Who Pays for a Home Appraisal, the Buyer or the Seller?

When we are going to buy a home, we have to face many expenses inherent to this decision, we have to pay taxes, notary, management, registration or appraisal among many others…

Publications where financial institutions assume all expenses are the order of the day, but is it better for the bank to pay for my appraisal?

The appraisal is the only expense that the buyer has to pay. However, some banks also pay this expense. Why do banks assume this expense?

As always, all stories have a beginning and a meaning. At the end of last year, given the problematic controversy over the payment of the IAJD (Tax on Documented Legal Acts), there was an entity that, before the ruling came out, launched a product in which it assumed all the expenses. Later, when it was regulated that the IAJD was assumed by the lender, other entities joined this initiative, but in light of the new LCCI 5/2019 that was published in the BOE in mid-March and that comes into force after 3 months, it is already pure marketing, because the only expense that the buyer has to assume is the appraisal, so the claim of “all expenses” could be changed to “only expense” or “appraisal expense.” But analyzing it in detail, its cost is very low and it cuts rights.

What advantages does it have for the buyer to pay for the appraisal of the home?

The first of these is the guarantee and added value information provided by the appraisal report before making one of the most impactful decisions of their life (buying a home and signing a mortgage).

The appraisal informs the buyer about the existence of relevant problems regarding the environment, the building or the home itself, about its adaptation to urban planning regulations, problems in the property registry, possible risks to the stability of the value over time and a very relevant aspect, the auction value of the home in case the mortgage is executed.

When the bank pays for the appraisal, it uses it essentially to verify that the home is a valid and sufficient guarantee (LTV) for the mortgage loan that it is going to grant.

Can having all the information serve to negotiate better conditions on the mortgage?

That the client has a prior appraisal, instead of negotiating with a single financial institution, allows them to negotiate with all the financial institutions they want, and as it is always said “competition ends up reverting to better conditions for the client.” But the appraisal also serves as a powerful tool to negotiate with the buyer or directly to cancel the purchase, especially if it detects a smaller area than advertised, an enclosure that does not comply with urban planning regulations, deficiencies in the construction or the use of the property different from housing among others.

Is it common for the buyer to commission the appraisal or is the contracting process left in the hands of the bank?

As it is a product that is contracted once in a lifetime, customers do not have a great knowledge of how to contract it, and they tend to trust the commercial agent of the financial institution that manages their operation, so it is usually common practice that customers, due to ignorance, request it through the bank. From Euroval we help you to contract the appraisal you need in a simple way, at the best price and with the best professionals. In the 24 hours following the purchase, we will contact you to visit the property and facilitate, as far as possible, all this process.