A valuation is required when buying a house in the Netherlands. As a buyer, it gives you a good indication of the actual value of the property you have purchased. It is required to have the appraisal carried out by an independent appraiser. It is important that you know the correct value of the property you are purchasing. This will ensure that you do not overpay and that the purchase value matches the appraisal value.
Why an appraisal when buying?
Once you have made the winning bid to purchase a property, the property needs to be appraised to determine its assessed value. In addition, the mortgage lender will require you to have an appraisal done at the time of purchase. This must be done by a certified, independent appraiser. The rule of having a mandatory appraisal done on a property you are purchasing does not apply to consumers who pay for the entire property purchased with their own money, however, this is rare. The appraisal report states the determined value of the property, but not the condition of the purchased home. The condition of the property is checked during a building inspection. This is advisable when you have bought a house before 2000. A building inspection when buying a property is not compulsory, but it is recommended because there may be hidden defects. The inspection can save you a lot of money this way.
Benefits of a valuation report when buying a property
Despite the fact that a valuation is required when buying a house, there are two main advantages:
- Objective: The valuation report provides an independent and objective valuation on the purchase a property.
- Clarity: An appraisal report provides clarity on the actual value of the property.
A home appraisal is carried out by a qualified appraiser, such as with the NWWI. An NWWI-qualified appraiser looks at the home as follows:
- Looks at the property thoroughly
- The current condition of the property
- The size of the property
- The location of the property
- Any special features and/or characteristics
- The neighbourhood where the property is located
- The surroundings of the property
- Recently sold properties in the neighbourhood
After the appraiser has gone through these above points, an appraisal report is drawn up stating the value of the purchased property.
Valuation required when buying a house: The influence on the maximum mortgage
The valuation when buying a home has a major impact on the amount of mortgage you can take out. The value of the home, as described in a validated appraisal report, determines how much a mortgage lender can provide with the purchased home. This is because the mortgage lender does not want to lend more money than what the value of the property reflects on paper. Otherwise, it would be too great a risk at the time when you can no longer afford the mortgage payments on the purchased home. If you can no longer afford the mortgage payments on the property. The property belongs to the bank. The bank will sell the property to minimise its loss. The downside is, the bank no longer gets the full value of the home. Since the appraisal value is lower than the purchase amount. The bank does not want to run that risk, this is one of the reasons that a valuation is required when buying a house.
|House purchase price||€ 500.000|
|Appraised value||€ 460.000|
|Maximum mortgage needed||€ 460.000|
|Additional equity required||€ 40.000|
Disbursements: Additional costs of valuation report
Disbursements are additional costs incurred in producing a valuation report. A standard mandatory valuation when buying a property, the valuation models and knowledge are not always sufficient. There are certain factors that affect the value of the property that are not initially noticed. Some of the factors that affect this are:
- Changes in policy by the municipality or province
- Changes in zoning plans
This information can be requested from the municipality. There are costs associated with requesting this information. The costs come under the term “disbursements”. Each municipality may set its own rates for these disbursements. As a result, one municipality may be more expensive than another. As far as we know, the maximum rate for disbursements is €70. In all cases, in addition to consulting the land registry, an appraiser also examines the ownership documents. It sounds redundant, but unfortunately in practice it is often necessary to check whether the seller is actually the owner of the property. This investigation also falls under disbursements.
When should a valuation be arranged?
It is advisable to engage an appraiser as soon as possible after signing the deed of purchase. The valuation report is a mandatory part of the file of the purchased property for a mortgage lender. Until the file is complete, the mortgage lender cannot approve the new mortgage. The sooner the valuation report is complete, the sooner you can receive a response from the mortgage lender on the mortgage for your new home.
The value before and after a home renovation
Are you planning to renovate your newly built house and would you like to finance (part of) this in the mortgage? Then you are obliged to pass this on to the appraiser as well. Inform the appraiser about the remodelling plans you have at your home and the appraiser will have to give a value before and after the remodelling of the home. Keep in mind that not all remodelling costs will contribute to a higher value of the purchased home.
|Purchase price of the house||€ 600.000|
|Bathroom renovation||€ 25.000|
|Appraised value after renovation||€ 615.000|
|Deposit of own money for the renovation||€ 10.000|
Who chooses the appraiser?
As a buyer, you are required to hire your own appraiser after the offer is accepted for your new home. The appointed appraiser should not be the sales or purchase agent. An appraiser must be independent and separate between the parties that have anything to do with the purchase and sale of the home. Check that the chosen appraiser is registered in the NRVT register, this way you are guaranteed that it is a recognised appraiser.
What does a valuation report cost?
The cost of appraising the purchase of your new home varies between appraisers and regions. Unfortunately, you cannot co-finance a valuation report in the mortgage, but it is tax deductible. The cost of a compulsory valuation varies between 500 and 800 euros. This depends on the availability of the appraiser and whether it is a validated valuation report, as mentioned earlier, this is mandatory for buying a house.
A validated valuation report of the required valuation when buying a house
A valuation report must be a validated valuation report. A valuation report is checked and validated by one of two bodies, the NWWI and the NRVT. The reason for this mandatory check by these bodies is to prevent fraud. It also ensures that all parties involved get as much certainty as possible about the actual value of the property purchased.
Planning to buy a new-build home?
When it comes to requesting an appraisal report, different rules apply when it comes to a new-build home. If you buy a property at a new construction project and you are the immediate owner after the purchase, you do not need a valuation report. If you plan to buy a plot of land yourself in order to build a house on it, a valuation is recommended. This way, you will have a good idea of the valuation of your newly built house.
How long does it take to prepare a valuation report?
Exactly how long it takes to prepare an appraisal report depends on the appraiser.Preparing an appraisal report can vary from a few days to a week after valuing the house you have purchased. Depending on the size of the property and the information available, preparing an appraisal report may take longer. It also depends on the appraiser’s workload and how quickly they prepare reports. It is always wise to ask in advance about the expected completion date of the report.