How to appraise an apartment using a VTB, Sberbank mortgage

Why do you need an apartment appraisal?

• Firstly, an assessment must be carried out if there are disputes about the market value of the property that is purchased with a mortgage. And during communication with the bank, such disputes will definitely arise.
• Secondly, based on the assessment report, the bank makes a conclusion about what amount can be issued to the client. The bank focuses on the market and liquidation value of the property. The first is the price at which you can buy or sell an apartment under normal conditions. The second is the price at which you can sell the apartment in an accelerated time frame. The bank looks specifically at the liquidation value, since it is interested in selling the asset as quickly as possible if the borrower stops paying.

What it is

Real estate assessment carried out for the purpose of obtaining a mortgage loan is a complex process implemented on the basis of several approaches. Namely:

• comparative. It consists of analyzing and comparing all transactions carried out on the market with similar real estate;
• profitable. Provides for assessing the prospects for growth in the value of the property;
• costly. When implementing this approach, the amount of costs required for the construction of similar real estate is determined. During this stage, the liquidity level of the object under consideration is established quite accurately.

What documents are needed to evaluate an apartment?

The package of documents for assessment depends on the type of apartment - primary or secondary.

For a new home, provide the appraiser with:

• apartment acceptance certificate indicating the postal address;
• equity participation agreement;
• client's passport.

For the secondary market the package of documents is different:

• technical passport from BTI;
• real estate registration certificate or extract from the Unified State Register of Real Estate;
• a contract confirming your ownership, for example, a contract of sale or gift;
• client's passport.

Sometimes the appraiser requests photographs of the apartment. In fact, according to standards, he must independently go to the site and take photographs. But this increases the price and terms, so many ask clients to provide photographs of the apartment from different angles.

The list of documents may change. We recommend checking with the appraiser himself.

On what basis are different types of real estate valued?

As of 2021, any loaned premises are subject to mandatory assessment, with the exception of garages and parking spaces.

VTB-24 takes assessments for secondary housing especially seriously, and there are a number of reasons for this:

1. To find out the real state of the housing - whether unregistered redevelopments have been carried out in the apartment, whether the technical data from the BTI correlates with real data, and so on. Due to the fact that secondary housing is often dilapidated, banks take a significant risk when issuing mortgage loans, and an appraisal can reduce this risk.
2. Secondary housing must have liquidity and high real value , otherwise it will be difficult for the bank to sell it.
   For example, using an assessment, it can be determined that well-equipped and high-quality secondary housing, located very far from the city center, has a high market value, but low liquidity; conversely, fairly “shabby” housing in the city center may have high liquidity, but low real value. Depending on the data received, you can make a decision on the terms of the loan.
3. The borrower also needs an assessment. Not all sellers are honest and upstanding citizens;
   some of them are able to hide information that reduces the market value of housing - for example, past and unregistered redevelopments, poor water supply, and the like. Appraisers, having extensive professional experience, very quickly identify “omissions on the part of the seller,” which means that the buyer will remain in the black.

An apartment in a new building should also be assessed. Unlike secondary housing, the main reason for conducting an assessment is the desire to find out whether the developer has fulfilled all of its obligations.

The appraiser looks at the serviceability of the doors, windows and roof (for apartments located on the upper floors), and also evaluates the general characteristics of the house:

• stability and quality of electricity, gas and water supply;
• the material from which the house and its foundation are made, and so on.

If the assessment reveals non-compliance with banking requirements, the loan for the selected housing may not be issued.

If an applicant wants to take out a mortgage on a private house, not only the real and liquid value is determined, but also the overall quality of the house:

• what are the floors made of?
• the foundation, what material - moisture-resistant, durable or non-durable - the house was built from;
• other technical characteristics of the house.

According to the rules of many banks, a loan can be issued for a house only with a brick, stone or reinforced concrete foundation; ceilings should not be made of wood. This is due to the durability of the house: if the foundation and ceilings are made of unstable materials, the house may become unusable within 10-15 years, which for the bank means inevitable losses and bureaucratic difficulties.

