The valuation of residential real estate provides the Market Value of the asset in question, based on numerous factors such as the size of the property, the quality of the construction, the location, local facilities, market conditions and characteristics of associated land/terrain.

The valuation can be carried out by professional qualified valuers, estate agents or mortgage brokers. The objective of the valuation is to estimate the price for which a residential property could sell for on the open market. This can then be used by a seller to assist with determining the asking price for their property, or a potential buyer to assess whether the purchase price is reasonable. In addition, valuations are used by lenders to ensure that the value of their loans are in line with that of the asset, and by investors to inform their investments decisions.

If you or your clients own residential property in France and are seeking independent valuation advice, Berthier & Associés have more than 40 years of experience in this domain, valuing residential real estate for all purposes. For an English-speaking introduction to the specialist valuation services that can be provided, contact Samuel Thompson via email at [email protected] or telephone +44 7933 239126 / +33 07 45 55 81 46.

What Comprises a Residential Real Estate Valuation?

Residential property valuation comprises estimating the true Market Value of a residential property. This provides an impartial opinion of the value of the subject property, generally formulated by comparison with recent sales of similar types of residences in the local area.

A valuation can be thought of as a response to the question: ‘how much is my property worth?’. An accurate valuation can provide assurances to both mortgage lenders and buyers. Lenders will avoid the risk of lending more than the property is worth and buyers will know whether the purchase price is a true representation of the value on the open market.

Some of the key elements that real estate valuers will examine when considering their opinion of value for a residential property include:

• The general condition.
• The age and location/situation.
• Any improvements or additions adding value.
• Market trends and selling prices of similar properties in the local area.

How Much Does a Residential Valuation Cost?

Each instruction will vary, but in general the valuation of an individual residential property will cost between €800 – €1,500. Properties comprising multiple units will naturally take a longer period of time to value, leading to additional costs. In any event, the cost of a valuation will differ on a case-by-case basis in accordance with factors such as:

• Size/area of the property and any associated land.
• Type of property.
• Location/situation.
• Condition of the property.

Each factor will have an impact on the time and effort required for the valuer to carry out their assessment. For instance, a valuation of a large property in a remote rural location will likely prove more costly. In the event of a valuation for a judicial case, it will be the judge who decides upon the fees of the valuer (who must be qualified and registered to intervene in legal cases).

Who Pays for the Costs of a Residential Valuation?

The costs for a valuation are generally the responsibility of the prospective purchaser or the party who has instructed the valuation. This will be due for payment when the contract is signed, but the purchaser could choose to settle the charges in advance. When required for a mortgage, the valuation fees will most commonly be charged to the purchaser or added to the overall cost of the mortgage.

Depending on the market conditions and the property in question, a purchaser could find themselves in a position to ask for the seller to cover the costs of the valuation. However, this a relatively rare situation and is most common when a seller is looking to enhance the deal offered to the purchaser.

What are the Potential Consequences of a Valuation not in Accordance with the Purchase Price?

In the process of purchasing a residential property, the valuation is a key indicator for lenders as to whether the amount they are lending is in accordance with the true value of the subject property. Clearly, lenders will not agree to a mortgage superior to the value of the asset but it could be to the buyers’ advantage if the valuation is higher than expected.

If a valuation reveals the Market Value to exceed the purchase price, this is positive news for the purchaser. Not only have they secured a good deal, but they will emerge with an overall higher net equity. On the other hand, the seller will not be informed of the fact that the property has been valued above the agreed sale price, and with the contract already signed they will not be able to pull out of the agreement and re-list the property at a superior asking price.

If the valuation is inferior to the expectations, this could hinder the buyer’s ability to obtain a mortgage. Either the process will be slowed due to necessary revisions to the mortgage, or the deal may fall through if amount the lender is prepared to agree to is not enough for the purchaser to conclude at the agreed price. To resolve the situation, the purchaser may be able to renegotiate the price with the seller or pay the difference between the expected value and that determined by the valuation from their pocket.

How Long is a Residential Real Estate Valuation Valid For?

As valuations are defined at a given moment in time, they are evidently not valid indefinitely. Market trends, and the condition of the property, are subject to constant evolution so the further one moves from the valuation date, the more risk there is that the value of the property will have changed. The majority of valuations are therefore valid for around 4 months and if the purchase of the property has not been concluded in this time period, a new valuation will be required in most circumstances.