Mexico Property Valuation

Valuation of Property in Mexico

Allen Perry

An appraiser must assess value on any property that they are assigned to. Much of the time the valuation of a location type is very similar; sometimes other factors will designate a need to use unusual techniques for a subject’s valuation. These circumstances are called special property types and an appraiser must be aware of this. Things that can make a subject property different can be lack of relevant comparable properties or subject properties located I different countries (where other factors can affect value as compared to the US). For instance, valuation in a country like Mexico can be very different then how you would value a property in the United States. For example, construction, land, building, and maintenance cost are extremely lower than US prices. This needs to be considered in the valuation. Another aspect that needs to be weighed in is the state of the infrastructure around the subject property. Overall, the value ad appeal of land and property comes down to three key factors: location, local infrastructure, and local amenities (Buying & Selling Real Estate in Mexico).

Location is a major issue that affects value in Mexico. This is similar to factors that affect value in the United States, but it is especially important to consider when doing a valuation of a property in Mexico. There are many areas in Mexico that are very remote with little to zero infrastructures. This will obviously lower the value of a subject property. In most markets in Mexico the values of properties are increasing on a year-to-year basis, but they have not risen as fast as US and European markets (Buying & Selling Real Estate in Mexico). Mexico is a very big country and not all land development is feasible. Location is a major factor when valuing a property in Mexico, but it is not the only issue that must be considered when conducting a property valuation in Mexico. The local infrastructure around the subject property is an issue that needs to be assessed when valuing a property.

Things like roads, airports, and public services are luxuries that citizens of the US take for granted, but these things are not common place in all areas of Mexico. When doing a valuation appraisal in Mexico an appraiser must take into account the fact of if the subject property is located in an area where there is a proper infrastructure in place. As the years progress, the infrastructure in Mexico is gradually getting better, but an appraiser must remain cognizant of areas in Mexico where there is little to no infrastructure. Subject properties located in these areas should be reflected in a valuation report. Once an appraiser considers both the location and local infrastructure adjustments for the property there is another element that needs to be considered.

In the United States, just about anywhere a subject property is located there are basic amenities that come with the property and that the property is near by. In Mexico, this is not always the case. An appraiser must be aware of the subject property’s amenities. Does the property have access to running water and a sewage connection? Is the property near any schools and hospitals? These are questions an appraiser must answer these questions before they place a value on a property. If a property is not equipped with running water and sewage then the value of the property will be significantly reduced. Also, if the property is not located near any hospitals or schools (for residential properties) then a subject property will have less value then a property that does. If an appraiser does not account for these issues in a valuation, then they will be seriously mistaken.

Land/property valuation in Mexico can basically be adjusted for through location, local infrastructure, and local basic amenities. If a subject property does not have access to roads, airports and public services like a police force then the property will have a drastic decrease in value. A property also needs to have basic amenities working in the property as well as near the subject property. Many people living in or near the numerous Indian communities do not have access to basic amenities (Mexico: Between a Rock and a hard place). An appraiser needs to be aware of this when valuing a property in Mexico. Most factors of land valuation are the same in the United States and in Mexico, but these few factors must stay in an appraisers head when they are doing a valuation of a property.

References:

; Buying and Selling Real Estate in Mexico, http://www.mexperience.com/property/buying-selling-real-estate-in-mexico.hip

Ioffe, Karina; Mexico: Rock & Hard Place: The Joys & Malcontents of Modernization and What it means for the local population, www.mexconnect.com/articles30390-mexico-between-a-rock-and-a-hard-place-the-joys