a home, one factor with a strong influence is whether the building in which the home is located has been renovated, as well as whether it has passed a technical inspection.
  • The location of the home: when it comes to appraisal of a home, location is fundamental. In relation to this aspect, it will be taken into consideration whether the home is located downtown in a city, or if not, if it has good public transport connections, or if it is located in an area that is primarily residential or more commercial in nature, with bars, shops, parks, etc.
  • The surface area of the home: how many square meters it includes and the proportion of this area that is inhabitable.
  • The orientation: An apartment facing towards the north is not the same as one facing towards the south. An apartment that receives many hours of natural light, for example one oriented towards the west, will have a higher appraisal value. In addition to the home's orientation, the views it offers can also play an important role when a home is being appraised.
  • Distribution of the bedrooms: Surface area is not the only thing that matters for a home, since the distribution and organization of its spaces can also be fundamental for an appraisal. For example, an apartment that is very large but with very long, narrow hallways will be appraised at a lower value than one with the same amount of inhabitable surface area, but with a more convenient layout.
  • Elevator in the building: The ability to provide access and mobility for persons with some sort of reduced mobility is another factor to be taken into account, and which can increase the value of a home. 
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BBVA Valora

In addition to taking all the above factors into account, if you want to find out the approximate value of your home, don't hesitate to calculate its value using the BBVA Valora application. It will provide an analysis of your home, quickly and easily. You just need to enter your location, including your complete address, and BBVA Valora will then provide you with an approximate value for your home. However, in no case does this represent its actual appraisal value or its real value.
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