Purchasing a Property - What are the Essentials & the Pitfalls !!

Most of the assumptions you have made about me below are misguided !!!!!!!!!

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€30,000 off an apartment advertised at €180,000 isn't much of a "special deal" these days! It has been much discussed on here that estate agents are suggesting "silly offers" can be made. My house was originally advertised at €149k, was "reduced for quick sale" to €129k. I made a silly offer, encouraged both by this forum and by the estate agent involved, and negotiated a further reduction greater than the one of which you boast, off a much cheaper property.

Asking prices are so stupidly high, that the company you are plugging can always get massive reductions. To then pay 20% of the €30k "saving" is a massive fee when a lawyer's fee is about €1,000. Harry - do your own negotiation, and pay a lawyer. I know John says a lawy isn't necessary, but in my personal opinion, for a first-time buyer, it's a small fee to pay and will include sorting your NIE (and queue-jumping at the comisaría!), helping set up a bank account, transferring the electric contract to you, and if they are in the same village/town (which is useful) lots of ongoing help!

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I didn't suggest that you don't use a lawyer. Of course my sister used a lawyer, but a lawyer doesn't tell you what might be a reasonable price for a property. I think the possible discount on a property is relative so you can't say what is or isn't a good discount - that only depends on what the real market price is. Of course you can get a much bigger discount if the original asking price is unrealistic. But to get 30k off an asking price that already seemed low (we're talking about a serious mature development on the Costa where prices have fallen, not Colmenar where prices have collapsed!) seemed like a good deal to me.

My apologies to Harry. I'd assumed by the original thread that he was someone who didn't know about Spain and was asking for advice. I naturally assumed he didn't speak Spanish and wouldn't know his way around the property market. Now he tells me I'm wrong about that assumption...

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If you're thinking of buying on the Costa del Sol I can out you in touch with a small business that can help you avoid the many problems related to purchasing a property in Spain

 

 

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Hello John,

                 I thought you were insinuating that I make some money out of suggesting the people that my sister used. I don't.I simply liked them, they seemed honest and my sister was happy with the deal they got for her and grateful for the one they warned her off.  And as I pointed out, I haven't given any contact details, phone numbers, website (I don't even know if they have one!), etc.

                 Surely the whole point of a website like this one is to pass on possibly useful information to fellow expatriates living or thinking of living in Spain? Apparently not......a genuine tip as to how Harry might get some help in avoiding the many pitfalls of buying in Spain is met by incredulity from other contributors and even Harry himself - who seems to not only speak Spanish but also know his way around the property market (which makes me wonder what the original thread is there for in the first place!)

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Actually, this thread seems to have gotten right off the point anyway. But I would say that you musn't rely on either Estate Agents (who act for the seller anyway and whose interest is selling you the property whether it's good or bad) or your lawyer. Even if your lawyer is honest and efficient he's only there to deal with purely legal matters. The following is a list of problems encountered by people I know who have bought over the last 10 years.....none of these things would have been picked up by their lawyer - and weren't mentioned by the estate agent! In the end there's no substitute for local knowledge.....or serious research.

• Friends who have had their car stolen 3 times by people 'escaping' from the nearby drug rehabilitation unit.
• Someone who can't get property insurance because the villa they bought once was burnt in a bush fire.
• An ex-work colleague who bought a fairly new property in an apartment block that is now in a complete state of disrepair as the developer went bust and the bank doesn't pay the community fees on the unsold properties. (Because of this he thinks it's now worth about 70k - he paid 250k for it!)
• Two people I know who bought a bit too close to the sewage works.....and also near to where several problematical gypsy families live!
• I also know someone who has a property in Pueblo Laguna, Almería where they were recently completely flooded out (and two people died). They then discovered that the area had been flooded 20 years ago in exactly the same manner.

Maybe the real answer to avoiding the pitfalls is to find somewhere you like and then rent for a year or two before you buy. That would give you some chance at least of picking up some of the potential problems like the ones I've mentioned above.

 

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"I do think you have a special interest here."

Hi John,

Thats pretty obvious & the more he rants on the more certain this becomes. Also share Tamara's comments below re suggested fee structure !!!!

He also sent me a PM plugging this "service".

Cheers,

Harry

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Look, everyone. The original thread from Harry gave the impression that he was thinking of buying in Spain but was concerned about the pitfalls. I merely mentioned that I knew of a company that help to avoid these pitfalls. Of course they charge a fee. But it's up to Harry to decide whether they are worth using or not.

All of a sudden the thread is all about whether I have an interest, presumably financial.........Pathetic!

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BEDE you have MADE some interesting points which I should have CONSIDERED when I was doing my own DUE DILIGENCE on my OWN SPANISH property purchase some 6 years ago, FORTUNATELY we are OK after all but that’s mainly because as a community we worked TOGETHER to transform what we had been LEFT by our so called BUILDER.

The problem is that people are very SCEPTICAL and they have a right to BE after ALL THAT has happened in SPAIN over the last 10 years.

Personally I am pleased to SEE any SMALL BUSINESS do well but not to the DETRIMENT of others.

Rod

 

 

This message was last edited by rod on 28/11/2012.

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Thanks, Rod. Personally I bought quite some time ago, using a lawyer that I knew well, long before I purchased. When you read this site and others it seems like the last 10 years or so have been a nightmare for many. I read recently that the Spanish real estate agents; lawyers; etc, backed by the Spanish government, are trying to regain the confidence of the foreign buyers with a new organisation that 'guarantees' the purchase - whatever that means? To me it seems like 'poacher turned gamekeeper' and short of guaranteeing something in writing with something or someone to claim against, then nothing has changed.

