Real Estate Appraisals
Real Estate Appraisals
index
A real estate appraisal is a document that decrees the monetary value of any property. This value is the result of an exhaustive analysis of different characteristics of the property. This document not only serves to have knowledge of the monetary value, but also helps in the process. of different procedures, all this is endorsed by a certified appraiser.
What are the benefits of carrying out this appraisal?
- The properties can be sold as quickly as possible, since having a fair price will prevent them from being put up for sale with a high or very low price.
- With this appraisal, anyone who wants to buy a property can be sure that they are paying fairly and not overpriced.
- When requesting a loan from the bank to buy a property, this appraisal will be requested.
- This appraisal not only provides the economic value of the property, it also offers a report on the condition of the home and the changes that have been made.
What are the types of Real Estate Appraisals there are?
Mortgage: This is requested mostly by financial institutions, specifically for mortgage loans. With this type of appraisal they will know the value of the property and with this they will have a basis to know how much the loan will be.
Buy and sell: It allows you to know at what price any property can be put up for sale or bought. Here the value is calculated taking into account different aspects such as: location, inflation, other properties that are similar, among others.
Value Opinion: The value sought with this type of appraisal will only be an approximation, it is not necessary to do a very in-depth investigation.
Determination of Income: This type of appraisal determines the monetary amount of the income of a property, whether commercial or residential. It can also be requested so that compensation for rents that have not been paid or an assignment of contract can be requested.
Sure: It serves so that in the event that a property suffers damage due to an incident (natural phenomena or insecurity), the owner can receive an economic replacement based on the market.
Writing: This appraisal is used to know the value of the property at the time of deeding it. The appraisal is carried out by an expert who has a record in the treasury.
Cadastral: It helps to know that a home is up to date with its tax payments (water, property acquisition, property, etc.).
Expropriation: This appraisal is needed in the event that a home is affected due to some government activity, the value of the property that was affected is calculated, as well as the amount that will have to be covered to repair it.
Development Potential: It helps to know what the maximum value that a piece of land can reach where some type of property is located.
Methodologies to carry out a Real Estate Appraisal
Costs: This method helps to know how much it would cost to replace a home, this is calculated taking into account what type of materials the property is made of, it also takes into account the facilities it has.
Market: The homes that are in the surroundings of the one to be valued are investigated, the characteristics they share are investigated, as well as the type of area in which they are located, based on this the expert can arrive at the economic value that is similar to those on the market.
Capitalization of Income: The value of the income that can be generated from the property is calculated.
What properties are included in a Real Estate Appraisal?
Regulations and Standards by Country in a Building Appraisal
1. Mexico
- In Mexico, property appraisals are regulated mainly by the General Law on National Assets and the Appraisal Standards established by the Institute for the Administration and Appraisal of National Assets (INDAABIN)Local regulations in each state are also taken into account.
- The appraisal must be carried out by a certified appraiser by the Mexican Valuation Society (SMV), and must include a detailed description of the property, the cadastral value, the market value, and, if necessary, the conditions of the real estate market.
- The type of construction, age, state of preservation, location, capital gains, and market comparables are considered.
2. USA
- In the United States, real estate appraisals are primarily regulated by the Uniform Standards of Professional Appraisal Practice (USPAP)), which are guidelines issued by the Appraisal FoundationIt is important to mention that these must be updated every two years, it is mandatory for licensed appraisers.
- The Federal Housing Administration (FHA) has regulations for certain types of financing.
- Appraisals must be performed by a Certified Real EstateProperty values are based on market comparables (recent sales), the property's physical condition, its location, and other local market factors.
- Factors to consider include a comparison of recent sales, replacement cost, and the property's profitability. Zoning and local land-use regulations are also taken into account.
3. Argentina
- In Argentina, real estate appraisals are regulated mainly by the Civil and Commercial Code of the Nation, as well as provincial professional associations such as the Professional Council of Surveying, Architecture and Engineering or the College of Public Auctioneers.
