Property prices

Just been reading the new price comparison over on kyero and was wondering what is the general experience of buyers here, does the data tally up to real experiences? I'd heard some properties were selling for much less than 20% lower than the peak which their data indicates

In the Manilva area where I'm based, I would say prices are down by around 40-50%.  I've been keeping an eye on the Madrid market and I would say prices are only down by around 20% there. 

Prices have dropped a lot, and buyers have been scarce. The market has picked up a lot in the last month or so. So much so that we are running out of realistically priced properties for our clients!!

 I think prices on the over built coasts have taken a real battering but inland in the nicer areas they have managed to fair very well not losing too much so in the long run a good inland property should hold it's value in my opinion. 

Most new builds are significantly cheaper than they where at peak, however it depends how desperate the developer is to off-load!

For example, the few remaining units where we live are still more expensive than when we purchased in 2008, as the developer is not desperate to sell. Having said that, a bank repossessed unit sold recently for less than what we paid for our property, but that property is smaller and in a less desirable location down at the bottom end of the Urb. and with little or no views.

On the other hand, the new units at phase two of the Urb. where we purchased our apartment back in 2006, are less than when we purchased because the developer has gone bust and the banks that now own the units are desperate to off-load.

However the re-sales of units in phase one of the Urb. where our apartment is located, are more or less the same as when we purchased.

So prices depend not only on location and build quality, but also how desperate the vendor is to sell, therefore you cannot use a broad spectrum evaluation as to how much percentage properties have lost in value, as some have not, even in the area where I live.

I think TechnoApe is correct, that there are a number of factors that affect the price; the desire/need to sell quickly being the main one.

We bought in December, having looked in the area we like for around 3 years. We could have bought some real bargains, but there was always something not quite right, it's a very personal decision. If you are buying purely for commercial purposes then you will find bargains. If you want something a little special for yourselves, in the area you like, then it is a different matter. Desirable properties will always command a premium. So its really about what concessions you are prepared to make, and as the saying goes......location, location, location.

What is the best way to make sure that you aren't overpaying. Is it to get a bank valuation? Most properties have been on the market for a long time and I feel that the prices are still over-inflated due to the high commisions charged by the agents.

 One way is to get a firm that acts for you as the purchaser not the seller.  They will contact agents in your preferred area and put forward a portfolio of properties for you to look at.  They then take a cut of the estate agent fees so effectively it does not cost you anything.  They also check the legality of the property, ensure its structually sound and negotiate price on your behalf.

Hi Nigela,

Thanks for your reply. My concern is that this just adds another person to the chain, attracting even higher commisions. What I want to know is where I can find the fair value of a property before everybody adds on their slice.

Trendytots

You on the right track and part of the problem is there are many wanting a slice of the action. It's not unusual to have 3 agents at completion. In fact I had one recently involving four agents!  Agent in UK passed on lead to Spanish agent who passed on client to freelance agent who worked client and sourced property from another listing agent and no matter what anyone tells you buyer pays!!

The problem in Spain is there are many disguised agents or helping the seller out etc. It's hard to find a property where there is no agent unless you start walking and ringing se vende signs. Spanish buyers don't like dealing with agent especially English agents.

If you do enough research you can usually ascertain price for an area depending on property/location etc.

But at the same time I know one or two agents who are very good at sourcing discounted/distressed properties but these do tend to sell quickly - so by all means have a good agent on side.

I agree with all comments. Banks will overvalue their own properties to meet their own criteria for what percentage they can lend. They just want to transfer the mortgage for an empty apartment from their books to a personal mortgage. They will undervalue somebody elses property because they don't want to carry any risk.

Agents cannot generally be trusted. My opinion is, and that is all it is, is find an honest agent that is up front about the deal on each property. For this you need a recommendation. That's where the challenge starts. You need to networki n the area you want to buy in. Ask people on this forum. Different people will have different opinions, ity's for you to decide who you think you can trust. But...always ask them for the whole story, the decievers normally give themselves away at some stage.

Dave

PS. I know somebody in the Benalmadena area that I would recommend if of any use.

Hi Trendytots - I think you need to decide where you want to buy and then spend time looking at prices and comparing them all to find the real bargains.  We had a property which another agent had listed for 10,000€ more than us, so you do need to shop around.

Here in Orihuela Costa there are some very nice properties selling at less than half the price of 3-4 years ago.  The end price depends on lots of things - agents yes, but also what the seller can afford to drop the price to, and how desperate they are to sell.  The banks have been very slow to cut prices here but we sold a bank repo last week for 99,000€ which had originally been sold at 211,000€, so they seem to be beginning to cut their prices in line with individual sellers.  Having said that, I would not trust a bank valuation as their over-inflated valuations are what got a lot of people into massive negative equity in the first place!