The problem is that lots of Brits, and other Northern Europeans, coming up to retirement would like to retire to Spain - but the risks are really high. I thought that the people that my sister engaged and, supposedly/hopefully take some of the worry out of buying, were onto a niche market. There are other people who act as buyers' agents (definitely one in Marbella that advertises in flight magazines)who I presume do something similar. But the idea of taking your fee from the money you can reduce the asking price by is quite clever - in that it seems 'painless.' They did seem to know what they were doing, but I suppose that's only compared to someone who doesn't - like my sister or myself?

Can you believe it?After all this, I'm supposedly promoting them, I asked my sister for their contact details and she can't find their card! Well, maybe marketing isn't their strong point.....i don't know the name of the company either. The people are called Sean, who is Irish, Silvia, who is Spanish, and somebody else, who is English...If I can find their details I'll send thenm to you by private message.

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Thanyou BEDE 

In my line of work as a FINANCIAL ADVISER clients ask me about INVESTING money and retirement planning AND what experience I have had with overseas property PURCHASE ,as an INVESTMENT buying in SPAIN has been a disaster for SOME BUT not all OF COURSE.

I have a number of CLIENTS who reside in SPAIN AND its advantageous to know these companies YOU MENTION exist i would URGE that people get PROFESSIONAL ADVICE in these matters.as it is very difficult to UNWIND if it goes HORRIBLY wrong

I have experienced GOOD and BAD with mY involvement with SPAIN but still love the PLACE and hope to RETIRE out there eventually

Rod

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Getting back to the original question, the essentials are to

- as others have said do your research. For example, be aware of the taxes you have to pay and that the Hacienda will look at what you paid at the Notary if it was a fair price for the house.

- best to use a lawyer - they can then prove to you that they have done the proper checks at the Land Registry, that everything is legal, all of the property is on the deeds, that there is an existing debt on the property that needs to be cleared etc

- make sure whether a lawyer or anyone else is doing it that all utilities contracts are transferred into your name (or out of your name if selling)

- that you are fully informed of your ongoing committments in terms of tax (many people dont realise about non resident tax), council tax (IBI) and community fees (find out what the community situation is)

- get a survey

Don´t be too concerned, many people buy property here without any problems. You just hear the bad stories but make sure that the legal work is done properly. Look into the reputation of your lawyer too.

 

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 I would recommend to rent until the crisis blows over.

just looking at this graph of regional debt where local beauracrats have been spending like drunken sailors - you can be assured of much higher taxes.

 

http://www.zerohedge.com/sites/default/files/images/user20289/imageroot/2012/11-2/20121019_spain.png

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When things are better the prices will go up... it is very difficult to judge the right time to buy but for anyone I would say only buy if you are looking at it long term.

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if you are looking at the long term then now is not the time to buy!

just a few points:

interest rate risk - can only go up! more than a 2% rise can seriously wipe some people out

political risk/taxes - highly indebted = property taxes can only go up!

political risk - government interference in the market preventing homes being repossessed/ banks carrying debt and property at fantasy valuations and not being forced to liquidate.

currency risk - Spain could be the country that breaks the proverbial back of the EU

property values - spain has had the biggest bubble in the western world and prices have still not returned to anything like normal - check the economist link below (it's a doozy!)- ie  you would be massively overpaying.

http://www.planbeconomics.com/wp-content/uploads/2010/08/House-price-index.jpg

fundamentals - S&P suggest a further 25% fall in prices which is confirmed by the price to rent and price to income ratio (see link) 

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/06/S%26P%20Spain%201_0.jpg

On the positive side: (i will try and add some balance ;-)  )

you get your foot on the property ladder.

 

GL with whatever you decide - each to his own. 

 

 

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ComaskeyProperty,

Are you a property agent ? Just curious - nothing wrong with that !

"further 25% fall in prices' - thats about right !!!

 

This message was last edited by Harry07 on 30/11/2012.

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 A good point John.

Spain is being turned into one big social housing experiment. 

A also read a report that the majority of housing lending by the Caja's was sub-prime lending to people who could not

normally afford to get a loan or who were trying to borrow more than they could afford.

Presumably these are the same people now complaining about having the house repossessed.

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That makes sense John.

On the other hand there are people like Georgia who has called the market an "absolute" buy. Clearly, all views should be respected & only time will tell !

Harry

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Harry07 I actually work for a legal firm which also has an Estate agent, so yes, CP is an Estate agent but I am not trying to market here.  I was writing from my point of view. I bought last year after 5 years of renting here. I decided that as I would be buying with a long term timescale in mind (20 years plus) I felt although things are bad, but I didnt want to rent someone else´s property anymore with the associated problems and I felt my property was a good buy. As you say everyone has views which should be respected, and although moncapitan lists excellent points a lot can happen in the future and although this is a world recession we generally go through these cycles. We´ll see first what happens with Greece and the bailouts. I am hopeful for Spain. I suppose I may be an optimist after all!  But whatever life goes on, and whether my house is worth a bit less or not for a few years (I do drop it will drop 25%), it is mine and will be there I hope for many many years, perhaps 20. I would not have bought if I had any thought of selling in the next 5 years. Perhaps even longer.

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