How do you know whether the property you are buying is valued properly? In this section we will try to help you determine a 'correct' value for the property you laid your eyes on.
External value estimations
Maybe you will receive a free estimation of the value. These are often rather superficial estimations. Therefore it might be helpfull to request an additional (neutral) value estimation made by a certified expert. Especialy when your realtor represents the seller, or if the report was not composed by a certified expert, you might want to add some question marks with regards to the neutrality and validity of these free estimations.
If you are making use of the services of an intermediary or realtor that represents you as the buyer, they most certainly will be able to help you out.
Note that if you want to incorporate a mortgage in the sales deed, you will need to have a neutral taxation report by law.
How can I estimate the value myself?
Even though you are not an expert, you want to have some basis to compare the listing price with. Let us give you some indications towards where you can find a good basis. We will make the distinction between the land (in case you want to build yourself), the property (land + building) and the transaction costs.
1. Value of land
Land is an important factor in determing the total cost of a property. To check if the asking price is right, you can check out a few sources. You can check out the land register to see what prices pieces of land are sold for in the same area. Different parts of the country may have different prices. For an indication, you should check out the average selling price for different regions in Portugal.
It is important to keep in mind that there are a lot of factors that can have a big impact on these prices. For example, if your piece of land has a stunning view or lays next to a forest, the price per square meter will be higher for your land. Depending on the sources we found online, these price differences typically go anywhere between 30% to 60% of the land price.
Another key factor to be aware of, is the intended use of land that neighbours the plot you want to buy. You might have a stunning view now, but maybe the farm land accross the road has been reassigned to be used for industry. Or maybe the owner of the plot downhill is planning to construct an enormous skyscraper that not only will block your view on the valley, it might cast a shadow on your plot too! This type of licenses and permits are typically checked by the notary during the sale. However, you can always do some research in advance by checking the urban plan at the town hall.
2. Value of the property
For properties as a whole (including the building), it never hurts to check out the neighbours. Try to find recently sold properties that are nearby similar to the one you want to buy. If you are looking towards other properties that are still on sale, keep in mind that they might eventually be sold for a much lower price. If a property has only been listed recently, prices might go down over time or after negotiations. For properties that have been on the market for a while, prices might be set too high too.
Information on selling prices can be looked at in the land register. In Portugal all the registration offices are connected to the 'Instituto dos Registos e de Notariado'. In Portugal, two services are connected to the cadastre: Predial Online & Casa Pronta. The information available on Predial Online is accessible without charge, but for using the information on Casa Pronta, a 15 euro subscription is required.
3. Transaction costsWith a purchase in Portugal you have to be aware of certain additional costs in the transaction. Examples of these costs are:
- Transfer tax (when reselling a property)
- Value added tax (with new properties)
- Notary costs
- Legal costs
- Cost for registration of the purchase document
- Possible costs for a land surveyor
- Realtor costs
- Mortgage costs
- Costs for facilities (with new properties)
A part of these expenses and taxes are included in the selling price, but always make sure that you know exactly what you still have to pay before you sign anything.