Looking for the right property in spain

In Spain, property is everyone’s favourite subject of conversation and advice can be confusing. This week our guest contributor, a real estate agency in Marbella, gives a professional view to the buyer's problem. Christopher Clover writes from the perspective of Marbella, but his comments and advice make sensible reading wherever you are looking in Spain.

Over the last decade, Marbella has gained unprecedented acceptability from a more demanding and sophisticated market. But the buyer’s problem in finding the right property, negotiating for its purchase and closing the sale remains more difficult than in one’s own country: as in most resort areas everybody seems to be in the business, from the taxi driver to the hall porter in the hotel. Property is everyone’s favourite subject of conversation. And almost everyone has an opinion, many of which can easily confuse a potential buyer. Where to start?

Some people spend years looking for a property. Others are lucky enough to find a property and have the confidence to purchase on their first visit to Marbella. Yet others take their time and view properties during three or four trips, until they feel comfortable with their eventual decision.

What type of property are you looking for, and in which area? Many potential buyers think they are looking for one type of property and end up choosing something totally different. Unless you are very clear about what you want and are equally sure that it exists, look at various types of properties in different residential areas with an open mind. This exercise will also help you build up your knowledge of market values in the area, a major advantage in negotiating and insuring that you are getting fair market value for your money when you buy.

Choosing a reputable estate agent can save you time and there are many highly qualified agencies on the Costa del Sol, alongside more opportunistic and less qualified ones. Qualified agents are either APIs (Agentes de la Propiedad Inmobiliaria) or GIPES (Gestores Inmobiliarios), but recent legislation allows anyone(!) to open a real estate agency. It is best to look for an established, experienced agency with a good track record and good recommendations from non-interested parties. A recommendation from your lawyer or a long-time resident should point you in the right direction.

A good agent will really listen to you and interpret your requirements. He will share his market knowledge and experience with you and, once he has offered you properties from his direct portfolio, he will work with collaborating agencies until he finds the right properties to offer you. Key qualities to look for in a good agent are: experience, professionalism, product knowledge, sincerity, good communication, a friendly desire to help you in any way he can as well as in your property search and above all, not pushy!

If you do not feel comfortable with your agent you shouldn’t hesitate to move on. But when you find one who is easy to work with and understands what you are looking for, stay with that agent until you find the right property, or until you are satisfied that you have been offered all the properties that are available through that agency and its collaborating agencies. Sticking with your agent motivates him to pull out all the stops and come up with the right property - as well as saving you from having to tell the same story to every new sales agent you approach.

Compromise always pays dividends. It will be almost impossible to find exactly what you want, even if you build it yourself and if you do find it, don’t be sure your partner will agree 100% with your choice. Find a property that you are both happy with. (This usually means a compromise!)

Do you mind being a pioneer? If you want to buy in a new or not fully built-up area, remember that empty land plots will be built on one day and that you may find yourself in the middle of an ongoing construction site for many years to come.

Protect your investment. Make sure you have enough land around you to protect your privacy and views from a prospective building project.

Ensure the protection afforded by the law is given also to you. If you are buying property under construction, the developer is legally required to provide an insurance policy or bank guarantee to protect your payments in the event of non-completion. The developers must also provide proof of ownership, as well as planning permission and licenses, and since 2002, an insurance policy against building defects. A lawyer experienced in property transactions will anticipate these items.

Buy for your own use first and foremost. Unless you are absolutely sure that your children or grandchildren will visit you, it is generally a mistake to buy with their use as the main consideration. Time and again, people end up selling their enormous homes when their family doesn’t visit as often as envisaged. Purchase primarily for your own use, taste and objectives.

Be realistic in your analysis of the potential costs of modernising an older villa or apartment that has romantically taken your fancy: reforms and unexpected repairs can be expensive surprises.

Look at comparables. The best rule for determining the value of a property is to take real sales prices of comparable properties recently sold. To enable you to do this your agent must have very good market knowledge. It will also help to have seen enough properties yourself to get a basic knowledge of the market.

Think ahead to the day you sell. A property bought today is an important part of one's assets and will one day be resold. It is therefore advisable to take into account not just personal preferences but also general investment criteria, such as location, design factors, quality of finishes and facilities.

