1.An overview of buying in Spain
The climate and lifestyle in Spain coupled with the property boom in the UK in the late nineties and early 2000?s has meant people are considering a second home in Spain ? or permanently moving here to start a new life. Whatever the reasons there appears to be 2 types of buyers.
1.Those that prepare and research everything
2.Those that have little time or inclination for preparation
Many buyers have seen property exhibitions run by large companies who appear to offer the world. They sign up for inspection trips believing that they will see a few properties and then have time to look around other areas and other properties.
However the reality of these types of trips is that there is little time to do anything except look at houses the developers choose to show you ? often in areas which the buyer doesn?t really wish to move to.
Often buyers believe the TV programmes that promulgate British TV ? such as ?A place in the Sun? - that for a few thousand pounds one can buy their dream Villa in Spain ? this just isn?t the case anymore. Most of these programmes were produced 2 ? 3 years ago and give buyers unrealistic expectations. Because of the influx of foreign buyers, prices in most areas of Spain have shot up considerably ? on average around 20% per annum over the past 5 years but near the Costas a lot more. Consequently the number of agencies selling properties has grown proportionately.
People on the whole ? for whatever reason - tend to visit Spain with little or no preparation. Busy lifestyles lead to limited time. So many people will just hop on a plane and hope for the best ? some are lucky others spend their trip searching fruitlessly, visiting estate agents offices, seeing properties that neither meet their needs nor their purpose for buying in Spain.
Many agents have a philosophy of once you are in their office don?t let you go until you agree to visit something. They spend little, if any, time finding your real requirements ? to them all that matters is the amount of bedrooms, the area and the price ? but to you the buyer there are other more subtle factors, such as schools, hospitals and a feel for the area, which no amount of words can put across.
Estate Agents operate by taking on a property from a client. They differ from the UK in that the seller determines the price they wish to receive and the agency adds on their fees. In most cases these fees vary from between 3% and 10%. However some unscrupulous agencies will charge upwards of 25% and more if they feel they can get away with it.
The net result of all this is that you are visiting people who have the sellers interests at heart, will pressure sell you into buying something you don?t necessarily want, will happily trail you around countless number of houses ? usually just to give the sellers the impression they are doing their job. Thus because buyers are stretched for time they will accept anything just to get on the ladder, and end up with the wrong property in the wrong area ? and possibly return to the UK after a year or so because they don?t like the lifestyle.
And worse still they probably paid well over the odds for their property because they don?t speak Spanish and went to an English agent ? which means they are paying usually 10%+ on top of what the owner wants ? in some cases much more. So when they try to sell later ? they cannot without losing money.
2.The results
So the net result of not preparing and just going to an estate agents is
?Using agencies with other peoples interests at heart
?Wasted time as agents show buyers round properties not meeting criteria
?Wasted trip due to fruitless search (and the cost involved in arranging another trip)
?Accepting the wrong property because ?time is running out? and the need to get on the ladder
?Paying over the odds for the property ? due to high agents fees and....
?Not being able to negotiate a good discount because it is not in the agents interests to do so
?Eventually having to either go home or sell on at a loss because of over inflated prices
?Frustration at the whole process of buying in Spain
?A general feeling that no-one is listening to their needs
?An Increase in costs due to price rises in the meantime
3.The Solution
The solution is very simple. Instead of using someone who has the sellers interests at heart use some one with YOUR interests at heart ? a Buyers agent. If you only have a limited period of time then it is much better to do a little preparation and get someone else to do your legwork for you. Then when you do visit you will see a handful of properties ? all of which you will have a fairly good chance of buying because they meet with your criteria.
4.What does a Buyers agent do
?Establish your criteria
?Search for property and view each one then Select properties for you to view
?Process the formalities - take you to the Police station to arrange your NIE number (crucial before buying a house) and arrange a Spanish Bank account
?Guide you through the purchase process, including the notaries and translation service where
?required.
?Where needed provide additional services such as finding builders to do work, interior designers buying a car etc.
4.1.Establishing your criteria
Firstly they should discuss with you your requirements on the phone, email or face to face.
They should endeavour to establish important criteria such as
1.Area and location
2.Reason for purchasing
3.Maximum budget
4.Other requirements - Type of property, State of property, Minimum # of Bedrooms, What kind of work you are willing to do, What you are willing to accept, What you are NOT willing to accept, How much land you require and for what reason (where appropriate) 4.1.1.Area
Probably the most important criteria is the area. Once you have established an area you want to live in then the rest is secondary. It is generally easy to find specific types of property in an area once the area has been decided upon ? providing you are realisitic in your requirements (there?s not many places where you can find a 3 bed villa with a pool for the price of a sandwich and a coffee from Starbucks).
