WHAT IS A SPANISH PROPERTY REALY WORTH

We all see claims and reports now boasting better news about Spanish property prices and sales, but are they true?.

We also see all the estate agents websites etc, but are these prices fact or fiction?.

Is it true that most property for sale prices are based on what the owner paid and/or Tony’s house for sale next door.

There is a government website that now lists all properties sold through court proceedings.

Portal de Subastas de la Agencia Estatal Boletín Oficial del Estado

https://subastas.boe.es/index.php

Approximately 3,000 properties for sale at any moment in time with a listing period of 3 weeks. This equal 52,000 properties per annum.

Obviously I cannot check everyone of them, but I have not found a single property that has sold. All I can find is ‘’The auction has not received any bids.’’.

These are distressed properties that are below market value, if in fact there is such a thing as market value or is it just speculation value.

Generally a property is worth what buyers are prepared to pay. It is true that the situation in Spain still remains desperate for sellers. There is still a massive amount of property for sale with few serious buyers. Many Spaniards will not or cannot even pay the tax and legal fees involved thus making many properties worthless.

Yes many sellers are in trouble especially those who have to sell due to divorce loss of job etc and simply have to accept nothing or low offers or worse

It could be argued that there is absolutely no market value for any property in Spain because no market exists. All the buzz created by so called estate agents is purely fictitious on the hope they can make a quick buck out of a mug. I do not see how a property can be considered an investment when it is no longer an asset only a liability. With new holiday let legislation that market is becoming worthless. With the rising standing costs of rates, electric, water and taxes, who wants the liability anymore. You also loose 10% immediately with purchasing costs. The only situation that a property is an asset is when it has a true market value and that value is likely to rise in the future.

Some inputs here are close to the mark.

True a property is worth what a buyer offers, but it also depends on what the seller accepts, so its a two way transaction.

If it's not a sale (ie for a divorce or inheritance etc) the value is taken from comparable evidence of near properties, recently sold in an open market, of similar size and specification.

Potblack, you are right regarding estate agents. When I hear them telling clients that property is a good investment I cringe. Buying costs are plus 11% and selling costs about the same so where's the investment.

The new letting laws brought in after pressure from the powerful hotel groups has made letting out short term a minefield.

Property is moving but very slowly, Brexit will keep most Brits on the sidelines for the forseable future.

Brian

If it's not a sale (ie for a divorce or inheritance etc) the value is taken from comparable evidence of near properties, recently sold in an open market, of similar size and specification.

Where would you get that actual real EVIDENCE from. As far as I know there is no information or access to the Spanish Land Registry. There would also be a good chance that there is no ‘’recently sold’’ properties. That takes us back to the unreliable estate agents fantasy shop window and website.

Potblack. 

The comparable evidence starts with properties as close as possible to the subject property and works away from it.  The properties are as similar as possible and have the same local facilities and desirability as possible.   The accuracy is weighted by these attributes.

if the land registry in Spain is not set up to provide information of the sale transactions then the information from estate agents must be limited to properties (as described above) that have been sold in 'unfettered' transactions.  Relying on estate agents estimates is not acceptable in valuations.

RICS are a world wide organisation with registered valuers in all member countries, anyone reading this post must look up the professional status of its members and how they access accurate information, they are qualified and insured for their services (including in Spain). 

If you leave the housing market to estate agents you are accepting the fees they earn are the driver for the value.

I would be interested to know how Mr RICS access’s accurate information in Spain.

The point I am trying to make on this thread is that buyers should be very careful before buying any property in Spain at the moment. The prices you see in estate agents windows are from La La Land. Just made up from the desires of what the owner would like and encouraged by money driven estate agents.

However if a buyer pays, let’s say 40,000 euro for an apartment overlooking the marina and lives there quite happily for the next 20 years, the true worth at the time of purchase becomes irrelevant. But if that buyers’ circumstances change in the short term and they need to sell, they may find themselves with an unsalable worthless pup.  

The most appropriate attitude at the moment for buying a property in Spain is pay whatever amount you want, then write it off as worthless.

Potblack. 

If anyone requires the services of a valuation then approach RICS and ask.  

If someone buys an apartment for 40000 euros, that becomes the value on that day, because it's what someone asked and someone paid.   Estate agents will love that because they can use it to sell others as a valuation from their own books  

by using comparable evidence from other properties the true picture should emerge, if done through red book conditions and npby a suitably qualified person   

Im sorry to say that people just buying in the way you mention will distort the market in the way that suits a litter of pups! And more and more estate agents wanting to jump on the bandwagon   But of a vicious spiral eh?  

There is no Mr RICS - it's the royal institution of chartered surveyors.   They will have the professional knowledge in Spain  

I agree with potblack that there are insuffient sales to provide meaningful data. One needs a constant turn-over in the immediate vicinity, ideally similar properties in the same street. Equally important is the number of similar properties in the same street that have been on the market for, say, over a month, and have not sold.

