Wednesday, September 13, 2023

Appraisal of a Residence in Cuba

In the almost 14 years of writing this blog, my practice has shifted from large international projects financed by big lenders to smaller properties involved in estates and divorces. It’s often the case that the bereaved family or the spouse does not even know what Dad’s property or the other spouse’s property in the Old Country looks like, but they need a valuation, and don’t want to spend the money for me to make the trip there. This home in Cienfuegos, Cuba, is such an example. I sometimes have to turn to remote valuation methods instead. 

Google Earth sometimes works wonders but is not as complete or even available in some countries, such as Iran, Morocco or Cuba. In this instance I hired an English-speaking tour guide to visit the address and discreetly take photographs. It worked well because Cienfuegos is a tourist town on Cuba’s south coast. 

Another complicating factor was the need for a retrospective appraisal report for a date 3 years ago in a country which has no public database available and only a fledgling home sales industry. In situations like these I like to turn to Internet archives and hope to find real estate listings relatively close to the date of value. 

In this case, I was able to get my comparable listings from the web site archives within a month of the date of value. Homes for sale at that time were listed in the Cuban Convertible Peso currency. From 1994 to the end of 2021, Cuba had a special currency, “Convertible Peso”, pegged to the U.S. dollar. The regular Cuban Peso is a completely different currency and is much less in value. The advantage of this pegged currency is that one is likely to be looking at the same value as if the home is sold in US dollars. 

Aerial photos were also helpful in comparing the locational differences of the comparables. Two larger homes in the Historic District were both for sale for about 714 CUCs per square meter, whereas a smaller home inland in La Gloria neighborhood was listed for only 500 CUCs per square meter. In coastal areas property values lessen as one travels inland, and one advantage of being closer to the water for many Cuban citizens is the refreshing sea breezes that can cool down the heat in homes without air conditioning. The Historic District, on the other hand, was judged to be slightly superior to the subject neighborhood.

The lesson learned here is that there are an increasing number of Internet tools available to help with remote valuation – Google Earth, Google Translate, Internet archives, real estate listings, ads from tour guides, English teachers, real estate salespeople, etc.