One of the most common mistakes buyers make is to try to buy a property before establishing an area. Sometimes this works ok but most times it is a disaster, leading to disappointment and wasted time, as well as additional expense. Some research can be done beforehand, but the buyers agent can help to establish an area based on your requirements. For example do you speak Spanish? No then you need a predominantly English area unless you are willing to learn. Do both partners drive ? if not then what happens if you buy a secluded property when the non driving partner wants to go visit people and the driving partner isn?t around ? they will drive you straight back to the UK. Need to work, then going to a sparsely populace village could be commercial suicide. These are factors that are more than just the price of the house and how many bedrooms it has.
4.1.2.Reason for purchasing a property
The reason for buying the property is almost as important as the area. For example if you want a property for investment purposes it is no point in buying inland as you will get very few rentals ? in spite of what agencies may tell you. There is only one constant with rental properties ? the beach gets the highest premium. You may well be able to increase the rental income by adding a pool, but most holidaymakers want to be within striking distance of the beach.
Or you may be buying a holiday home for occasional use and rental, a place to live semi permanently or a permanent residence. All of these factors need to be clarified as they all have a bearing on the area and location within the area.
For example older people want to be close to Hospitals and Medical care, the towns and where one partner only drives within walking distance of amenities so if anything happens to the non driver the other can cope without upheaval.
Young families need to be close to schools and amenities, clubs and other societies to enable comfortable living. Do you want to live in the country but close to a town, or in an urbanisation where you have neighbours close to hand.
The rest of the requirements are self explanatory. The buyers agent will try and determine your minimum requirements so they can discard any properties that don?t meet them ? after all there is little point in visiting a stunning property if you need 3 beds and it only has 2 ? this would compromise your living and in time would mean you have to move on.
4.1.3.Maximum Budget
Obviously very important. But you have to remember a number of things. First of all the advertised price isn?t the price you pay. You must add another 10% for legal fees etc on the purchase price of the property or 12% if you need a mortgage. You pay 10% of the declared value. It is customary in Spain to only declare a percentage of the purchase price. This is known as BLACK and WHITE Money. Ie the black money is the undeclared amount.
Whilst completely illegal it still goes on and is dependent upon YOU as a buyer whether this is something you wish to do. DO NOT be pressurised into doing this it is fraud and all you are doing is leaving yourself open to paying someone else?s tax bill.
You must also take into consideration exchange rates. You may have had ?200,000 last week when the ? was high against the Euro but this week it may have gone down again. Allow for this fluctuation by setting your budget a bit lower or by fixing the rate beforehand. Most agents will have a relationship with an exchange company and can guide you here.
What about furniture. Will you bring your own with you, or get some whilst over here. Most Spanish people tend to leave their furniture in the house ? lock stock and barrel. You need to agree with the sellers what?s being left and make sure you get it in writing before you sign contracts. If you are going to buy when you are over you need to allow around 10% of the purchase price for furniture. 4.1.4.Other requirements
All your other requirements are taken into consideration too. A buyers agent will only provide you with properties that meet your minimum requirements, taking into account price and area. Where they believe these requirements to be unrealistic, they should guide you as to acceptable solutions.
By working with you and advising you honestly they should ensure you get the results you want .
4.2.Search for property
Once they have established your criteria they will search for properties in the area you have indicated using your criteria. Typically this can take up to 3 weeks depending on the area and your requirements (obviously the more flexible with criteria you are the more matches you will get the quicker it will be). A good buyers agent will personally visit every property before they send details to you.
They will then send you a list of about 5 ? 10 properties for you to look at. From this you will agree a list of properties you wish to see and create an agenda for your visit.
Experience suggests that anything more than half a dozen properties will overload you and will not add anything to your overall choice. By limiting properties to your selected criteria they will ensure that you get your perfect property very quickly. Think of it as a dating service for property. It usually works because most people buy the first or second home they see. 4.3.Process the formalities
There are two very important things you must do before you buy a property in Spain. The first is go to the police station and obtain a NIE number (Numero Identificaci?n Extranjeros ? A foreigners Identification Number). This allows the authorities to know who owns property in their area and is essential for buying a home or any other large purchase (such as a car).
