The Essential Hurdle in Spanish Homebuying: The Bank Appraisal
A friend of mine recently ran into issues with the bank appraisal while applying for a mortgage. It seems many newcomers to Spain who are looking to buy a home are a bit unclear about this concept. So today, I’d like to share my understanding to help those in need. This isn’t just a formality—it directly determines how much money you can borrow from the bank!
Simply put, a Tasación is an official valuation of the property you intend to buy, commissioned by the bank to approve your mortgage. It’s carried out by an independent appraisal company certified by the Bank of Spain. And here’s the most crucial point: banks will typically lend you 80% of the lower of two values: the ‘purchase price’ or the ‘bank appraisal value’. For example, if the house you want is priced at €300,000, but the appraisal comes in at only €280,000, the bank will base its loan on 80% of €280,000, not €300,000. You’ll have to cover the difference, in addition to your down payment, out of your own pocket.
The appraisal process generally works like this: after you apply for a mortgage, the bank will provide a list of their partner appraisal companies for you to choose from. You can also find a certified company on your own, but the bank may not accept their report. The cost is borne by the buyer. The appraisal company will then send a professional to the property to measure its dimensions, take photos, inspect its condition, and verify the property deed (Nota Simple). They will then combine this information with recent sales prices of similar properties in the area to produce a final valuation report.
The cost of the appraisal is not fixed; it mainly depends on the property’s value. Here is a rough guide:
| Property Value | Estimated Appraisal Fee |
|---|
| Below €150,000 | Approx. €300 - €400 |
| €150,000 - €300,000 | Approx. €400 - €550 |
| Above €300,000 | Starting from €550+ |
These prices are just estimates and can vary between different companies and cities. Besides the property’s price, other factors like location, age of the building, floor level, orientation, presence of an elevator, community amenities, and even the overall market climate will influence the final appraisal value.
So, what happens if the appraisal value comes in much lower than the purchase price? It’s a real headache. First, you can try to renegotiate the price with the seller, using the appraisal report as leverage and citing the official bank appraisal. If the seller won’t budge, you’ll need to prepare more funds for the down payment to cover the gap. Some people ask if they can get a second opinion from another appraisal company. In theory, yes, but it’s costly, and there’s no guarantee the new valuation will be higher. Moreover, the bank is unlikely to accept a ‘friendly’ report that seems significantly inflated above market value. Therefore, when signing the reservation contract (contrato de arras), it’s best to include a clause stating that ‘the deposit is refundable if the mortgage is not approved due to appraisal issues.’ Although many sellers are reluctant to add this, it’s worth fighting for as a safeguard.
