COVID-19: Influence On Property Valuation And Mortgage Lending Value Determination In California

COVID-19: Influence On Property Valuation And Mortgage Lending Value Determination In California

The corona pandemic has not only suddenly changed the personal environment of each individual, but has also led to serious changes in the working environment and the economic situation in this country. Keywords such as home office, shutdown or contact blocking have penetrated our everyday lives. We see closed shopping centers and empty inner cities, people sit in their home office instead of at home and the air over Frankfurt is clearer than ever because only five percent of air traffic takes place.

But the work needs to continue and real estate appraisals with business property tax California are still urgently needed. If one is allowed to venture a preview, the need for valuations by the real estate industry and especially by credit institutions will increase sharply in the medium term due to the very different effects of the pandemic on individual market segments.

Information Gathering

Due to the existing contact blocks and exit bans, the required property inspections of the properties on site are currently not possible or only possible to a very limited extent. This means that the expert is missing an essential part of his expertise. It also comes into conflict with the applicable legal requirements and banking supervisory regulations.

For this reason, professionals has published simplifications on the subject of property inspections, under which, in view of the existing travel restrictions or contact blocks, the inspection of the property to be lent as part of the valuation, which is normally required for the coverage according to the Mortgage Lending Value Ordinance, can be temporarily dispensed with:

  • For properties within the meaning that are not already subject to the regulations of law, a discount of at least ten percent is required the result of the mortgage lending value determination.
  • Any lasting, crisis-related effects on the mortgage lending value, as can arise in particular in the case of operator properties as a result of reduced occupancy, must be adequately taken into account in the determination.
  • If, instead of viewing the property to be lent, a view is made by video transmission (e.g. via a mobile phone) and the appraiser can get an at least approximately complete view of the entire property and its surroundings, the above-mentioned discounts can be reduced by five percentage points each In the case of small loans no longer applies.

Market Events

Since the outbreak of Corona and the shutdown of large parts of public life, there are currently practically no real estate transactions in the market. The transactions currently being processed at the banks are still unaffected by the corona pandemic. As a result, the expert does not currently have any secure market data available. However, certain megatrends can be derived from the analysis of the market determinants of different asset classes having close ties with the business property tax California.

Decisive for the future development of the real estate markets are the duration and extent of the general social restrictions and the resulting economic consequences at national, but also at American and international level.

A group of experts made an initial assessment of the effects of the COVID-19 pandemic on the real estate market. As a result, the effects on the residential property markets are likely to be weaker than on commercial property. The need of the population for adequate and affordable living space is decisive for individual housing construction; the effects of the pandemic will not fundamentally change this.

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