Valuation of an apartment for a mortgage in questions and answers

When applying for a mortgage loan, you will be faced with a requirement from the loan manager to evaluate the apartment for the bank. This is absolutely legitimate and is spelled out in Article 9. Law “On Mortgage” - the main regulatory act that regulates the process of issuing loans for real estate.

What's the point:

You want to take out a loan from a bank;
The amount is large, and the bank needs guarantees that this money will be returned - that is, a deposit;
In the case of mortgage loans, the collateral will be the apartment, which is purchased with the bank’s money;
If the loan is not repaid, the bank will be able to sell the property at auction and return the money.

At this point, the question arises: how much can the bank sell the apartment for? You need to know the market value of the property. The bank will only issue a loan for the same or lesser amount.

Mortgage borrowers sometimes confuse this indicator with the amount in the contract - these are different things. The amount in the contract is the price for which the apartment is sold in a specific transaction. Estimation of the average market value is a professional calculation, which depends on the area, layout, infrastructure, number of floors and other factors.

The average market value can only be assessed by qualified appraisers - this is also a legal requirement. Therefore, a professional assessment of the apartment for mortgage is carried out.

Researching the average market price is also useful for the buyer - sometimes it turns out that the market value is significantly lower than what the seller asks for. If the appraisal price turns out to be significantly lower than the desired loan amount, the bank may refuse to issue a loan.

What documents will be required for the assessment?

Please note that most of the list of documents belongs to the owner of the apartment being purchased. Therefore, order an assessment and start collecting a package of documents when you have already definitely decided to buy this particular home.

The list of documents required for the assessment includes:

Documents confirming the right to sell this apartment. For example, a certificate of ownership, a purchase and sale agreement, a gift agreement or an inheritance document. If we are talking about buying only part of the property - for example, a room - then a shared ownership agreement is suitable.
You need a copy of the cadastral passport. This document can be obtained from the BTI. The paper will be issued only to the owner.
The owner of the apartment must also provide you with BTI plans - this is a document with a complete description of the apartment. It contains a housing plan with exact dimensions. The total area and the area of individual premises are indicated. Please note that the BTI plan must indicate the area of all rooms, including the bathroom and corridor.
A copy of your passport and contact details, such as telephone number;

If the apartment has undergone redevelopment, this should be shown on the plan. Usually it looks like this - on one sheet the old layout, on the second - the new, legalized one. Or both plans are printed on one sheet.

Was the layout changed without permission? To register a mortgage, the bank is provided with a report with information about illegal redevelopment and the bank will refuse to issue a loan. The owner will have to remodel the apartment or obtain permits.

Pay attention to two subtleties:

Was the house built earlier than 1960? You need to obtain a certificate confirming the absence of wooden floors. The problem is that these ceilings have a high fire hazard class and insurance companies do not issue insurance contracts for such objects. Accordingly, it will not be possible to take out a mortgage.
You may need a certificate stating that the house will not be demolished - the object is not in the demolition plan of the local administration.

Draw up an insurance contract

Mortgage insurance helps the bank reduce risks in the event of the borrower losing solvency or damaging the apartment.

An insurance contract is usually concluded for:

mortgage real estate;
life and health of the borrower;
right to own housing.

If an insured event occurs, for example, the borrower loses his job, gets sick or becomes disabled, or the apartment is transferred to another person due to fraudulent actions, the bank pays the insurance compensation.

If the insurance compensation exceeds the loan balance, the insurer must transfer the required amount to the bank to repay the loan, and transfer the difference between the payment and the balance of the mortgage debt to the borrower.

To obtain insurance, the borrower must bring:

mortgage agreement;
copy of passport;
statement;
questionnaire.

Sometimes they may request a certificate of medical examination, an apartment appraisal certificate, certificates from the BTI and other documents.

Where can I make an assessment?

When applying for a mortgage, the apartment can only be assessed by a company that has the right to engage in this type of activity. There are also special requirements. Feel free to ask if the company meets these requirements when you first contact:

The appraiser's work is insured;
The appraiser - no matter whether it is a company or a private entrepreneur - is a member of the SRO. The association is professional and does not hide its contacts and list of members;
The appraiser has a civil liability insurance policy for his work.

