Does valuation really matter?

We are buying an apartment and need a mortgage. In Nov our mortgage bank (a British bank) sent a valutator to the complex but somehow the sales staff on site led valuator to a wrong unit. So the whole valution is on a wrong unit.

Then, we have go through one month headache and endless talks with various parties involved. To be able to obtain the mortgage we need to carry out a valution on the right unit i.e we need to carry out a 2nd valuation. Since it is not our fault the 1st time the valuator went to wrong unit we refuse to pay for the 2nd valuation fee which is €400. It is not bank's fault either since bank contracts out the valuation to indenpandant valuator. Bank and us both think it is obviously developer's fault and developer should pay for the 2nd valuation. But developer just blindly refuse it. Our bank has tried its hardest but has always told us that to squeeze out one cent out of Spainish develper is like to squeeze blood out of stone.

Last week, suddenly the developera wants us to complete ASAP i.e. Dec or early Jan and says that our mortgage is not their problem. When we ask our lawyer talking to the developer to delay the completion for two months so we can apply a fresh mortgage application the developer becomes BIG BULLY and treats us with 'go to court' ' and 'lose 30% paid' etc.

Cut long story short, the developer offers 'builder's mortgage', when we contacted the 'builder's mortgage' bank it is so easy to get mortgage from them. The bank agreed our mortgage without even ask the proof of earning. The interesting part is that the bank does not need valuation it just takes developer's sales price as the value.

Why we bothered to pay some other bank for valuation which may come out lower than our purchasing price? Should we just go for 'builder's mortgage' which is quite competitve coming with cheaper set up cost............................ or the whole episode is the scam to force us to use a particular bank? End of day if the rate is good who cares? Right?

Hi Flyingcat,

If you take the builders mortgage over there is generally no need for valuation as the property has already been through the process.

If another bank is lending against the property they will always ask for valuation as they will always want to know what they are lending gainst.

Builders mortgage can be a good choice to avoid set up costs etc............

Georgia,

Your a real pro. It makes a lot of sense now. I wish we knew it earlier so we even did not have to pay the 1st valuation fee

It does depend on yur circumstances and whilst it may seem a cheaper choice right now, if it doesnt suit your financial set up then its extremely expensive to remortgage in Spain.

Ideally have a chat with an independant broker just to ensure you are getting the best product - you may want a long term interst only for example as opposed to capital and repayment!

Noreen has recently completed on her property in Vera with the builder's mortgage. I think the decision to use that mortgage came very late in the day because valuations were up and down and also the set up costs saved a lot of money.

We have recently completed but couldn't afford to take the builder's mortgage as the mortgage value was a lot less than we wanted to buy. The valuation process was a pain in the jacksie and still came in uder selling price. We had someone else look over the property (not officially) and they said that the valuation provided was a bit on the conservative side, so we completed anyway.

Hope you find a solution.

Mark

Lots of valuations are coming in lower for 2 reasons, firstly the bank of Spain has issued a directive to all banks to pull them in due to oversupply, credit crunch and the open knowledge that property is around 20-30% overinflated

Secondly bank targets are set based on the eyars before business, and each year exceeds previous year and bonuses are related to this goal. So at the end of each year once the target has been met, banks are very reluctant to release more funds, preffering to push completions into the new year - so everything is akin to pulling hens teeth at the moment!

Flyingcat

As Mark rightly says we completed in October & switched to the builders mortgage at the last minute.

I have sent you a PM with some more details.

If you need any more info, please PM me tonight or tomorrow morning as I am off to the airport after work tomorrow.

Good Luck

Noreen

What folks have failed to mention is that valuations seem to be tightening dramatically. Does this not sound an alarm bell? Spainish banks are useing any excuse to tighten lending criteria and get out of new loans, infact they don't want to loan atall.

They atleast perhaps see the writeing on the wall.

And lending criteria is tightening up as well!

Some of my valuations have come well under where they were a year ago - effectively placing properties into negative equity!

Happy Christmas Rixxy

Hope 2008 is profitable and peaceful for you. Bit wet and windy here, no sun for a few days. Had some friends out from the UK the week before 9th Dec and it was 26c and wall to wall sunshine, I think they were rather impressed.

Been looking at property around here to get a feel, but not tempted yet, asking prices as you say still atleast 30% overvalued.  Let me know how the market goes with you next year, I value your opinion at the coal face so to speak.

Til later

Tim

Happy Christmas to you too Tim,

Rainly here since last night but cosy to keep in. Hopefully it will break for the big day but if not it doesnt matter!

Next year will be interesting meethinks, but for now Im going to enjoy the chocolate, icrecream and cakes, and thats just today!!

Have a great one everyone and possibly wont be on until early January! XX

Merry Xmas everyone.

I am in sunshine Tenerife, 25 degree today, yippppppppie. 

Noreen, thank you very much for your PM. We have decided to go for builder's mortgage. When I have time I will send  you my 'story' it is not anywhere shorter than yours  . We started purchasing with that agent M** back in May. Luckly we got ride of them.

Tim, see you point, but if Spanish banks are tighting for lending, why they are not even bothered asking for our earning? How can they sure our financial abilities? Is that sub-prime started? Lend to the people who cannot repay? I do not know whey Spainish banks tighting up the valuation, but I do not think they are reluctant to lend. Quite opposite, they are so keen to lend to us. Passport copies and NIE numbers, it is all.

Wish everyone a Merry Xmas and very Happy New Year.

Does Valuation Really Matter? Of course it does!

I am really tired of hearing people come out with the same old platitude;

' Spanish Banks always under value'

Complete utter total nonsense, Spanish banks are no differant from banks the world over, they want to loan money! It is there reason for being in existence, lending money, it is how they earn a profit.

Like all banks everywhere they will loan a percentage of the VALUE of a property, not the sale price the VALUE!  Why is there a difference between what the builder can obtain on mortgage and what an independent financial institution will offer? Simple, the 'builders mortgage' is almost certainly being offered by the builders bankers, so all they are doing is spreading there risk, good economic and business sense; particuarly, as is invariably the case, there is a cross guarentee between builder and banker!

So yes, valuation does matter.