Before granting a mortgage, every bank requires an official appraisal of the property. It's not a mere bureaucratic formality: the appraisal result can directly determine how much money the bank is willing to lend you, even if you've already agreed on a purchase price with the seller.
What the appraisal is actually for
The appraisal determines the estimated market value of the property according to objective technical criteria, carried out by an accredited appraisal firm independent of the bank. The bank uses that value, not the agreed purchase price, as the reference for calculating the maximum percentage of financing it's willing to grant (typically up to 80% of whichever is lower: the purchase price or the appraised value).
What happens if the appraisal comes in below the purchase price
This is one of the scenarios that most surprises buyers: if you've agreed to buy a home for €250,000 but the appraisal comes back at €230,000, the bank will calculate the financing percentage based on the appraised €230,000, not the agreed €250,000. This can force you to put down a larger deposit than you had planned, to cover the gap between the agreed price and what the bank is willing to finance based on the appraisal.
What factors the appraiser takes into account
- The property's size, layout, and condition.
- Location and characteristics of the surrounding area (amenities, transport links, neighborhood).
- Recent sale prices of comparable properties in the same area.
- Age of the building and construction quality.
- Any encumbrances or zoning issues that could affect the value.
Who pays for the appraisal
As a general rule, the cost of the appraisal falls on the mortgage applicant (the buyer), unlike other costs that the Real Estate Credit Contracts Law shifted onto the bank (such as the administrative agency, the registry, and, in many cases, part of the stamp duty tax). The cost of the appraisal varies depending on the value and type of property, but it typically runs a few hundred euros.
The appraisal has a limited validity period
An appraisal isn't valid indefinitely: it usually remains valid for several months (typically around 6 months), after which, if the buying process drags on, the bank may require an updated appraisal before finalizing the mortgage, especially if market conditions have changed substantially since the initial appraisal.
You can use the same appraisal with different banks
If you already have a valid appraisal carried out by an accredited firm, you have the right to present it to banks other than the one that originally requested it, without needing to pay for a new one, as long as that appraisal is still valid. This can be useful if you're comparing offers from several institutions for the same property.
Estimate your payment under different financing scenarios
Our mortgage calculator lets you simulate your monthly payment and total cost under different financing amounts, useful for anticipating how an appraisal that comes in below the agreed price would affect you.