Spanish Bank Valuations: What If the Tasación Is Low?

The number the bank actually lends against

When you read that a Spanish bank will lend a non-resident 60–70%, the natural assumption is 60–70% of the price. It is not. It is 60–70% of the tasación — the formal valuation carried out by an independent valuation company approved by the Bank of Spain and instructed by the lender.

Most of the time the two numbers are close enough that nobody thinks about it. When they are not, the arithmetic bites. Take a property agreed at €300,000 where the bank will lend 70%. If the valuation matches the price, the loan is €210,000 and you find €90,000 plus costs. If the valuation comes in at €270,000, the loan is 70% of that — €189,000 — and your deposit is now €111,000. The price did not change, the percentage did not change, and you need €21,000 more.

That money is on top of the 9–11% you were already budgeting for tax and fees on a resale, or 12–14% on a new build. And it appears well into the process, after you have paid a reservation deposit and instructed a lawyer.

Why valuations come in low

A valuer is certifying what the property is worth on the open market, evidenced by comparable sales, in a form that will survive a regulator reading it. Several things push that below an agreed price:

• The price includes things the valuation does not. Furniture packages are common on the coast. Furniture is not real property, and a valuer will not certify it.
• A recent renovation or flip. The work is real but the comparable evidence is of the building before it, and valuers weight recorded transactions heavily.
• Thin comparable evidence. Unusual properties — large plots, rural houses, anything distinctive — have fewer comparable sales to point at, so the valuer is conservative.
• Unregistered floor area. A pool, a terrace, a converted basement or an extra floor that exists physically but not on the deeds will not be valued. The valuer certifies the legal property, not the one you walked around.
• A rising market. Comparables are backward-looking by definition. Where prices have moved quickly, valuations lag.

What you can do about it

In rough order of usefulness.

Anticipate it before you commit

If the property is freshly renovated, sold furnished, priced at the top of its building's range, or unusual in any way, the risk is elevated and you can know that before you sign. A broker who looks at the nota simple and the asking price can usually tell you whether the valuation is likely to be the pinch point. It is a short conversation and it happens before the reservation deposit rather than after.

Check what is registered

Discrepancies between the cadastral record and the land registry are extremely common in Spain and they are not cosmetic — unregistered area is unvalued area. Where the paperwork can be brought up to date before the valuation, the valuation improves. It is a legal procedure with its own cost and timetable, so it needs to be identified early enough to fit in.

Separate the furniture from the property

If a meaningful part of the price is contents, how the contract splits it affects both the tax and what the bank is lending against. This is a question for your lawyer, and it is worth asking before the contract is drafted rather than after.

Try a different lender

Valuations are instructed by the lender, and different lenders use different valuation companies. A second valuation is not guaranteed to be higher — and you will pay for it, typically a few hundred euros — but where the first looks like an outlier rather than a fair reflection, it is a legitimate option. An independent broker can tell you whether it is worth the cost or whether the first number was simply correct.

Renegotiate

A valuation materially below the agreed price is evidence, and sellers know that the next buyer's bank will instruct a valuation too. It does not always work, but it is a stronger position than it feels like at the time.

Practical points

The valuation is usually valid for six months, so one carried out for a purchase that falls through may still be usable. You pay for it, typically in the region of €300 to €600, and in most cases you are entitled to a copy of the report — worth asking for, because it tells you exactly which comparables were used and what area was certified. Expect it to add one to two weeks to the timetable, and a little more where the property is remote or unusual.