How to Evaluate an Apartment for A Mortgage?

The bank approved the loan application; the agent found a suitable apartment. The next step is to collect a complete set of documents for the bank. It will definitely include real estate appraisal.

When a bank gives a borrower a mortgage loan, it automatically takes as collateral the real estate that they buy for this loan: “Here’s the money, but until you return everything, the apartment is like mine.”

The strength of a mortgage loan is precisely that it is easy to sell an apartment at auction - in the language of banks; it is liquid collateral. Banks are confident in the loans issued, so they can lower rates.

Will he be able, if something happens, to sell this apartment for the same 3 million? For the buyer, the appraisal is an additional guarantee that the object is worth the money for which it is being sold.

Who Makes the Assessment?

Appraisers are engaged in real estate appraisal. Their activities are regulated by the federal law “On Valuation Activity in the Russian Federation.” It can be a company or an individual entrepreneur.

Banks are required by law to accept the appraisal of any appraiser. But in reality, banks themselves accredit companies, whose assessment they trust. Which appraisers are quoted by a particular bank is usually written on the website? Sberbank cooperates with 256 appraisers, Bank Vozrozhdenie - with 90.

How to choose a company to evaluate

Call on the list of appraisal companies offered by the bank. Here’s what you need to find out in the conversation.

How quickly the appraiser leaves?

The normal period is 1-2 days.

How long it takes to prepare the report—usually?

3-5 days.

What the Report Looks Like

The appraisal of the apartment is made in the form of a report. The report is kept in printed form along with the mortgage for the apartment.

The Report Must Necessarily Contain:

  • who ordered and who completed the assessment, by what method;
  • what kind of apartment it is, in what condition, how it is used;
  • how are things in the market where this apartment will be sold;
  • for how much it can be sold usually or at auction;
  • what are the attachments to the assessment in the form of photographs and copies of documents?

The report is invalid without the seal and signature of the evaluator. A one-page document with a summary of the report is attached to the report. It is given to the bank along with the report.

What is the cost

The task of the appraiser is to calculate the market and liquidation value of the property.

Market value - the price of an apartment if it is sold without haste and force majeure.

Liquidation value - the minimum price for which the bank will sell an apartment in a short time.

To calculate these indicators, the appraiser evaluates the apartment itself and looks at the state of the real estate market for similar objects.

What affects the market value?

Technical characteristics of the building:

In what year the house was built, when the major repairs were made, and how many floors there are. Everything is taken into account: the presence of a garbage chute, the organization of the parking lot, the state of the front door.

Condition of the apartment.

What floor, how many rooms, and is there any renovation. The appraiser even looks at whether linoleum or laminate is laid on the floor, whether there is a tile in the bathroom and how the lighting is made in the apartment.

The condition of the apartment matters:

If the wallpaper is dirty, the report is marked "in need of repair. "At best, he will put a multiplier on repairs.

The real estate market at the moment.

The expert looks at similar properties on the market. For odnushki in a monolithic building, the analogs will be the same in the area of ​​apartments in monolithic or brick houses. Panel houses are usually not compared with brick houses, or coefficients are introduced. Five similar objects are used to evaluate the apartment. Comparing peers is a good way to see where the price is overpriced.

How to calculate the residual value

The residual value is calculated using the formulas. Here the elasticity of demand and the cost of money over time is important.

An example of demand elasticity.

There is little demand for a three-room apartment in a new building on the ground floor because of the large footage and low floor scare away buyers. Selling such an apartment in a short time is possible only at a low price.

There is a high demand for a one-room apartment on the middle floor of a panel building 5 minutes’ walk from the metro because such apartments are always in demand on the market. The liquidation value of such an apartment is close to the market value.

An example of the value of money over time.

When it comes to long terms and big money, it is often said that money gets cheaper over time. If an apartment can be sold cheaper now, then it is better than a little more expensive and then.

There are many reasons for this principle:

inflation, political risks, human mortality, and global progress.

For simplicity, it can be considered as follows: market prices for housing are slowly falling, and money is getting cheaper due to inflation, so it is better to sell an apartment now.

When an apartment is sold at the liquidation price, the loan is repaid first. The borrower receives the remaining funds. Therefore, the higher the liquidation price, the more money will remain in his hands.

The liquidation cost of a budget apartment is not much different from the market one. It is easiest to sell it on the market because there is a demand for it. An elite apartment in a new building will be on sale for a long time, even at a discount.

How to influence the result of the assessment

A mortgage loan is issued based on the market value of the object. If the apartment owners estimate it more expensive than the appraisal company, the bank still focuses on the report and reduces the loan amount. Therefore, the cost of the purchased apartment and the market value indicated by the appraiser should not differ sharply.

If you really liked the apartment, but it costs more than its analogs, talk to the appraiser. If an apartment needs to be valued for a certain amount, do not be afraid to name it. Appraisers will come into your position. They can put a multiplier on such trifles as the presence of double-glazed windows or a good set in the kitchen, which supposedly remains for the next owners.

If an apartment needs to be appraised for a certain value, do not be afraid to talk to the appraiser and name it.

Redevelopment has been made in many apartments. If it is insignificant and does not affect the supporting structures, the bank will most likely miss it. Evaluators indicate in the reports the nature of the redevelopment and how much it costs to legalize it officially. The bank decides for itself whether to issue a loan for an apartment with redevelopment or not.

There are several more ways to overestimate the rating, but they are illegal, and, of course, we will not write about them. In general, we do not recommend trying to mislead the bank in any way: remember that banks have a way to put a mark on your credit history. And this mark will be seen by other banks.


  1. Call several appraisal companies at once. Focus on the price and timing of the assessment. Everything will take at least a week.

  2. Choose an accredited or experienced company. This way, you will avoid petty bank nagging about your report. You can immediately contact the appraisers verified by the bank.

  3. Tell the appraiser the amount you want to appraise the apartment. He can meet halfway.

  4. Offer to send your own photos. Appraisers love telecommuting and, if it is possible to draw up a report without visiting, they will most likely agree.

  5. The assessment is valid for 6 months. Do not hesitate to buy it.