The most difficult thing is to evaluate a land plot. For this purpose, as a rule, it is allowed to involve only those appraisal companies that have been accredited by the bank. Difficulties related to:

• We evaluate the liquidity and value of the site with a difficult objective;
• with clarification of general infrastructure and logistics in the region.

Appraisers need to find out, among other things, whether water, gas and electricity are connected to the site, and whether the site is located above publicly important objects - pipes, sewer lines, and so on.

Who can evaluate the apartment

The determination of value is carried out by a specialist with a professional education - an appraiser. The status of the appraiser is confirmed:

• availability of specialized education;
• membership in a self-regulatory organization (SRO) of appraisers;
• availability of insured liability.

The appraiser can work independently or on the staff of an appraisal organization. When applying for mortgage lending, you need to pay attention to whether the specialist is accredited or not.

Where to contact?

It is better to contact specialized companies for a real estate appraisal, because... such organizations will professionally review all criteria and promptly inspect the specified property and draw up a detailed report.2 Only accredited organizations can provide appraisal services .
This means that the bank is inclined to trust their assessment, and is confident that it will be met according to all federal standards. An accredited specialist of an appraisal organization must have several, but very important points to perform his work:

1. Be a registered representative of the organization of real estate appraisers.
2. It is mandatory to have a civil liability policy, which must be at least 300 thousand rubles.
   This document will ensure that in the event of an unintentional or special error in the execution of the report, third parties will not suffer. If the appraiser does not accurately determine the price of the apartment, this will be covered by this policy. The requirement for the presence of such a document is enshrined in Article 24.7 of the Federal Law “On Valuation Activities in the Russian Federation”.

Important! The buyer can independently choose an appraiser. But the bank has the right to demand an additional assessment by an accredited organization, and this will cost extra money.

Appraisal by bank accredited appraisers

Banks do not employ appraisers on their staff. Firstly, hiring a specialist means paying him a salary, and this is much more expensive than hiring third-party appraisers for individual reports. Secondly, the very concept of “independent” assessment is lost. After all, if the appraiser is a bank employee, then his report will most likely be made in favor of the bank.

Banks post a list of accredited appraisers on their website. For example, Sberbank has almost 3,000 accredited appraisers and appraisal companies throughout the country. But VTB has a more modest list - only 330 appraisers.

Sberbank and VTB have special online services for ordering an apartment appraisal. For Sberbank it is “DomClick”, and for VTB it is “Service for ordering the assessment of residential real estate”. The algorithm for working with them looks like this:

1. You fill out the application, attach the necessary documents and make payment.
2. The application is processed by an appraiser accredited and authorized in the system.
3. An accredited appraiser sets a date and time for inspecting the apartment.
4. Within a few days, you and the bank receive an electronic appraisal report, which is legally equivalent to a paper report.

Pros: the bank will accept the report with a 99% probability. You do not have to prove that the appraiser calculated everything correctly. In addition, you do not need to check the availability of a diploma and insurance with the appraiser - the bank has done this for you.

Disadvantages: doubts arise about the “independence” of accredited specialists. For an appraiser, cooperation with a bank is a powerful channel for attracting clients. Consequently, the report may serve the interests of the bank to a greater extent than the borrower.

Is the procedure necessary?

Yes, definitely. VTB-24 Bank requires a real estate appraisal for a mortgage, and there are two good reasons for this:

• When taking out a mortgage, the parties are required by law to conduct an appraisal of the property. The obligation is specified in Art. 9 Federal Law of July 16, 1998 N 102-FZ; According to this law, the contract must necessarily stipulate not only the market value, but also the estimated value - which means that an assessment cannot be avoided.
• Housing issued with a mortgage is in most cases issued as collateral to the bank. This is done to minimize risks for the bank: in the event of late payments or a difficult financial situation for the borrower, the bank will be able to legally appropriate the housing and quickly sell it in order to compensate for losses received and prevent future ones.

