What is a property appraisal? – Who can perform property appraisals?
The real estate appraisals These are professional appraisals that determine the value of a property, whether it is a house, land or commercial premises. They are carried out using objective criteria and standardized methodologies that consider various factors, such as location, state of preservation, and the characteristics of the real estate market. This process is legally valid and is crucial for carrying out property-related operations, such as buying and selling, financing and determining taxes.
Appraisals serve not only to establish a fair price, but also to protect the interests of all parties involved in a transaction. They also provide support in the event of litigation, tax disputes or requests from financial institutions.
The real estate appraisals They are for the purpose of carrying out legal operations such as:
| Buy and sell | rent justification |
| Mortgage loans – Infonavit, FOVISSSTE, ISSFAM | Payment of compensation for expropriation |
| land concessions | Compensation for causes of public utility |
| Prosecutors – Cadastral | Obtaining insurance |
| Fiscal Guarantees | banking |
| Trials / Deed / Probate | Merger or Acquisition |
Who can perform real estate appraisals?
Real estate appraisals can only be performed by a expert appraiser, is an expert who has a professional license issued by the SEP, which supports and authorizes you as a property appraiser and, according to the purpose of the appraisal, must be registered with other specific institutions.
Based on article 3 of the Regulations of the Federal Tax Code, The institutions authorized to carry out tax appraisals are:
- The Institute of Administration and Appraisals of National Assets.
- Credit institutions.
- Public brokers who have current registration with the Ministry of Economy.
- Valuation Companies, and/or Professional Valuation Experts
Why are real estate appraisals necessary?
Normally, any credit institution that provides the loan and/or financing service requires support from the applicant, this can be any type of asset that has a value, including properties. It is through these assets that the institution ensures its payment, but for a property to be taken into account it must have an appraisal made by a certified expert who can determine whether or not it is possible to grant the requested credit.
As it is a detailed study and the value determined by the expert, the success of the operation carried out with said study will depend, for which an external and professional person is required, who knows and can determine a real value of the property, based on in the tables issued by the treasury.
What properties do we value?
- Houses.
- Departments.
- Industrial ships.
- commercial premises
- Properties under construction.
- Buildings.
- Offices.
- Cellars.
- Parking lots.
- Urban land.
- Forest Land.
- Agricultural land.
What is delivered in real estate appraisals and what aspects does it consider?
A real estate appraisal is made by analyzing different factors such as:
- Age of the property.
- m² of construction.
- Total area.
- Quality of finishes.
- State of conservation.
- Existence of electrical installation.
- Existence of hydraulic installation.
- Existence of gas installation.
- Location – Within this point various aspects are considered such as:
- Street lighting.
- Drinking water.
- Electricity.
- Access to public transport.
- Security.
- Urban growth.
- Access roads to the property.
- Shops, restaurants, shopping centers, parks, schools and any place near the property that can provide amenities and/or services.
All these characteristics help determine both the condition of the property and its habitability and, consequently, the quality of life that the inhabitants could have. The result of this analysis is what is called the real value of the property.
All these characteristics help determine both the condition in which the property is located and its habitability. The result of this analysis is what is called the real value of the property.
Appraisal process real estate
- Request for appraisal: The owner or person interested in the property requests an appraisal from a certified appraiser.
- Documentation review: The appraiser examines relevant documents, such as deeds, plans and property history, to obtain initial information.
- Property inspection: The expert visits the property, assessing its physical condition, dimensions, finishes and specific features. During this stage, notes are taken and visual information is collected.
- Market Analysis: A comparative market study is carried out, in which similar properties in the same area are considered, analyzing recent sales and prices of comparable properties.
- Value calculation: Using the data collected, the appraiser applies valuation methods, such as the comparative approach, the cost approach, or the income capitalization approach, to determine the actual value of the property.
- Preparation of the report: Finally, an appraisal report is drawn up, which includes all the findings, analysis and the final value determined. This document has legal validity and is presented to the applicant.