- Appraisals must be carried out by qualified and registered appraisers, such as those that form part of the Argentine Federation of Real Estate Appraisal Entities (FAEVY).
- The criteria to be followed include a detailed description of the property, its market value, cadastral value, and its relationship to the economic and local context. In addition, consideration is given to the type of construction, age, state of repair, location, and comparable market values.
4. Colombia
In Colombia, the appraisal of real estate is regulated by the Law 1673 of 2013, which supervises the appraiser's activity. As well as el Open Registry of Appraisers (RAA).
- Appraisals must conform to the International Valuation Standards (IVS) when the assignment requires it.
To carry out an appraisal, it is necessary that the expert appraiser be certified by the Superintendency of Notaries and Registry.
The appraisal must detail the property's description, assessed value, market value, and tax value. It also takes into account the property's location, physical condition, age, local real estate market conditions, and comparable property values.
5. Chile
In Chile, appraisals are regulated under the Law 18.795 on the real estate system and the Law 19.537 on horizontal property. As well as the Chilean Standard NCh 430 and the Regulations of the Ministry of Housing and Urban Development (MINVU).
- Urban and cadastral valuation falls on municipalities and the Internal Revenue Service (SII).
Appraisals must be carried out by licensed appraisers, who must follow the guidelines of the College of Appraisers of Chile.
A property appraisal must consider aspects such as its construction type, age, state of repair, location, market value, and capital gains. Comparable properties and local market conditions are also analyzed.
6. Peru
In Peru, the appraisal of real estate is regulated by the Law No. 28,923 on cadastre and the Law No. 28,243 on real estate appraisal. As well as the National Appraisal Regulation (RNT) under the Ministry of Housing, Construction and Sanitation.
The appraisal must be carried out by a accredited and registered appraiser before the National Superintendence of State Assets (SBN). They can also carry out appraisals engineers, architects or certified appraisal professionals.
The appraisal is based on criteria such as location, type of construction, age, state of repair, market comparables, and the property's cadastral value. The evolution of the real estate market and demand in the area are also considered.
7. Ecuador
In Ecuador, property appraisals are regulated by the Urban Cadastre and Appraisal Law. As well as by the Municipal Regime Law and various technical standards from entities such as the Military Geographic Institute (IGM) and the Technical Secretariat of Habitat and Housing.
- Some appraisals must be adjusted to the International Valuation Standards (IVS) for certain processes such as expropriations, planning or corporate appraisals.
A property appraisal should include a detailed description of the property, its market value, its assessed value, and local market conditions. The building's age, type of construction, state of repair, and comparable properties in the area are all taken into account.
8. Costa Rica
In Costa Rica, appraisals are governed by the Law No. 8,736 of Cadastre and the Regulations of the Cadastre Law. As well as by the National Appraisal Regulations (RNA), which is the main technical framework for public entities. The National Geographic Institute (IGN) and the Treasury intervene for fiscal or technical purposes.
Experts must be registered members of the College of Engineers and Architects of Costa RicaThere are also other qualified professionals such as surveyors or civil engineers, depending on the type of property and the specific regulations.
The appraisal process must detail the property's characteristics, including market, cadastral, and tax values. Also considered are the property's age, type of construction, state of repair, location, and comparable properties within the local market.
9. Uruguay
In Uruguay, appraisals are regulated by the Law No. 18,308 of cadastre and the General Tax Directorate (DGI), which establishes the tax parameters for the valuation of real estate.
Appraisals must be carried out by qualified appraisers, and must include a detailed description of the property, its market value and the cadastral value.
Factors to consider include age, type of construction, state of repair, location, and comparable property values in the area.
10. Paraguay
In Paraguay, appraisals are regulated by the Law No. 1,092/97 on Cadastre and the General Directorate of Public Registries.
Appraisals must be carried out by certified professional appraisers, who must include in the report a description of the property, the market value, the cadastral value and the fiscal value.
The location, state of preservation, type of construction, age, capital gains, and values of similar properties in the same area are considered.