Please note that the bank may provide you with a list of so-called “accredited valuation agencies”. The manager, in pursuit of bonuses, may even report that the market valuation of an apartment for a mortgage can only be carried out by these organizations. Actually no - you are free to contact any independent agency.

But having an organization on an accredited list increases the chances that the organization will issue a report that meets all modern legal requirements. Before ordering a report, check the company to see how long it has been on the market and whether it has any recommendations.

We recommend contacting a company rather than an individual - in pursuit of savings, you may receive a report that a credit institution will not accept. Our organization has extensive experience in preparing appraisal company reports for obtaining mortgage loans. Documents are accepted by banks, borrowers become owners of an apartment without delays or problems.

Are you planning to take out a mortgage?

The question “how to evaluate an apartment for a mortgage” arises at the stage when the bank has already pre-approved you for a mortgage, and you have already chosen the apartment that you are definitely going to buy.

What does this mean:

You have decided which bank you will take out a mortgage loan from, you are satisfied with the proposed terms and interest rate. You have already submitted a 2-NDFL certificate from work, a copy of the Work Book. And the bank assessed you as a reliable payer and is ready to provide a mortgage loan.
Of all the options that you chose yourself, or with the help of a realtor, you left one - with specific indicators for area, number of floors, year and type of construction and, of course, price.

Now you need to evaluate the apartment for a mortgage. If you take the missing money from the bank, there is no way around this issue, and here's why. While you are paying off the mortgage loan, the apartment is a property with an encumbrance and is pledged to the bank. In other words, it does not completely belong to you until you return the money you borrowed from the bank. If this does not happen for various reasons, and due to circumstances you are unable to make payments, the bank will seize the apartment from you and sell it at auction to recover the invested funds.

Assessing an apartment for a mortgage will show how easy it will be to sell.

By the way, valuing an apartment for a mortgage also has its own benefits for you. Because Even on the shore, you will be able to understand whether the apartment is worth the money they are asking for it or not. If it is sold above/below market value, then this is a reason to think about it. Especially if it is below the market value - this situation may indicate that your seller is on the verge of bankruptcy, which in turn carries the risk of losing the apartment. Because the transaction in this case can be contested in court.

How much will the assessment cost?

The cost of an appraisal in Moscow varies on average from 3.5 to 6 thousand rubles. In the regions you can find an appraiser for 1.5-3 thousand rubles. It is best to order an assessment in advance - urgent work from an expert is more valuable.

Please note that you need to choose an appraiser not only based on the lowest price. Look at the organization's reputation and its approach to working with clients. Yes, you can find a private owner who will do everything quickly and very cheaply. But the bank may not accept such a report due to violations in the format or the assessment process itself.

What must an appraiser have?

Professional education.
Membership in SRO.
Insured liability.
Work experience of at least 2 years.

Assessing an apartment for a mortgage and drawing up a report is a process that requires qualifications, experience and knowledge. Choose an organization that has been in the market for a long time.

Accredited companies of SberBank

There are a number of specialists whose services SberBank is ready to accept. From this list, you can independently select an appraisal company and cooperate with it, but it is not recommended to choose organizations not mentioned in the list. SberBank will be obliged to accept their assessment, but most likely it will require corrections and double-checks, and the borrower will lose time and money. It is best to turn your attention to large appraisal companies, since they inspire more confidence in the bank than small firms.

Loan “Gospodderzhka 2020” SberBank, Person. No. 1481

from 5.85%

per annum

up to 3 million

up to 30 years old

Get a loan

The list of companies accredited by SberBank includes the following:

Real Estate Center LLC;
LLC "Bureau of Business Assessment";
LLC Expert Assessment;
DiAnMax LLC;
NJSC "Euroexpert";
LLC Center for Innovative Technologies "SEVIAL";
LLC "Center for Independent Expertise of Property";
LLC "KO-INVEST";
LLC "SARG - Mortgage Center";
and others.

