Valuing Property in Croatia
Valuing anything without a comparable is very a difficult thing to do and is understandably prone to error.
In the UK, when a valuer sets a value for a property, he or she would look at the property and establish the condition, size and features relative to similar properties in the area that have sold recently. However, for property in Croatia this approach is not nearly as effective.
The Problem with Valuing Property in Croatia
Properties in Croatia are often very different from each other, and there is a long tradition of bequeathing property in a will, which means that the same property can belong to the same family for many generations (even for several centuries in some cases). In the UK people move houses to trade up, or to relocate for their job, but that rarely happens in Croatia. It is common for people to live in the same house or flat for their whole lives, even after marriage.
Hence the problem, the existence of minimal property transactions makes the business of valuing property in Croatia difficult. So for any property in Croatia other than a new-build property in perhaps a resort, it’s a good idea to view property valuations merely as a ballpark figure, rather than an accurate appraisal.
When buying a property in Croatia, trying to use information available on the internet to establish current asking prices is also prone to error. Unfortunately many estate agents’ websites advertise properties that were sold a long time ago, with prices that have been updated several times due to the property being available for sale for many years.
With property in Croatia many Croatian sellers also raise their asking price from time to time, but with so many agents advertising the same property, Croatian sellers generally fail to inform all the agencies of the new price. This is one of the reasons why it is possible to find the same property in Croatia, advertised at totally different prices on several websites. Another common reason is that the vendors often tell the agents to “add your commission on top” and let’s just say some agents… are a little more generous to themselves then others.
Unfortunately rather than listening to the advice of the experienced estate agent, asking prices for properties in Croatia are usually set by the vendor. In fact, because there isn’t a tradition of selling property in Croatia, it is quite common for the asking price of a property for sale to be set according to the following equation:
“My sister and I own the house 50/50. She wants to build a new house for herself on some land she owns. I want to put my son through college, and the cost of these two things is about XYZ. Therefore the price at which we are willing to sell to Mr & Mrs Buyer is X.”
Although there are a few professional valuers in Croatia, most are based in the capital Zagreb. When a bank lends against a property in Croatia they require a valuation, which in general is performed by their in-house team. And often their “in-house team” is in fact… the local estate agent.
In the end, unless the buyer is purchasing a new-build apartment that is in an area where there are several similar properties and where they can realistically compare prices like for like, it is simply not possible to accurately determine a property’s value. So when it comes to purchasing a property in Croatia it will simply come down to, what it is the property worth to the would-be buyer? On the other hand if you’re looking to buy property in Croatia for investment purposes, the process of evaluating your investment is a touch easier as you can work out potential return on investment (ROI), and yields on current vacation rentals comparables.
Simic Dom is an established real estate agency and consultancy firm in Croatia; and we have several years of experience with first time foreign buyers and Croatian property vendors.
So if you have any more questions, or you would like someone to professionally value your Property in Croatia, please feel free to get in touch.
Image by Alex E. Proimos.
By Nina Lauc