Another Nail in the Spanish Property Coffin

 Prices have fallen by up to 70% in Spain. It is possible to buy properties from apartments to villas for incredibily low prices. All you require is good relations with the banks and be willing to play the Spanish game. When some one walks away from their mortgage if the mortgage was for under 50% of the original cost the banks will let these properties go for 70 -80% of the outstanding debt. Obviuosly these properties are in great demand and the banks are eager to offload as it does not hit there balance sheet too badly. Now the over valued properties that they gave 100% or even 130% mortgages on are a different kettle of fish. The most they are ever going to get is 35 - 40% of the debt back from a potential buyer. This is disastrous for their balance sheets and they would be bankrupt in no time at all. So these properties will not sell for a very long time unless the Government steps in and creates a toxic fund (i.e. it buys all the banks bad loans), good for the bank but bad for the tax payers as they are left carrying the can of shit while the banks go on ripping the tax payers off and awarding themselves huge salaries, pensions and bonuses.

There are real bargains at 70% of 2007 prices you just have to know the right people. It's not what you know it's who you know.

Hi

Do you know who they are?

regards

 You will be cried down by those not wanting to face reality, but I think you are right.  You can get good property for 30% of what it was going for.  Of course, 30% is still a lot for something which was massively over valued at the time at 500000 or so - but plenty of bargains.  And good value property.  The Costas are already rock bottom, and I am not sure they fall further though average price across Spain might go down again.

 We found that you dont need to know anyone.  Just show an interest and make an offer!!!  Speaking Spanish increases your options.

Hi

I'm finding that reps just say "they won't take offers" , more so when the banks are the owners. lets say a property is 50k and is bank owned and to cover myself for possible future depreciation I offer 38k and try and get a deal to boot, how do I go about it, without the rep/agent.

I do want a property in Spain and will buy, but don't want to end up paying over the odds!

regards

 We used multipe agents and nearly all indicated that owners would take a big hit over the asking price where this was appropriate.   The bank repos we saw were also open to offers, and if you speak Spanish you can deal directly with the bank - we did not follow up on any offers so cant speak for that.  We did have joy with individual builders (not talking about big players building masses of property) who have been left with what was expensive property on their hands and they are now prepared to take a big hit - and will often throw in extras as well.  Some of these properties are lovely - but maybe a bit big for holiday purposes.

It is impossible to generalise about the market here at the moment.  There are banks who have some properties on special offer who will not take one cent less, but the same bank may also have stock where they will accept massive discounts.  A private buyer will only know by making an offer and see what they say.  We had bank properties at around 30% of the original asking price but these tend to sell out very quickly.

It is possible to deal with the banks direct and some are easier to deal with than others - some are very difficult to work with!  It is up to the customer to decide if the services of an agent are worthwhile or not but remember that an agent will be able to show a wider range of properties from different banks and construction companies, as well as from private sellers.

Regarding private sellers, we find that only people who have to sell are putting their properties on the market just now, for obvious reasons.  In our agency we try to get sellers to be realistic about their asking price and that means there is often very little room for negotiation.  On the other hand, there are some agents who will put 20% onto the price, so they can then take low offers.  The best way to check if the price is artificially inflated to allow for low offers is to shop around and see what other similar properties are going for.

There are some amazing bargains around and the best way to find them is to get to know your area and do your homework.

 Woodbug - you have hit the nail on the head. No names no packdrill, but here is how it works in property markets the world over: (This relates to Spain). Investors use whatever means necessary to get inside the system, they are only interested in good properties in very good areas, so this does not apply to properties in Marina Baja on Costa Blanca, Almeria or Northern Costa del Sol, like all areas in the world there are very few good areas for long term investment. People, do not get your nickers in a twist but this is fact these areas where only developed by local goverments and speculators to take easy money of foreigners. If you bought in the last 13 years you will not get your money back with a reasonable return in your lifetime, get over it and get on with your life. "Private Capital" is picking up properties in some areas of the Northern Costa Blanca and Southern Costa del Sol through there connections at prices you would not believe. They are able to do this as they pay well for the priveledge for the correct information at the right time. The information keeps coming as they are willing to buy absolutely every good bargain as long as the price is right and it meets there criteria. This is why you lot never get the real low prices on villa, fincas building plots etc. All you get is the crap that the "Real Money" does not want. It does not matter how cheap you, your friend or mother Theresa bought their property for yesterday, if it was not in the best location in the very few saught after areas, built to a proper standards (97% of spanish building is substandard), then they have still payed to much! Why does the real money buy these properties? I hear you ask. Simples, they are just such good value that most are already sold on before the ink is dry for hugh profit with no risk what-so-ever within a month or so, the ones that do not sell are rented out short term and are returning upto 40% per annum. 