How does the bank appraise an apartment?

There are several methods for valuing real estate for a mortgage loan. The main one is comparative. This is an objective method that takes into account closed transactions in the housing market and gives the most accurate market price for the property.

It is impossible to talk about all the intricacies of assessment in one article. There are a lot of special coefficients that the expert operates with during the research. Not only the condition of the apartment and its characteristics are taken into account, but also a lot of subtleties. For example, the distance from the main urban infrastructure facilities, the availability of parking, the landscaping of the yard, etc.

There are other methods. For example, expensive. Here we are talking about how much money is needed to build a similar facility. Suitable for analyzing a house rather than an apartment.

Another method is to find out how much income the owner will receive for rental use. It’s called the income method. Used extremely rarely.

Please note that the assessment is made not only based on documents or the BTI plan. The appraiser takes photographs of the premises - you will receive them in the report.

Center for State Cadastral Valuation

GBU for determining cadastral value is often called the center of state cadastral valuation.

Indeed, on the territory of a subject of the Russian Federation, be it a region, a republic, a district or a region, there is one institution that determines the cadastral value - this is a kind of central apparatus operating in a certain territory. In each subject, these institutions have their own numbers, staffing, additional functions and powers, and also have an individual name.

For example, in the Leningrad region - State Budgetary Institution "LenKadOtsenka", In Crimea - State Budgetary Institution "Land Management [/anchor] and Cadastral Valuation", in Mordovia - State Budgetary Institution "Property Fund" but most often, for example, in Altai, Buryatia, Yakutia, Amur , Belgorod and other regions, the state-authorized institution for determining cadastral value is called the Center for State Cadastral Valuation.

What affects real estate valuation?

In addition to the factors listed in the section on evaluation methods, the final cost is influenced by several other parameters that a competent expert takes into account:

The prestige of the area and the environmental condition are taken into account - if the apartment is near an industrial zone, the cost will be lower.
If there are many schools, kindergartens, clinics and other important social facilities near the apartment, the cost will increase.
It is important not only the condition of the apartment’s finishing, but also the condition of the entrance and common partitions. Roughly speaking, a renovated apartment in a dilapidated building will not be valued highly.
The presence of a yard is also taken into account - an area equipped for recreation is valued higher than a “patch” for ten cars.

Let us remind you that the apartment itself is valued according to:

Squares;
Number of rooms;
General condition – finishing, ceilings, layout;
The presence or absence of defects in the repair;
The first or last floor is cheaper.

What is the market value of an apartment made up of?

Location. The appraisal of an apartment for a mortgage will always take into account the location where the apartment is located. What is important here is whether the house is in the central area or not. If not in the central area, then how good is the transport and social infrastructure there: are there schools, kindergartens, hospitals, etc. It also plays a role how favorable and well-groomed the area is overall. If a factory or industrial zone, military units, courts, pre-trial detention centers are located nearby, all this will affect the cost estimate.
Technical characteristics of the building. Here we mean the year and type of construction, how long ago major repairs were done, whether the building is in disrepair or not, the number of floors of the house and layout. When choosing a “Khrushchev” or “Brezhnevka”, check especially carefully whether the house is designated for demolition or reconstruction, whether sewer pipes or heating have been replaced.
Condition of the apartment. The main parameters here, of course, will be the number of floors, number of rooms, layout (if redevelopment was carried out, then confirmation that it was legalized). In addition, the presence of repairs (high-quality or done in a hurry), household appliances, furniture that will remain after the sale will be used as increasing or decreasing coefficients. This also includes the presence or absence of plastic double-glazed windows and balcony glazing.
Market position. A comparison is made of similar apartments: a one-room apartment in a monolithic building is compared with the same offers. Up to 5 objects are usually selected for comparison: this makes it easier to understand where prices are artificially high or low. Don't forget about force majeure circumstances. Now, for example, due to the coronavirus, the solvency of the population has also decreased. On the other hand, there is state support, through which you can purchase housing in a new building, which also reduces the demand for apartments on the secondary real estate market.

