Official property valuation is used in every transaction where financing is done through a bank loan.
How much is the apartment worth? How much is the house worth? What price can be obtained if it is sold? These are questions that every property owner worries about. The fact is that the owner has an idea of the value, their own price, but the market value is often different. There are several ways to determine the value of a property – the property owner can independently review listings and based on that, estimate the value of the property. They can also hire an expert.
Who performs property valuation?
As explained by real estate advisor Ivan Varat from San Patrik Properties, property valuation can be useful for people who decide to sell their property and want to find out the current market price they can get for their property. For this type of market valuation, he notes that the comparative method is most commonly used, which involves analyzing the realized prices of similar properties in a specific location.
Varat also says that in every transaction where financing is done through a bank loan, an official property valuation is used. In most cases, banks do not charge customers for property valuation.
Property valuation is conducted by authorized permanent court experts and appraisers according to the Law on Property Valuation, whose authority stems from specific regulations governing the work of courts and expropriation procedures. They are the only officially authorized individuals to perform appraisals that are used for official purposes.
How is the valuation conducted?
Property valuation in the Republic of Croatia is not a simple process and is regulated by the mentioned Law, which applies to:
- valuation of properties
- their constituent parts
- their appurtenances and other real rights to properties as market value
Property valuation is a multidisciplinary process of market evaluation based on the “client’s tasks,” which cannot be determined by a single formula. It is an activity that requires:
- knowledge of regulations and experience
- knowledge in the field of construction and spatial planning
- fundamentals of law and economics
The Law exclusively deals with the market value of properties, the basis of which is determined using three methods (comparative, cost, and income) and seven procedures. It also prescribes the manner in which data is collected by appraisers applying the prescribed methodology, which is then further utilized.
Appraisal Report
The valuation of real estate is clearly and transparently presented in written form, specifically in a document called an appraisal report, which includes:
- Findings and opinions of a permanent court expert in real estate appraisal or
- Appraisal by a permanent court appraiser
This is a credible document used for making decisions in administrative and judicial proceedings, as well as for making investment and other decisions. An appraisal report that is not prepared in accordance with the Law and Regulations is invalid.
The deadline for preparing the appraisal report is a matter of agreement between the client and the appraiser.
For the valuation of real estate and gathering necessary data, the following are used:
- Purchase prices and other data such as rents, leases, management costs
- The collective characteristics of the property, which are not influenced by unusual or personal circumstances.
During the process of preparing the valuation, appraisers are required to provide:
- The date of the concluded sales agreement
- Cadastral parcel number
- Cadastral municipality name
- Cadastral parcel area
- Information related to the quality and characteristics of the property
If it concerns developed cadastral parcels, it is necessary to also provide:
- Type of building
- Description of the building
- Building area
- Street/square name
- House number
- Floor and year of construction
Purchase prices and other data influenced by unusual or personal circumstances are not considered transactions under market conditions and are not suitable for property valuation. In case of lack of data in the area of the property being appraised, other available data from comparable areas can be used.
The comparability of areas is determined based on the following indicators:
- Economic
- Spatial
- Spatial-planning
- Demographic
The Ministry, High Appraisal Commission, county and City of Zagreb or major city administrative bodies, as well as their appraisal commissions, have access to appraisal reports.
More about the appraisal report:
Every procedure, from determining the quality of the property, requesting an excerpt from the collection of sales prices from the eNekretnine system, using data, selecting methods, and other procedures to interim and inter-quality equalization, as well as considering specific significant characteristics of the appraised property, presenting results, and other aspects, must be computationally and textually analyzed and justified in the appraisal report, and carried out in accordance with the prescribed provisions of the Law and related regulations, in order for the appraisal report to be usable and credible for decision-making in further proceedings.
Regardless of the physical or legal person conducting the appraisal, it must be prepared in accordance with the Law and Regulations. It is also pointed out that the Law on Housing Consumer Loans prescribes that the appraisal of the value of residential real estate must be conducted in accordance with regulations governing real estate appraisal, and the appraiser must be professionally qualified and independent from the process of approving the housing consumer loan in order to provide an impartial and objective assessment.
More about the eNekretnine system and the location of the property:
Banks, in the process of assessing the value of real estate when obtaining a housing or investment loan, exclusively use the services of authorized appraisers, either their own or contracted partner companies, according to San Patrik Real Estate.
Costs of property appraisal
As stated by the Ministry, the costs of the appraisal depend on the complexity of the appraisal subject, and depending on the procedure being conducted, they are determined according to the price list prescribed by the Regulation on Permanent Court Experts and Regulation on Permanent Court Appraisers. The costs are determined through a public tender process or by agreement between the appraiser (the party conducting the appraisal) and the client requesting the appraisal. Alternatively, they may be included in other expenses or determined based on the company’s operations and other factors.
Through the eNekretnine system, authorized appraisers and real estate intermediaries have easy access to data that serves as a basis for their quality professional work. The database contains information about the number of transactions for a specific area, types of properties, data about the property that was the subject of the transaction, achieved prices, etc.
RECOMMENDATION
When searching for and selling real estate, which also requires property valuation, it is important to be educated, but it is not easy to be educated in everything. However, if you need support in buying and selling real estate or a free market valuation of your property within 72 hours, contact the professional team a San Patrik real Estate , where you can expect knowledge, experience, personalized approach, and fewer headaches.
Text author: : Zgradonačelnik.hr