MOST WILL NOT LIKE TO HEAR THIS, BUT THE WORLD IS NOT A FAIR PLACE,  those of you looking for that special bargain, just be happy for what you can find, you will never get anywhere near the best possible price. Just be happy in the fact that you have done your best and do not think about the few who are still making great easy money in the world property markets. 

Dear All,

I wonder what happened to the lady member who used to auction properties, if memory serves her last post indicated frustration at sellers not wanting to be realistic on prices.

Also what have valuations become? the valuation companies used to just measure up and value as an insurers rebuild, what do they do now?

Regards

Norman

 There are villas for sale but nearly all inland.   Have a look on Kyero.  Also your average  built for northern Europeans villa even if with 3 beds and 2 baths is generally only about 120 sq mt - so a tad small.  

People are very naive when it comes to any investing.  What you have to always realise is that by the time an investment is made 'known' to us lesser mortals - the heady days have already gone.  Same with the .com boom and emerging markets etc etc etc.  Crumbs from the rich mans table - and like I love Javea says - get over it.   It is what capitalism is and aways will be.  If you do well out of property that is good, but in reality, for most, property should be to live in - or use for a holiday for those who can actually afford it.  

IF you have the spare cash - and I really mean spare cash - it is always good to aquire property, and as long it is in a good place (forget about the build because the plot can be valuable) you will not go wrong in the very long term i.e. you are investing for your children and not yourself.

97% of spanish building is substandard..........goodness there's a statistic that would concern many prospective purchasers (not speculators however).

 ....and almost certainly not true.     

Obviuosly the ones with real monetary clout are only interested in the top 0.25% of housing stock world wide. We are not intersted in the "average joe's" apartment or 3 bed villa. Houses in Belgravia, Wentworth, St.Georges Hill etc. have all returned excellent growth in the recession. The same goes for good areas in any country. The top 1% have never been richer, live with it, they are always looking for investments in the right place and they certainly are not visiting agents and banks on the Costas, they do not have to. There are specialists here who do all the work for them.

Obviuosly the ones with real monetary clout are only interested in the top 0.25% of housing stock world wide. We are not intersted in the "average joe's" apartment or 3 bed villa. Houses in Belgravia, Wentworth, St.Georges Hill etc. have all returned excellent growth in the recession. The same goes for good areas in any country. The top 1% have never been richer, live with it, they are always looking for investments in the right place and they certainly are not visiting agents and banks on the Costas, they do not have to. There are specialists here who do all the work for them.

And are the top 1% going to soak up the excess of property..... I think not, so where does this leave the Spanish property glut?

I'm with Woodbug on this one "Until sanity, transparency and honesty prevail to say nothing of greed, along with a change or at least a clear national directive of property and construction laws, along with a clamp-down on graft - nothing is going to alter the parlous position we are in."

 Where did I say that the 1% where going to soak up anything, all that is happening is that they are playing the system they control at the expense of everyone else. Look around you, the world is in crisis but the rich are still getting richer at the plebs expense. This is how it has always been and only a rebellion by the plebicite will have a chance of changing it. Get use to being tossed an occasional scrap from the top table to keep you happy.

Sanity, transparency and honesty, you are pulling my leg. The Western world is a dispicable ponsi scheme run on madness, hidden agendas and total dishonesty. We are told the banks are too big to fail and they must be bailed out with our, our childrens and our childrens money. All the stuff you read in the papers about the banks ubderhand deals are just the tip of the iceberg. The top 1% are going nowhere the rest of you are going into slavery.

The spanish property glut is with us for the forseeable future and beyond. Most of the worthless coastal areas where developed by greedy speculators, developed because the land was cheap. Local and regional authorities whose administrators (both elected and civil servants) on all levels where both directors of the banks (mainly cajas) and the development companies or on their payroll  took a slice of all your hard earned cash. 

When I came to Spain 26 years ago, the mark-up on speculative property was between 25 - 37%, this was a great return. Before I retired 4 ago, the return was 150 - 210%. The economics is simple most all paid well over the odds for your properties, now we have excess supply and virtually no demand - go figure!

 Last month I went into the insurance broker in my village, to insure the house I'd just bought.  Of course his first question was "How much is it worth?"   I told him that nobody could answer that question at the moment - it could be worth anything from a quarter of what I paid for it, up to quadruple.  All I could tell him is what I paid.

But it's not just bricks and mortar, with a simple rebuild value - it's a home.  Priceless.

You are well-informed, I _Love_Javea.  I suspect you read the same sites/ books and watch the same News Programmes as we do! Having learnt how the world REALLY works, together with the fact that very few people on earth are interested in finding out or trying to change things, what do we do?  I spent a long time feeling very depressed before I accepted there was little I could do and I may as well get on and enjoy the life I have.  What did you decide?  The same?  Is life as one of the 99% easier to bare in Spain than it is in the UK? I'm guessing that you have your family here with you, judging by what you've posted on another thread.  And that's what it's all about for most of us...