You may have seen Mallorca properties advertised at asking prices below their “official bank valuations”. This sounds like a tempting indication that the price has been set at a “bargain” level. Indeed this is sometimes the case, but not always …
The question as to whether the bank valuation is of use relies largely on how recently it was done.
- Property prices have obviously changed in the last two years. An old valuation will not take this into account.
- Spanish banks are now more cautious in valuing properties. Valuations in excess of market value were commonplace whereas now under-valuations are the norm.
- Valuations are an indication of the property’s value. In the UK you would make your own assessment of value by taking advice and researching the area. You should approach it in the same way in Mallorca.
- Similarly, valuations do not assess the investment potential of a property. They are concerned with ensuring the banks lending is safely covered by its current value. Assessing the future investment potential requires more research and judgment.
So overall, the older a valuation is the less relevance it has and valuations going back before the summer of 2008 should be largely disregarded. Recent valuations are a useful guide as to current value but in order to assess the future investment potential you need to take advice and research the locality of the property you are considering.
Part of our role is to give our clients objective advice on value and investment potential. Contact us for further information.