The problem with Kyero and other price analysts is that it is very hard to find out what a property actually sells for here and asking prices are all over the place.  I sold a house a few weeks ago where the next door property , which was identical, was listed at more than 70,000€ more than ours.

Actually Fultond has hit the nail on the head with if only agents would tell the truth!

Agents seem hell bent on telling lies and the truth always comes out in the end.

How many times have I heard buyers say the agent says it's all legal/registered only to waste time and money to later find out that is not the case!

The good news is a lot of cowboys have gone out of business but we still have many disguised agents with websites but no fixed place of business.

The other problem you have in Spain is the question of who the agent represents - ie buyer or seller or both?

In Spain there are many agents who do not list properties and rely solely on the multi-listing systems to source properties.

This should mean such an agent being able to negotiate and get you the best deal because they have no relationship with owner/seller?

Of couse agents that list will usually try to sell one of their own properties first where they get 100% of the commission in preference to a multi-listing property whereby they will only get 50% of commission.

So worth asking if this is a property they have listed then you can negotiate also on commission .....

Agreed Faro. I have dealt with one of those agents with a great web site but no fixed place of business, who appeared to be very genuine, and was up front about the relationships with other agents. Some of them can work hard to find the right property at the right price throgh networking and endeavour. However saying that I didn't buy from him. I would prefer to be closer to the seller, as you do not know the scruples of the middle men.

When we finally bought, we found an agent that was also a property management company and had a close relationship to the sellers. We met the sellers, however the agent did the negotiating between both parties. The sellers were told what our maximum offer was, so I presume they were happy with the commission being charged. A good agent can keep both parties happy and still make a reasonable profit. The agent also did all the running around between the sellers, the lawyers, and us, to make sure the deal went through without hiccup.

 Hi Trendytots

Most agents charge a lot of commission in Spain - if you use a buying agent then they will agree to split the comission with the selling agent - it effectively costs you nothing but you get someone who is acting for you and will negotaite on your behalf - they have an idea of what the market is worth.  This is not the right thing for everybody but if you want a bargain and do not have the knowledge then i think it is an option you should consider.

I purchased a property off plan - I was told by the agent (a normal oneacting for the seller) that all bank guaranteesand licenses were in place - in the end I found out that the licenses wernt in place building work was stopped and has never restarted and at the moment it is  looking like i have lost 65,000 euros.  The site was a large siter with more than 2,000 buyers - many in the same boat as me.  If I had aused a buying agent they would have known the licenses wernt in place.  When I thought I was going to get my money back (3 years ago) I contacted a firm called Search and Survey and actually looked at properties with them.   I would recomend this to anyone buying in Spain - I think it is safer and not more expensive.

Nigela/Trendytots

Estate agents whether acting for buyer or seller will always lie. That's a proven fact!!!!

But what you do need is a good solicitor/lawyer who should do all types of searches before you hand over one penny. Don't even pay a 100% refundable reservation deposit - because you never will get it back!!!

I would suggest before you go any further you find a good solicitor/lawyer who will be ready to move when you find your dream property.

 The trouble is how do you know you have a good solicitor?  When I went to purchase my property there were a lot of solicitors acting for different people buying on the same site - they all got it wrong.  You would have thought with 2,000 buyers all using many different solicitors some would have got it right.  

Nigela

Good point!

1. Independent - too many solicitors/lawyers were introduced by estate agents and hence would not bite the hand that feeds them.

2. Experienced - Spanish lawyers are poorly trained and need to learn it all on the job. The property boom saw many firms expand quickly recruiting junior and inexperienced lawyers and then letting them loose on clients/files.

I think this is a question you would not ask in the UK?

I have been reading this thread with some interest. It seems to me that old habits die hard. I have previously warned people on this forum about the way agents, including UK agents, add huge amounts of commission on top of the prices being asked by the owners and then lie to their prospective buyers about what price is acceptable by the owner.

I really hoped that with the recession and downturn in Spanish sales, that Spain would take the opportunity to clean up its act and irradicate all the corruption and under-hand dealing, but it seems alas I was mistaken. It would appear that as buyers start coming back to the market, the agents are simply up to their old tricks. Nothing seems to have changed, Agents and solicitors in Spain still cannot be trusted. If you are going to buy in Spain, then just accept that somewhere along the line you are going to be ripped off - even if you are not aware of it. Shame.