Real estate has been one of the best investments in Cyprus for many years. However, changes in market conditions have a major impact on asset values. A fair housing appraisal provides the necessary market insight for a specific task, whether buying, selling or renting out real estate.
What is a real estate appraisal?
Real estate appraisal occurs to determine fair market value, or the price at which a seller is willing to sell their property in an open and competitive market and a buyer is willing to purchase it. In other words, it assumes that both parties have all the necessary information about the relevant facts and neither party is forced to buy or sell. Fair market value is not always equal to the sale price. For example, a rush sale of real estate may not reflect fair market value because the seller is under pressure to sell the property immediately, or as quickly as possible. Potential buyers are usually aware of this fact, and thus have an advantage in price negotiations, purchasing the property, often below market value.
Why do you need a real estate appraisal?
Knowing the real market value of a property has many benefits and allows you to make better-informed decisions in a variety of situations, which we will discuss below:
Buying real estate
Both sellers and potential buyers need to have an understanding of the fair value of the property they are looking to sell or are considering as a potential investment. Real estate is a long-term investment, and understanding the fair market value of a property helps buyers better identify suitable properties to meet their financial goals.
Mortgage and financing
Lending institutions use property valuations in Cyprus to determine the loan amount a potential owner can expect to qualify for. The bank appoints an independent appraiser by randomly selecting a licensed appraiser from a list and this procedure is mandatory.
Taxation
Stamp duty in Cyprus, as well as the tax on the transfer of ownership of real estate (transfer fee), depends on the market value of the property purchased.
Property insurance
Property valuation plays an important role in selecting a real estate insurance package. Failure to understand the market value of the property may lead to the selection of an inappropriate insurance plan or the purchase of an insurance policy that is more expensive than necessary in a given situation.
Rental Real Estate
For property owners interested in generating rental income, a residential or commercial appraisal provides a more comprehensive view of fair rental value. In this way, landlords gain a competitive advantage in the real estate market and attract potential tenants.
Determining the selling price
An offer to sell a property that is overvalued can be an obstacle in finding potential buyers. On the other hand, if the sale price is below fair market value, there is a risk of losing money in the transaction or, scaring away potential buyers who have a good understanding of the market and are concerned about why the property may be offered at an unreasonably low price. It is worth noting that real estate appraisals are done for other purposes as well. For example, resolving rental disputes, sales tax assessments, legal and litigation matters, and portfolio analysis.
How much does a real estate appraisal cost?
The cost of a real estate appraisal depends on the object of the appraisal, its location, area and the purpose of the appraisal. The appraisal can be done for personal purposes, for obtaining a loan, or for further submission to the judicial authorities. Valuation for personal purposes or real estate valuation for obtaining a loan costs approximately from 150 euros for a studio (50 m2) or from 350 euros for a house (130 m2). However, real estate valuation for judicial purposes is a rather complicated and expensive procedure.
Quick and free real estate appraisal in Cyprus
How does real estate valuation take place?
In real estate valuation in Cyprus, the property is valued based on the specific characteristics of the property being valued. These are: size, age, floor plan, amenities available on the property. Supply and demand in the region where the property is located are also key components of its overall value. For example, real estate in Nicosia is characterized by different dynamics of supply and demand than in Limassol. Thus, real estate valuation is a complex process, which we will discuss in more detail below:
Identifying the client's needs
There is a wide range of purposes for which clients will require residential valuation advice. The client's understanding of the market can range from a thorough knowledge of the specifics of certain aspects to absolute ignorance. The initial stage involves discussing the client's needs and the purpose of the valuation, which will determine the basis of value.
Data collection, inspection of the property and contacting local authorities
The client provides the appraiser with relevant documentation: certificate of title, sales contract, architectural plan, building and/or planning permission, lease agreement (if any), and any other information that may be used in the preparation of the report. If there are questions about the property of urban planning nature, the appraiser will contact local authorities to obtain objective information on the property. The appraiser will review the documents provided and arrange a visit to the property for inspection.
Market analysis and similar transactions
Typically, the appraiser will analyze current economic developments at the local and national levels. He or she also assesses identified risks and provides an opinion on the market outlook. All factors that affect the market value of a property, such as supply and demand, taxation, availability of financing, recent similar transactions, and others are considered and taken into account.
Preparation and submission of the report
After analyzing all the parameters of the property, an appraisal report is prepared to indicate the appraiser's opinion of fair market value.
Whether you are a buyer, seller or landlord of a property, a correct appraisal of its market value will provide insight into the transaction of interest and help you make a better and more favorable decision. When dealing with a lending institution, you will not be able to get a mortgage to buy a property, or sell an equity property, without an official real estate appraisal from a licensed real estate appraiser.
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