Your agent may not be as skilful in negotiating the price of your offer as he was in helping you find the property in the first place. Don’t hesitate to seek out the sales director or managing director of the agency to help you negotiate your purchase. Experienced estate agents are generally better at handling the commercial elements of a sale (this is their job) than lawyers are and will do their best to bring what are often opposing viewpoints (yours and the seller’s) together in harmony, as any good negotiator should do. Your lawyer can always be consulted during the negotiation to ensure that the offer meets his legal criteria, and become actively involved in more complicated negotiations.

In making an offer it is important to feel out the bottom price of a seller but at the same time qualify yourself as a serious bidder. Try to get all your negotiating points together at one time rather than negotiate piecemeal: this saves time and often, unpleasant surprises. Make your offer in writing if possible (of course, subject to contract), and include not only the price, but also the deposit amount, when you are prepared to pay it, when you are prepared to complete, what you understand to be included in the price (for example furniture and fittings if applicable), and an often neglected point, that all machinery equipment and installations should be in good working order.

Show the colour of your money to the seller. He will certainly take your offer more seriously if you have a healthy deposit ready for immediate action in a bank account in Spain. This is normally in the area of 10% of the purchase price. Many agents today also offer credit card facilities, wherein a small deposit from €5,000 to €25,000 can be taken to 'seal a deal' with a seller, and the deposit remains in the agent’s client account during the week to ten days it can take the lawyers to prepare the private contract.

Negotiate who will pay the Municipal plus valia tax (the increase of the index value of the land since it was last purchased to its present sale). By nature this is a local tax for the seller, but local custom is that this is often paid by the buyer, especially with apartments.

If you are looking to buy a plot of land and no topographical survey exists, it may be advisable to negotiate a Euro per square metre price subject to survey, to avoid any unpleasant surprises.

If your offer is too low, your strategy can boomerang and it may simply insult the seller, and you may not even get a response. It’s important to know how much property is really worth in the market, and to you. Find out if the seller has rejected other offers and what they were? What is the minimum offer that will engage his interest?

Good psychology dictates that you should leave room to improve an initial offer. However, if you believe your offer is realistic and perhaps have a second choice in mind, it can be a wise strategy to let the seller know that if he doesn’t accept your offer, you will be offering on another property before considering any counter offer from him.

When an offer is accepted, always get a lawyer to check the land registry (the last word on property ownership, where any liens and encumbrances will show up). He will prepare a private contract that will bind both parties to the deal, and eventually prepare the public deeds for signature in front of a Spanish Notary, when the balance of the purchase price is paid and vacant possession of the unencumbered property is granted, thereby completing the sale. There are excellent lawyers in Marbella, most speaking fluent English and other languages. The best way to find one is by personal recommendation, or from your agent.

Of course, many of the above comments are more intended for the purchase of resale properties, as new developments have a fixed price list and payment schedule, with none or very little room for negotiation, at least with respect to price. Sometimes some extras or modifications can be negotiated within the purchase price, depending on the policy of the developer.

7% transfer tax (I.T.P.) payable by the buyer for the purchase of any real estate (villas, flats, land, commercial premises, garages), provided the vendor is not a developer or normally trading in the business of resale properties.

8% (7% VAT and 1% stamp duty) for any villa, apartment or garage that is annexed to an apartment, where the vendor is a developer, promoter or habitual trader in these generally new properties.

17% (16% VAT and 1% stamp duty) for parcels of land, commercial premises, or garages not annexed to an apartment, where the vendor is a developer, promoter or habitual trader. This covers virtually all newly urbanised land parcels and newly built commercial premises, and includes resale properties when the vendor falls into one of the above categories.

Notary and Property Registry fees should vary between €1,200 and €2,500 each depending on the value and complexity of the property.

The plus valía tax (described above) can be as little as a few hundred euros or as much as many thousands of euros on a property with a lot of land that hasn't changed hands in many years. This tax must be quantified and may be negotiated with the seller, although it is often the custom that the tax is passed to the buyer in the case of apartment sales.

In summary, the total official costs involved in purchasing built residential property should be less than 8% for resale properties, or 8½ - 9% if VAT is paid (new properties), plus the Plus Valía tax if applicable. Lawyer's fees are in the order of 1% of the selling price, more or less, depending on the lawyer. The seller pays agent’s fees unless otherwise agreed.

Finding and buying a property in Spain can be as simple, or as complicated a procedure as one wants to make of it. The old rule of Caveat Emptor, (Let the Buyer Beware!) always holds true. And a final tip: listen to your intuition! It is often one's best guide!

Many thanks to our guest contributor Christopher Clover, founder, owner and managing director of Panorama,  credited as Marbella's longest established real estate agency.