However, in order for real estate to be sold quickly and profitably, it must have liquidity and a sufficiently high real value. This is precisely why an assessment is required: it allows you to accurately and on the basis of objective data find out what liquid and real value the property has.

If the assessment shows good results, the bank will be completely satisfied , because in a critical situation nothing will prevent the successful sale of housing. For the same reason, a mortgage agreement is signed only after an assessment has been carried out, and the final terms of the loan depend on its results:

• loan amount;
• monthly payment amount;
• in some cases even the loan term and interest rate.

More information about why a real estate appraisal is needed and whether it is possible to do without it can be found in this material.

Appraisal by non-bank accredited appraisers

The lack of bank accreditation is not an indicator of the appraiser’s lack of professionalism. Perhaps he has not yet been accredited, does not meet all the bank’s requirements, or simply does not want to cooperate with financial and credit organizations.

You have every right to provide the bank with a report from an unaccredited appraiser, the main thing is that he has a specialized education, insurance, and is a member of an SRO.

Pros: This is truly an independent assessment. It makes no sense for an appraiser to underestimate the value of a mortgaged apartment.

Cons: Banks are reluctant to accept reports from non-accredited appraisers. They will find fault with every figure and coefficient. The report will not be accepted, and no one will return the money for the assessment. In addition, you will have to check all documents confirming the status of the appraiser yourself.

Cost of examination

The minimum cost of the service, established by appraisers for 2018, is 2,500 rubles. In each case, the price is set by the companies independently and depends on a number of factors, in particular:

• the remoteness of the home that needs to be assessed;
• quadratures;
• regional affiliation.

In the central regions of the country, the average fee for the service is 5-7 thousand rubles. In regions remote from the center - 3 thousand rubles.

Payment for the service is made by the buyer of the apartment, that is, the borrower.

To study in detail the pricing policy in this area, you should familiarize yourself with what the cost of appraising an apartment consists of.

How to choose an appraiser

We recommend choosing an accredited appraiser. You will avoid problems associated with the bank’s acceptance of the report and save a lot of time. If you do not know which bank you will receive a loan from, look for an appraiser accredited in several banks at once.

The most important indicator when choosing an appraiser is price. Choose the cheapest option. Appraisers usually have the same deadlines. It will take no more than a week to prepare the report. To speed up the procedure, use electronic banking services. You won’t be able to select an offer by price here, but you will save your time.

Text: Elizaveta Kobrina

Basic conditions

There are almost no strict conditions strictly regulating the inspection. Most of the requirements for appraising an apartment for a mortgage at VTB Bank allow borrowers to choose the best course of action for them.

But customers should consider:

• that the home must be assessed by a specially trained specialist who has the right to perform such actions;
• this procedure is paid, and the buyer of the apartment will have to order it;
• it will not be possible to do without checking the collateral (apartment);
• The validity period of the received report is limited, so you need to use it as soon as possible after receiving it.

The fact that the received reports will be used by the bank when allocating money deserves special attention. It influences the decision to issue funds and provide financial assistance to the client who has applied. It also turns out to be decisive when calculating the loan amount. It is worth preparing for the fact that the final loan amount will be less than the result indicated by the appraiser, since the bank will not be able to sell the living space at market value. Therefore, the seller should discuss this nuance in advance or prepare additional finances in a timely manner that will cover the difference between the loan and the cost of housing.

Features of apartment evaluation

The value of real estate indicated by the appraiser is influenced by:

• current prices for similar offers on the housing market;
• technical condition of the building;
• location of the facility and the presence of nearby social organizations, kindergartens, schools, hospitals, infrastructure;
• commercial value of living space;
• date of construction and material used in construction;
• other nuances.

The expert will pay special attention to the legal component, including the seller’s ownership of the property, legal proceedings in which the house is involved, and compliance of the actual condition of the premises with the parameters specified in the documentation.