Rules for the Valuation of Properties According ECO/805/2003 (III)

Valuation Rules According ECO/805/2003 (III)

Market Value and Replacement Value. Checked Area and Computable Area. Comparable Properties. Urban Levels.

The Spanish Order ECO/805/2003 defines the Market Value (VM) as the price at which the property could be sold on the date of the valuation. In determining the Market Value is necessary to consider:

• that there is no prior relationship between seller and buyer
• that neither the seller nor the buyer holds any personal or professional interest in the transaction, excluding those associated with the cause of the contract
• that the public offering to the market occurs through a proper marketing strategy and with no inside information
• that the price of the property is consistent with the public offer and reflects a reasonable estimate relating to market conditions existing at the date of the valuation
• that the price does not include any taxes or marketing expenses.

Definition of Replacement Value (VR)

The Replacement Value (VR) can be gross or net. The Gross Replacement Value (VRB) is the sum of all the investment costs required to build, on the date of valuation, another property with the same characteristics (capacity, use, quality, etc.) but using current technology and materials. The Net Replacement Value (VRN) is the result of deducting from VRB the physical and functional depreciation of the property on the date of the valuation.

Checked Area and Computable Area

The Checked Area is the floor area as measured by the valuer. The Computable Area is the floor area used in the valuation.

Comparable Properties

Comparable properties are those that are considered similar to the property that is being valued, or appropriate to apply the homogenization, because of its location, use, type, size, antiquity, condition or other relevant physical characteristic.

The Urban Levels of the Land

For the purposes of the valuation, Spanish Order ECO/805/2003 classifies the land into two levels:

• level II: non-developable land
• level I: developable and developed land.

Architect Daniel Trujillano

http://www.arquitectotrujillano.com/valuation/home.html

Valuation Reports for Properties in Spain

Cadastral Valuation of Buildings in Spain

Valuation of Buildings in Spain

Gross Floor Area. Replacement Value and Current Cost. Massive Valuation.

The assignment of a homogeneous economic zone involves the assignment of a Basic Construction Module or MBC ('Módulo Básico de Construcción'). MBC is defined in euros per square meter and it should be implemented by the appropriate coefficient depending on the type of construction. The value of a building is the result of multiplying its Gross Floor Area by the Unit Value and by all applicable weightings.

Calculation of the Gross Floor Area

In order to calculate the value of a building, we define the Gross Floor Area as the area included within the outer perimeter, considering as part of the perimeter, if any, the axes lines of the party walls, and deducing the area occupied by courtyards. Covered outdoor spaces (balconies, terraces, porches and similar spaces) are computed at 50 per cent of its area, unless they are closed in three of its four orientations, in which case they are counted at 100 per cent. If the building use is residential, spaces where the height is less than 1.50 meters do not count at all.

Replacement Value and Current Cost

When we value the buildings we should use the Replacement Value, calculating its Current Cost and taking into account:

• building use
• building quality
• historical and artistic value
• antiquity
• condition
• other circumstances, able to depreciate the value after the real estate market relevance.

Current Cost is defined as the sum of the following concepts:

• the performance cost, including the profit of the builder
• all professional fees
• all taxes affecting the building process.

Massive Valuation of Buildings

All buildings should be classified in order to enable Massive Valuations. However, if the special characteristics of a building permit no identification with any of the established types, or assimilation into any of the typologies, its valuation will have to be singled, by using the valuation method provided by the Statement of Values.

Daniel Trujillano, Architect

http://www.arquitectotrujillano.com/valuation/home.html 

Property Valuation Reports in Spain