I’ve been completely swamped with house-hunting lately. After a lot of searching, I finally found an apartment I loved in Barcelona. I went through a long negotiation with the owner and we finally agreed on a price. I was thrilled and went to the bank to apply for a mortgage, but the appraisal from the bank’s designated company threw a bucket of cold water on me—it came in almost €20,000 lower than my purchase price! Suddenly, the down payment I needed shot up. I’m wondering if anyone else in the community has faced a similar situation?
Why Do Appraisals Come in Low?
I later discussed it with my mortgage manager and did some research on my own to understand the story behind these appraisals. To put it simply, banks are always very conservative to manage their risk. Appraisers primarily base their valuation on the prices of recently sold properties in the area, not the asking prices. They use a cautious calculation method to ensure the bank won’t lose money if the property ever needs to be foreclosed on and auctioned. Therefore, for bank appraisals, having a valuation lower than the market purchase price is actually a very common phenomenon in Spain, especially during periods of rapid property price increases.
The most direct impact of this appraisal value is on your loan amount. Most banks will lend you 80% of the lower of the two values: the purchase price or the appraisal value. For example, let’s say the house you want to buy has a purchase price of €300,000, but the appraisal comes in at only €280,000. The bank will base the loan on the €280,000 figure, lending you 80%, which is €224,000. This means your required down payment becomes €300,000 - €224,000 = €76,000, instead of the €60,000 you might have initially calculated. That extra €16,000 is no small amount for most people.
So, what can an ordinary buyer do in this situation? I’ve summarized a few options, but honestly, most are reactive measures. The best approach is to be mentally prepared in advance and have extra funds ready.
| Strategy | Feasibility | Explanation |
|---|
| Increase your down payment budget | ⭐⭐⭐⭐⭐ | The most direct and effective method. Set aside an extra 10%-15% as a buffer. |
| Try a different bank | ⭐⭐⭐ | Different banks work with different appraisal companies, so the valuation might vary, but usually not by a large margin. |
| Negotiate with the seller | ⭐ | Unless the seller is in a hurry to sell, the chance of them lowering the price is very slim. Basically a long shot. |
| Request an appraisal review | ⭐ | Time-consuming and costly, with a low success rate unless there are clear, major errors in the report. |
When buying a home in Spain, the ‘Tasación’ or appraisal value is a critical step that you must pay close attention to. Never assume you only need a 20% down payment based on the purchase price, or you could find yourself in a tight spot at the last minute. I hope my experience serves as a helpful reminder for everyone. I’m also curious to hear from others: what was the difference between the appraisal and purchase price when you bought your home? Do you have any success stories or tips on how to ‘turn the situation around’?