What does the evaluation album look like?

An assessment report is an official document that must be completed in accordance with the regulatory requirements of laws and state standards. Check if it contains the following data:

Information about the company that conducted the examination. Company contact details.
Information about the customer of the assessment - that is, about you.
Full characteristics of the apartment you are planning to buy. Check the address, area, layout, etc.
Analysis of the real estate market for your property - numerical indicators.
The amount of liquid value and market value of the apartment for purchase.
Attachments – photographs, copies of appraiser’s diplomas, etc.

The appraiser's report should have a concluding section - this is what loan officers read first. It contains information about the price of housing and how much the bank can get for this apartment at the moment - if the mortgage agreement is terminated.

There are no requirements for the appearance of the report. Usually this is a folder with at least 20 A4 sheets, usually much more. The documents are bound and numbered. The appraiser's signature is everywhere. There is a seal.

Please note that the report is only valid for 6 months. If the contract for the apartment was not concluded, or refinancing is planned, a new assessment will have to be made. The reason is constant changes in the real estate market.

Examination price

The cost of appraising an apartment for a mortgage depends on the location of the client and the location of the property they want to buy. In big cities, appraisers demand from 5 thousand rubles for an expert opinion. In settlements with fewer residents and a different income level, the price for market research will range from one and a half thousand rubles to three thousand. For urgency in each city you will have to pay extra.

Ours offers housing inspections starting from three thousand rubles. Clients will be able to view the cost of other services on the official website page in the price list. Actual prices may differ from those stated. Find out the final salary of experts from our consultants for free. It will depend on the location of the property, the type of housing and other criteria. You can also calculate the full cost of services using an online calculator.

What is the validity period of the assessment report?

The assessment report is valid for six months. But it is better to check with the bank manager - in some cases, the requirements of credit institutions may differ from this period. In reviews of mortgage products, you can find complaints from citizens who were denied a loan or mortgage refinancing a month after the assessment.

Ask the bank manager if the report will be valid if the mortgage application expires - some banks can take up to 2-3 months to review a new one.
Check to see if the bank has any other requirements for the appraisal report.

Who has the right to evaluate an apartment in a new building?

Not every specialist working in the field of appraisal activities can evaluate apartments in a new building and other residential real estate. When ordering an assessment, owners must determine whether the specialist meets the following requirements:

Listed in SRO.
His civil liability is insured for the amount of 300,000 rubles.
Has a higher education and at least one year of work experience in this field.

Only an appraiser who meets these requirements has the right to draw up an official document - an appraisal report, which will be accepted by the credit institution as a source of reliable and objective information. Sometimes banks require approval of the “candidacy” of an appraiser. This is due to the fact that the credit institution and clients expect different results from the assessment. The first one wants to reduce the value of the collateral property, and the second one wants to determine the value of the object as close as possible to the market value. This is one of the important reasons why banks will carefully, meticulously check the appraisal report, so it is very important to contact a professional appraiser. The result of his work will not cause any complaints from interested parties.

Who orders a real estate appraisal, the seller or the buyer?

The buyer pays for the appraisal of the seller's property. This is logical - the buyer is interested in obtaining a mortgage, and accordingly, the buyer is interested in the assessment procedure. There is no point in the seller spending his money - it is easier to wait for a buyer in cash.

Therefore, we recommend ordering an appraisal only when you are already sure that the purchase and sale transaction will be completed without problems.

Once again, the buyer pays for the appraisal, so first collect all the documents, make sure the apartment is clean, and only then apply to set the appraisal amount so as not to waste money and time.

Can a mortgage be denied after approval?

Yes, sometimes the bank refuses already in the process of signing documents. Therefore, it is important to understand why the deal did not go through.

