The new map will allow comparisons of real estate market prices.
photo: Jana Liptáková
But this is about to change: The National Association of Real Estate Offices of Slovakia (NARKS) plans to launch a "price map" of Slovak real estate in the first quarter of 2007.
At issue is the market value of real estate in Slovakia, because this determines not only how much a buyer should expect to pay for a given property, but also what collateral value a bank assigns to it. So far, these values have been assigned either in-house or by industry experts who must be hired specially for the task.
"In the past, real estate prices were determined mainly through expert appraisals. But the law has been liberalised in many respects, and now it is up to the seller to set the price," Martin Lazík, general secretary of NARKS, told The Slovak Spectator.
Lazík said that the price map could serve as a replacement for expert appraisals. It is also supposed to make decisions easier for financial institutions in accepting property as collateral for loans, or in trying to forecast trends in real estate prices.
As well as real estate prices, the price map should also provide information on different types of properties such as their size, location, age, and utilities, and offer information on the real estate market from 2000 to the present.
"The map will be accessible on-line. Users will be able to find the price of a property in a certain locality on a certain date. It will include the prices of closed deals - not just the advertised prices," said Lazík.
After users fill in the basic specifications of the property that they are looking for, they get a list of suitable properties with prices attached. According to NARKS, the price map should cover the whole territory of Slovakia.
The map will be updated regularly based on information supplied by roughly 500 real estate agents and offices around the country, along with Slovakia's largest real estate website, www.reality.sk.
"The price map must contain a certain amount of data if it is to have any informative value. That is why we cooperate with www.reality.sk, which has the widest database and a sophisticated system of data collection. In the end, the data must be offered to users in an effective and understandable way," Lazík added.
The price map's beta version will be launched in December this year and will be available for commercial use in March next year. Banks and construction savings houses will be the first to have access to the map.
During the first years of its operation, the public will not have access to the map, although NARKS is hoping to open the map to general viewers within the next several years. Until then, the public will benefit indirectly through access to better loan conditions.
Lazík explained: "The price map will allow real estate to be priced quickly, which could be useful especially for banks, while their clients will find it easier and cheaper to arrange mortgages. Real estate offices also will find they have a useful tool for market estimation and consultancy on investment plans."
However, some financial institutions and some real estate offices are still sceptical of the potential advantages of the map, and say it will not fully replace expert appraisals.
Jaroslav Dolnák, head of the 1. Merkur real estate office, said he was not sure whether the price map would include all of the factors influencing the market price of a property.
"Just because someone sells a property for a certain price, that doesn't always mean that this is its market value. Sometimes it is due to the "cleverness" of the seller or to a firm's long-term plans. The master plan of a city, for example, can influence the price of construction land tremendously.
"Expert appraisals, which are still needed for mortgage loans, are what should be used. They set the value of the land or other property for which a bank is willing to lend you money. In my opinion, this is the real market value, and I would certainly not sell a property under this value. I think we should go back to expert appraisals. They, not real estate brokers, are the experts at setting the minimum value of real estate," Dolnák said.
According to Peter Macinský, director of the 1. Real real estate office, there are various factors to be taken into consideration when setting real estate prices: location, the condition of the property, what it was used for, why it is being sold or bought, the willingness of the buyer to negotiate, and the prices of similar properties nearby.
Macinský said he hoped the map would differentiate between properties based on their location, as well as define minimum and maximum price ranges, and thus become an effective tool for property pricing.
Martin Rímeš, the head of the loan administration department at Slovenská Sporiteľňa bank, pointed out that banks still do not know exactly how the price map will function, what search terms will work with it, or what the quality of the information provided will be.
"For these reasons, we currently cannot forecast whether the launch of such a project will be beneficial for the bank and its clients," he said.