Many property deals have fallen through due to differences in opinion by the professional property valuers and their appearing to be ‘out of touch’ with the market. Banks’ valuers in Spain, Tasadores, are obliged to work according to the regulations of the Bank of Spain, which regulations at times have appeared to be more designed to influence the market for the benefit of the political requirements of the economy rather than following the market. The same has occurred in other countries Europe-wide and in other situations. With the countries of Europe trading increasingly between themselves, both in property occupation and investment terms, there needs to be a common, trusted standard.
But what is value? Basically, it’s judged by what you or another would sacrifice to become the owner. Nowadays, it is judged in money and that applies to property as much as anything else. The internationally accepted definition of market value is: The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.
It’s essential that valuers are independent of the lender, the buyer, the developer, the Town Hall and, in Spain’s case, the central Government. They must only be responsible to the market; knowing, reading and experiencing it on a daily basis.
It’s essential that there is a well-regulated and professional body of independent valuers, which will play an important role in the stabilisation of financial markets. The European Parliamentary recognises this and has demonstrated its position by voting to request that member states ensure their valuers are professionally competent and that valuations for residential mortgage credit agreements are carried out to the international standards laid down by International Valuation Standards Council (IVSC).
On 5th June 2012, the European Parliamentary Committee voted to adopt the following article:
• Member states shall ensure that sound valuation practices are applied in accordance with international standards and methods and the importance of sound regulation and oversight of appraisers (valuers) is recognised.
• Member states shall require that internal and external appraisers carrying out such valuations are professionally competent and sufficiently independent to provide an impartial and objective valuation to be documented in a durable medium and that lenders keep record of it.
The UK based, but now worldwide organisation, the Royal Institution of Chartered Surveyors (RICS) has been instrumental in ensuring that this article be included in all future valuations and is lobbying the member states to cooperate. All RICS valuers work within the requirements of the ‘RICS Valuation – Professional Standards (the ‘Red Book’)’, which contains mandatory rules, best practice guidance and related commentary for all members undertaking asset valuations. The Red Book is compliant with the International Valuation Standards. RICS valuers are also required to be professionally competent and companies and individuals are regulated.
Survey Spain’s professional surveyors and valuers are already ‘Regulated by RICS’ and hold Professional Indemnity Insurance to protect their clients’ interests. Director, Campbell D. Ferguson, FRICS, with more than 40 years valuation experience including 13 in Spain, is confident that mandatory European regulatory guidelines will ensure that Spanish mortgage valuations have to meet international standards, as many already do. He added, optimistically, “This also means that RICS valuers will be accepted by Spanish lending institutions and Courts, which will benefit English-speaking property investors throughout Spain.”
The Survey Spain Network has individually designed software linking 12 residential RICS chartered surveyors and valuers working all round the coastal and inland areas of mainland Spain plus the Balearics, Canaries and Gibraltar. All reports are reviewed by another chartered surveyor and covered by professional indemnity insurance.
Campbell D. Ferguson, FRICS, has been advising buyers on what’s real and what’s not for more than 13 years in Spain and for 40 years throughout the UK and Europe.