Possible reasons for refusal:

Borrower's credit history. The bank is afraid that the borrower is unreliable - he has arrears on past loans, disputes with collectors or banks.
Insufficient income to pay the mortgage: The borrower may not have enough balance to live and support the family.
There are other loans, so a mortgage will increase the financial burden too much.
Inaccurate information in the loan application. This includes both typographical errors in documents and the provision of deliberately distorted data. In the latter case, failure is guaranteed.

Sometimes banks refuse due to citizenship or age. In any case, after a refusal, you should not give up - you can submit an application to another credit institution. But it’s better to do this after some time, so first solve the problem with the documents, and then re-apply to other banks for a mortgage.

Is a re-evaluation of an apartment necessary when refinancing?

If you are planning to refinance your mortgage - i.e. renew the mortgage loan agreement; a re-assessment will be required if the first report is more than six months old.

In fact, refinancing is a new agreement. Accordingly, the bank carries out all operations again. This includes finding out how much money he will receive if your deal is broken and the apartment has to be put up for auction. To do this, he needs data on the liquid value of housing.

If you decide to refinance less than six months after drawing up the appraisal report, then in theory there is no need to re-do it. In practice, you need to check with managers - judging by customer reviews, some managers still require you to redo the document.

What is the liquidation value of an apartment?

Liquidation value is calculated using a special formula. It is important for us to know that it is influenced by two basic factors:

Time value of money factor;
Factor of price elasticity of demand.

What is price elasticity of demand? This is the number of potential buyers and the degree of specialization of the object. The greater the number of potential buyers, the higher the elasticity of demand (and this is good). The higher the specialization of an object, the lower the price elasticity of demand for it (which is not good). In other words: if you buy a standard one-room apartment in a relatively new house, not on the first or last floor, with a standard layout, near the metro, then you will then sell it very quickly, because... A lot of people will want to buy it. If your apartment is a three- or four-room apartment with a designer renovation, or a townhouse outside the city, then you cannot count on a very quick subsequent sale

Do you need an appraisal for a mortgage on a new building?

Judging by the reviews, some bank managers require such an assessment. In fact, this is not necessary - the amount for the apartment is set by the developer and indicated in the share participation agreement.

If you are planning to take out a mortgage loan, you will have to order an appraisal report in any case. Choose an organization that is responsible for hiring appraisers. Only high qualifications and responsibility guarantee an independent study and report that will be accepted by any bank.

What is the job of real estate mortgage appraisers?

The real estate property is assessed only by professional experts, with the proper level of accreditation and a full package of permits.

First of all, the employee collects the necessary information that relates directly to a specific property: year of construction, material of manufacture, degree of wear, number of redevelopments, geographical location, technical equipment, etc. Summarizing the data received, he conducts a detailed analysis and makes an assessment, drawing up a report that includes photographs of the property, graphs, diagrams and detailed conclusions.

The study of a mortgaged apartment can be carried out by an accredited company from Sberbank or an independent expert.

Why do you need to appraise your home?

The assessment takes place on the basis of Article 9 of the Law of the Russian Federation “On Mortgage”. This regulatory act controls the loan issuance process. Without a report on the market value of the property, the bank has no right to issue funds to the client. Valuation of an apartment for a mortgage to the bank is a guarantee for the lender that in the event of termination of the contract, all finances issued by the bank will be returned.

When applying for a mortgage, the client must pledge the housing that the borrower is buying. This object will be sold at auction if necessary.

Therefore, an appraisal examination is carried out, which determines the amount for which housing can be sold on the market. The report also records the liquidation value of the property. It characterizes the price of an object for which an apartment can be sold in a short time. Many factors are taken into account. Liquidity is also affected by the location of the property, its condition, the type of property, whether it is an apartment in a new building or a resale apartment, etc.

The legal purity of the object is also verified through an examination. That is, whether the apartment is already secured by another financial organization and whether there are persons registered in it who should not be registered there.

The property appraisal for the mortgage determines the credit limit that the bank can pay the borrower. If the seller lists the property for 5.5 million rubles, and the appraiser estimates its market value at 5 million, the financial institution will issue a loan based on the figures recorded in the report. Therefore, the borrower's down payment must be increased to cover the payment.