To buy or not to buy? What to do when a «friend» asks for advice (Part II)

This time we will talk about how to value a property or, to put it another way: to estimate the value-price match of sale.

We assume that you did not heed our advice from the previous post when you a friend asks you to advise him on buying a flat, Because friendship is a sacred value for you and when a friend asks you for something, you don't know how to say no. So we are going to tell you what we, as real estate agents, would do.

Our friend has found a property that he likes and we assume that he has been looking at the market for some time. It is even likely that some good options have slipped through his fingers and, therefore, he will know perfectly well if the asking price is reasonable. But buying a home is a tough decision and they'll want your opinion on whether they're paying the asking price, getting a bargain or simply buying at a reasonable price. The following tools can help you support (or not) your decision:

1. MVI (Methodology of Real Estate Valuation) of Registrars of Spain. It is a fee-based system that allows you to access and filter data from land registrars and even issue a valuation based on the correlation between the property under analysis and the data of registered sales and purchases during a period of time of your choice. 

• Pro: Based on actual transaction data.
• Cons: It does not include the state of conservation of the properties, the level of finishing or the intangibles that can make it an object of desire. 

2. Idealista.com. This real estate portal is an almost complete portrait of the supply available on the market. Observing the advertisements of the “competing” properties with the one we are valuing allows us to compare the one we are valuing with the others we could buy. Depending on the quality of the advertisements, we can see images, characteristics, price and even how the property is performing on the market (contacts made by other users and how long the advertisement has been valid). From there, our ability to compare the most relevant properties with ours and perform a qualitative analysis. In Monapart we use our own comparison grid model, which allows us to homogenize the sample to determine the reasonable market price of a property, which we do based on the guidelines established in the ORDEN ECO 805/2003 (rules for the valuation of real estate). 

The really important thing about data is knowing how to interpret it, and you don't learn that in a day.

3. IIdealista price report. We mention this separately because the index is a tool that, like the MVI, is based on a historical database that is updated quarterly. We can filter by areas and periods. However, we must bear in mind that the prices are “offer” prices and the price at which a flat is advertised may differ from the final closing price. Hence the usefulness of cross-checking various methods and data sources to reach a reliable conclusion. 

4. On-line valuations. There are several appraisal companies (those that carry out “official” appraisals for banks) that offer this service at prices of around €10. You enter the details of the property to be valued in a form and the system returns a report, which is not binding for mortgages, but it does give you an idea of the price of the area according to the data of these companies, which are always interesting to know, although in our experience as sellers of flats, we have seen on many occasions that they can differ (and much) from the real opinion of the market. Here you have the links to Tinsa and Sociedad de Tasación, as benchmarks in this sector. 

5. Barcelona City Council's Real Estate Statistics. They are fed by the data from the land registrars. It can be useful if you do not want to go through the ordeal of registering in the MVI, which is more focused on professional use. There you will find real average purchase prices per surface area (€/m2), but, once again, without criteria of state of conservation, quality or intangibles. Be careful, because we are only talking about Barcelona city!

And there is still more, but we stop here because you could spend a week searching and compiling data, just like when you did your university work. Besides, we all know that what is really important is to know how to interpret them, and you can't learn that in a day. Besides, your “friend” probably has the best possible valuation in his or her head, based on hours of looking at online ads and visiting the most interesting flats in-situ. Anyway, you can always say that “Nowadays people know the price of everything and the value of nothing”.” of Oscar Wilde and look like a champion. In the next article we will talk about the legal, town planning and documentary checks... Exciting, isn't it?