One of the requirements for the transfer of a mortgage loan from one bank to another is to appraise the property, that is, to contract the services of a professional appraiser to establish the price of the property.
This happens even in relatively new properties!
It seems easier to set the price by looking at what goes on around the property. For example, the builder is still selling real estate, just ask him. There are new projects in the area and we could find out how the square meter is. Or even the price in the deed would suffice. After all, it has been a short time.
Why do you need a new appraisal?
What business do you want to do with the property? The purchase of mortgage credit. That is, you are going to request that a bank lend you money and offer your home as a guarantee of payment.
The bank requires appraisal
The question asked by the bank is: in what state is the guarantee offered by this client in exchange for the money borrowed? Does it comply?
It may seem obvious that if your house is new (less than five years old) it is in good condition. But not all owners are always as careful as you.
- They make reforms that alter the original design, eliminating, for example, natural lighting or air flow in some spaces. Sometimes they affect the comfort of spaces.
- They quickly determine floors, windows, doors, bathrooms, kitchen and closets.
- They change the original finishes, modifying the initial price.
- They make changes that add areas such as a study, a terrace or a room.
In addition, situations in the environment can also affect the price and you don’t know it:
- Track construction
- Construction of parks or shopping malls
- New neighbors who value or devalue the area.
- Change of use of a neighbor as a warehouse or an old school.
- Change of municipal regulations.
- Fee for the maintenance of urbanization.
Banks hire the best appraisers. The reason is simple: if the price is adjusted to reality, the guarantee is safer. And the best appraisers are able to apply the rules of the National Appraisal Regulation (Ministerial Resolution 172-2016-Housing) and the formulas, which are worth saying, are many. And, perhaps this is the most important thing, you have a great knowledge of the city, of future works, and are able to establish its impact on the value of real estate.
Currently, it may seem better to avoid the cost of an appraisal. But it is very useful. If you were negotiating the purchase of a good, would you not be sure of the price? It is not enough to see the facade, the state of the elevator, the view or the kitchen. The age, and above all, what is to come in the area, determine whether the price will fall or rise in the future.
That is why it is established by rule that it is mandatory for banks to request pricing.
In the case of brand new houses or apartments, the appraisal can be estimated to be equal to that of the sale. It is clear: it is the builder who is estimating the impact of the environment on the real estate!
But, when you want to transfer your debt to another bank, that price should be revised. Otherwise, the bank would be missing the law. You must make an appraisal in all businesses that imply a mortgage guarantee.
But not only the financial institution will demand it.
The insurer requires the appraisal
The insurer needs to establish the exact value to determine the viability of the insurance and its cost.
Do you remember that other requirements for the transfer of your mortgage loan are all risk and lien insurance?
The insurer must have the fair value of the asset to answer for the correct value in the event of an accident. The price of the appraisal should reflect the renovations of floors, woodwork and improvements in the kitchen!
Of course, it makes no sense to invest in a property with a mortgage loan and not have a good lien insurance. Why insure for less value? It could be causal for not paying insurance just when it is most required.
As you can see, the ideal for all parties is to know the right price, to make the appraisal.