Types of real estate appraisals
| mortgage | This type of appraisal is requested by financial institutions such as Infonavit, FOVISSSTE and ISSFAM, with the purpose of determining, based on the value of the house, the amount that will be lent to the beneficiary, as well as the deed expenses. It should be considered that the appraisal is not included in the mortgage loan, so the buyer must cover it. |
| Buy and sell | It is used to know the price at which a property can be bought or sold. Aspects such as inflation, the location of the property, the market, the real estate offer near the property, etc. are taken into account. A real estate appraisal will help define the fair price of the property. In this way, conflicts are avoided due to the fact that the house is above the market price and, in the same way, losses are avoided by offering it at a lower price. |
| value opinion | Approximate values and costs are estimated, without the need to resort to specific quotes for each asset, since the purpose of this appraisal is to have values in a timely manner and that generally are not for decisions that require a very deep study. |
| Determination of income | In general, this appraisal is requested to determine the amount for which a property can be rented, as well as to request a contract assignment or compensation for unpaid rents. It is useful for both room rentals and commercial rentals. |
| Sure | It allows estimating a fair market value that allows a replacement. It guarantees before any insurance company the economic protection that covers the property in the event of a risk or accident due to insecurity or natural phenomena. |
| deed | Its objective is precisely to notarize the property, for which it is governed by an expert with registration in the Treasury and is sent to the portal of the finance secretary, this to pay the corresponding contributions depending on the commercial value reached by the property. |
| Fiscal or cadastral | The purpose of this kind of appraisal is to verify that a property is up to date with the payment of predial, water, real estate acquisition tax, etc. The location of the property, the square meters of construction and land are taken into account. It is used to indicate to the local treasury how much the property is worth before the cadastre and thus know how much property will be charged. |
Market Impact on a Real Estate Appraisal
Real estate appraisals are deeply influenced by the economic environment and market conditions. Here are some external factors that can affect the value of a property:
- General economic conditions: The national and local economy influences the purchasing power of buyers. In times of recession, property values tend to fall, while in times of economic growth, prices tend to rise.
- Interest rates: Mortgage interest rates have a direct impact on the value of real estate. An increase in rates can reduce demand, causing prices to stagnate or decline.
- Real estate market trends: Variations in supply and demand also affect the value of a property. In areas where there is an excess of supply, prices can fall, while in markets with high demand, prices can rise significantly.
- Changes in legislation: New laws or regulations regarding land use, construction, or zoning can alter the perception of a property's value. For example, a new law limiting the construction of high-rise buildings in an area may cause existing properties in that area to be valued more.
- Social and demographic factors: Changes in demographics, such as population growth or the development of new infrastructure (such as schools and hospitals), can make an area more attractive, thereby increasing property values.
What is the validity of a real estate appraisal?
In general, real estate appraisals are valid for six months, so it is necessary to analyze the reason for it to determine our needs and choose the most convenient option.
How much does a real estate appraisal cost?
| Type of property/square meters of construction and/or land | Appraisal Cost Commercial |
|---|---|
| House of 60 to 150 m2 | $3,400.00 |
| House from 151 to 250 m2 | $3,700.00 |
| House of 251 to 350 m2 | $4,300.00 |
| House of 351 to 450 m2 | $4,800.00 |
| House from 451 to 650 m2 | $6,400.00 |
| House of 651 to 750 m2 | $7,200.00 |
| House of 751 to 850 m2 | $8,400.00 |
| Apartment up to 50 m2 | $3,600.00 |
| Apartment from 51 to 100 m2 | $3,800.00 |
| Apartment from 101 to 150 m2 | $4,000.00 |
| Apartment from 151 to 200 m2 | $4,300.00 |
THE VALUES IN THIS TABLE ARE AN EXAMPLE, THE COST OF THE APPRAISALS DEPENDS ON MORE SPECIFIC FACTORS OF EACH PROPERTY. THE REAL COST MAY VARY.
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