We were recently told by an estate agent in Turkey that the valuations of property provided in appraisal reports are 30% less than market prices…. That means if our family want to make a property investment of $250,000 to obtain citizenship and passports, we need to be paying about $350,000 because the valuation will be 70% of 350,000, which meets the minimum requirement $250,000. Can this be true?
Fortunately we found local experts to help us with this, and what they told us is that it is NOT true, and many agents will say such things because they know very little about professional real estate practices, and focus instead on saying what-ever is necessary to maximise their commissions and profits. The reason it is not true is very simple: the valuations provided in appraisal reports are based on method of using three sales prices in the last 90 days paid for property in similar location, size, and finishing quality, to the property being valued.
So the price the valuation price is based on actual sales prices in the market: it is a market price. Most agent do not know this, just as they know very little about other aspects of real estate business, unlike the surveying profession which receive years of education and a degree, and unlike the valuation experts themselves, that receive training, pass exams, and receive licenses from the Capital Markets Regulatory Board of Turkey.
In their ignorance agents also confuse matters. An appraisal report prepared for a bank for mortgage financing purposes will have more than one valuation reported: the market value; the forced sale value; and liquidation value. In some instances a bank lender may stipulate the liquidation value to be set at a 20% discount from the market value. And an estate agent may become confused by this.
In some cases it is also possible that an official appraiser is under pressure to complete reports quickly. The appraisal eksper may not research the local market adequately, with the time necessary, to find the most recent and best three property sales comparisons. And so the valuation price reported may not be the most accurate. Often times this is because there is no simple fast way, or place, to find a record of the most recent sales transactions. This situation happens more often in quiet, small, coastal communities.
Fortunately again, there is a solution available, for a property seller that wants to ensure his property receives an accurate valuation, and thus receives an optimal, and accurate bid from a buyer. The experts at mytapu.com provide a ‘quality control’ service to address this shortcoming in appraisal reports. A seller that wishes to maximise the valuation of their property, is advised to instruct this ‘quality control’ work BEFORE a buyer requests an appraisal report, as having the ‘quality control’ performed after the appraisal report is completed, is far more difficult and expensive. This is especially important if the property owner is hoping to sell to a foreign buyer, because as of March 2019, it is a mandatory regulatory requirement that all foreign buyers must be presented with an appraisal report ( Gayrimenkul degerleme eksper raporlar ) before completing the purchase of a Turkish property.
Don’t believe agents, ask an expert…