Non-Turkish property purchasing investor in Turkey: ' 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 ... '
This 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 - and the 30% often reflects their hidden marked-up profit margin. . The reason it is not true is very simple: the valuations provided in appraisal reports are based on real world market price comparisons of three property sales 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.
Simply by requiring the seller to provide an expert appraisal report from a licensed and certified appraiser, called an Eksper Rapor, before the property purchase transaction begins, and not at the end of the transaction - which means before discussing or negotiating the price, advance payments, etc.
Step1: The Eksper Rapor provides all the essential information required in a standard legal search. With this report in hand, buyer’s rest assured all essential, information about permits, ownership, cadastral, and structural details have been revealed and disclosed..
Step 2: Next step is then to obtain confirmation that the checked information is what is required to qualify the property as being safe and secure for investment, and for this a independent professional specialist and expert (not the agent or lawyer referred) should be relied upon, because caution is required... the report itself provides information but does NOT guarantee that information is acceptable and meets requirements - for example about permits. An experienced independent expert will need to perform the due diligence on the information provided in the report to determine the acceptable status of the various detailed information provided in the report- and there are many surprising aspects where this is essential (legal, cadastral, planning permits, flood plains, construction conformity with regulations, etc.) Due Diligence by an independent expert is essential.
The experts at mytapu have been advising foreign investors to obtain expert appraisal reports since 2007, and recently the Turkish authorities also adapted the practice, by introducing a new regulation requiring international non-Turkish buyers to be provided with a report for their property purchases.
Don’t believe agents, ask an expert…
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At mytapu.com our policy is to ensure our clients are fully informed, so that they may make fully informed decisions- this helps to ensure better outcomes all around.
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Additional Reading for Buyers:
Residential Property Investors Tool-Kit for Turkey
Property Finders Service Istanbul and Coastal Turkey,
Citizenship Investment in Turkey
The One Source for Every Turkish Mortgage
Legal Services for Property Matters in Turkey
Advice for Property Matters in Turkey
All Articles
Additional Reading for Sellers:
Legal Work on Property Matters
Property Selller’s Tool-Kit for Turkey
Digital On-Line Sales Distribution
Peer-to-Peer On-Line Exchanges
Advice for Property Matters in Turkey