This is a mere formality, for which you only require a copy of your passport, and a signed application form. You will require this identification number for non-nationals should you wish to open a bank account in Spain
Next you need to have a Spanish Bank account. Although not entirely essential you need to pay bills regularly (in Spain Bills are paid every two months rather than quarterly). Missing a bill can mean disconnection from the service and an embargo put on the property (similar to a CCJ in the UK). Most Bills are paid by Direct Debit ? so it makes sense to have a Spanish Bank account. Also if you have a mortgage then you will need to have a Spanish Bank account.
After this you are free to buy your property.
4.4.Guide you through the buying process
Once you have chosen a property you should ensure that pre-contract enquiries and searches are carried out to protect your best interests. Evidently, the first step is to introduce you to a solicitor who specialises in drawing conveyances. Your decision to employ a lawyer will provide you with peace of mind and save you considerable expense in the long run.
Once you have chosen a lawyer, the conveyancing process commences with the pre-contract enquiries and searches. These procedures are the same for newly-built and second-hand dwellings.
Second-hand homes: It is usual to sign an option contract, and pay 10% of the purchase price, from which any amount you may have previously paid as a booking deposit must be deducted. Prior to paying over a deposit you shuld carry out pre purchase searches (or your solicitor should)
The balance is paid, in the majority of cases, within 30 to 60 days. On payment of the balance of the purchase price, the vendor is bound to sign the Deed of Conveyance transferring the property to you, or to the person or company you designate.
It should be remembered that where the vendor is a non-resident you must retain 5% of the purchase price stated in the Deed of Conveyance. This 5% must be lodged with the Spanish Inland Revenue as a payment on account by the vendor in respect of his eventual capital gains liability generated as a result of the sale. Your agent should assist you with this if there is no bank mortgage involved (usually the banks retain this on your behalf and pass it to the hacienda directly)
Newly-built homes: In most cases the developer will offer a standard contract of sale, requiring an initial down-payment and a number of interim or staged payments, which are generally linked to progress of construction and completed work stages. In most cases, the final payment is made when the Licence of first occupation is granted.
Likewise, if the developer has financed the development through a mortgage loan, the purchaser may assume the mortgage instead of making the final payment. Should you not wish to assume the mortgage, the developer must discharge the mortgage, and will be liable for any expenses or outlay entailed in the discharge of mortgage. Be careful to ensure he does not try and pass this amount to you. You will need to ensure this is in your contract
Any interim payments you may make to the developer while construction is in progress must be guaranteed by a performance bond or insurance policy called a bank guarantee
4.5.Help you with other services
Seldom does your purchase finish at the notaries office. Typically most agents will help you a little afterwards with things such as transferring bills into your name etc. However for most this is where the transaction ends.
But what about when you need a builder to turn your plot into your dream home, or to renovate your house, or even buy a new car and transfer everything into your name. This can prove as stressful as buying a house.
As your buyers agent they should be happy to either put you in contact with local people who they know to be good, or they can manage your project for you and ensure that the work gets done in accordance with your wishes ? very important if you are not here to oversee everything yourself.
Finally there may be times when you just need to call someone to talk over a problem or ? in some cases ? someone to speak Spanish on your behalf. It has been known for customers to call and ask if we can speak to an assistant at a shop in order to get the message across to them. We are more than happy to do so ? and it doesn?t matter how long after you bought your property ? our service doesn?t stop when you buy a property ? after all you may be our neighbour and a client again one day in the future.
5.The benefits of using a buyers agent
There are many benefits of using a buyers agent. Firstly and most importantly you have someone batting for your side. They will negotiate on your behalf and because they find your property via other means than using an agent then you can be assured of getting the best possible deal. In short then the benefits are
1.Someone with your interests at heart
2.Vested interest in getting you your property ? therefore will listen to your requirements
3.Local knowledge of the areas you wish to live in
4.Able to bypass agents or at least negotiate on your behalf
5.Save you frustration of endless visits to inappropriate properties
6.Save you time allowing you to get on with purchasing your home
7.Could save you substantial amounts of money (upto 10-30% of the purchase price)
8.Will ease you into the process of buying in Spain
If you have any comments on the subject matter or want any advice then please feel free to contact me. vbtudor@spanishproperty-direct.com and for more articles about buying in Spain look at the website http://www.spanishproperty-direct.co.uk If you would like a free copy of the e-book - An Insider?s Secret Guide To Buying A Property In Spain then drop me an email and I will send you a copy by return.