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Parallel to the growth of the UAE’s realty sector is the growth of its home finance sector. Home financing is a crucial part of the realty market since property appraisal is the biggest eligibility criterion for it.
The financier, which is either a bank or a money lender, establishes the security value of the house to be purchased for the buyer to secure a home loan and for the property to serve as mortgage collateral. The lender’s objective is to obtain an estimated selling price of the house in the market in case an immediate sale deed takes place, like repossession.
The lender can assess the value of the property in two different ways. The financier can either send a surveyor to physically inspect the property, or use modern methods like online evaluation.
Online valuation is carried out by utilizing online data such as land registry, information on comparable properties in the area, house price indices and Google maps to arrive at a probable market value. Along with online data, a visual inspection of the property may also be performed. Online assessments work for simple residential properties only. However, for quantitative residential purchases or commercial property, physical assessment is the best approach.
The physical assessment of a house includes recording details like the number and type of rooms, the absence and presence of fixtures and fittings, and changes required, among others. In addition, the location of the house, its accessibility to public transport, the availability of parking space or garage facilities, the condition or structure of the building or villa, structural faults, fit-outs and local council zoning are significant factors in assessing a property.
Once all facts are accumulated, with the latest comparable sales figures in the neighboring area and current market rates, a comprehensive valuation report is prepared to determine the worth of the property.
Property valuation fees are part of the home loan process and can vary depending on the bank or lender, or it can be waived off.
• The UAE home finance sector is growing alongside the real estate market
• A property can be appraised either physically or through online assessments
• The charges of a property appraisal vary depending on the bank or the lender
Source: Arva Shikari, Special to Properties
The writer is a freelaner