The UK market is transparent. I have done two newbuilds - (by remote from Spain) - in the last 18 months (Cowbridge, Vale of Glam). The estate agent looked at them when finished and gave his estimate. This was based on the easily verifiable prices that twenty similar properties had fetched within about 500 metres, within the previous couple of months. Both houses sold in under a month for a token £5k under asking price. (His fee was 1% plus VAT). Now, that's a property market! Albeit a crazy bubble-inflated one). 

I agree that a property is only worth what someone is prepared to pay. Location always comes into the equation etc.

New builds seem to be popular again as they appear to be good spec for the money!

But let's say like me you intend to use your property many times a year for the next ten plus years (hopefully) then the overall cost does become a bargain, (based on say 100K) although this doesn't stop me going other places in the world.

hopefully it can be passed on to children/family to continue having fun in the sun.

Guy, your using a really easy example there sir, thats the easy bit.

The lender for any borrowing on those properties (all of them) will use a RICS valuation report to assess the market value and assess their risk, they lend against that report, not whats agreed with an agent or builder or buyer.

I said earlier if someone pays for it and someone accepts it, it becomes a value, but any other fettering such as borrowing, selling inside families, manipulation to achieve higher or lower figures, inheritances, forced sales through money raising or extra borrowing distort all these 'straightforward;' valuations.

Its more likely to stack up in the UK because it is more tramsparent, but its open to abuse with lots of cash buys (like there are in Spain I think?) for example.  I'm finding the 'help to buy' schemes for first time buyers has led to a bit of a gravy train of over valuation because the lending structure is misunderstood.  This may lead to a negative equity when the owner wants to buy the other share out.

The value of a property in the UK can't be established by the local agent or the next house on the street alone, its just part of it.  If there is a structural defect or a poor build quality that requires NHBC involvement, or planning is not fully approved, or the freehold or leasehold is not straightforward if, if, if.   

So I'm just passing on a bit of advice about my professional opinion of the housing market, its there to consider but every lender does use this method.

TRUE figures - in my area ( Mijas,c.d.sol.  )

The first villa just sold after EIGHT years - 140k.

Identical villa ( near neighbour ) sold pre crash - 350k. 

The 140k villa was on the market at 240k and they

accepted the 100k discount bid.  

TRUE figures - in my area ( Mijas,c.d.sol.  )

The first villa just sold after EIGHT years - 140k.

Identical villa ( near neighbour ) sold pre crash - 350k. 

The 140k villa was on the market at 240k and they

accepted the 100k discount bid.  

Brian wrote: "True a property is worth what a buyer offers, but it also depends on what the seller accepts, so its a two way transaction."

No - It is still only worth what a buyer is prepared to pay. Whether the seller accepts the offer is irrelevant. If the seller doesn't accept the offer, a new buyer will need to be found who is prepared to pay more or the buyer has to accept the fact that the property is not worth what he/she wants for it. In either case, it is still the buyer who determines the value.

Over the last 2 years 6 properties have sold in our complex, all for under 50% of the original purchasing price. 2007-8 was a very bad year to buy and mostly becouse of the coruption by the authorities in Spain.

Brian wrote: "True a property is worth what a buyer offers, but it also depends on what the seller accepts, so its a two way transaction."

No - It is still only worth what a buyer is prepared to pay. Whether the seller accepts the offer is irrelevant. If the seller doesn't accept the offer, a new buyer will need to be found who is prepared to pay more or the buyer has to accept the fact that the property is not worth what he/she wants for it. In either case, it is still the buyer who determines the value.

Well I really think you should read again what you wrote here.    If a seller doesn't accept an offer the property doesn't sell, in your example the first buyer walked away.  Markets change and a valuation can go down on a property sure, and if a seller needs to sell a property they are faced with 'accepting' a lower offer.  It still depends on if they accept or not, transactions are not made with guns to people's head are they?

if the owner paid too much in the first place then they will always be faced with accepting a lower offer from most people.  That's not a buyers market, it's likely because the first buyer paid too much or the market has changed and an offer reflects that.   Or of course the property was influenced by sun, sea, sangria and estate agents and market distortion   

I don't see why it's so difficult to understand!!!!!

Sadly this was not the case, the crooked builder and the Spanish authorities that fail the property industry need a kick in the pants. So many untruths and fiddles going on in 2007 and posibly still today have given Spains property market a very bad name. Spain is a wonderful Country. Sadly the crooks are hiding in many places which includes the property industry. )ver the last 10 years The Spanish Covernment have done very little to improve the situation. Just treat anyone who wishes to enjoy a life in Spain with contempt. We did all the research and still got it wrong.

I would not advise anyone to buy a property in Spain off plan .....the way the Spanish builders go about selling of plan can be classed as Pyramid selling this process is classed as illegal selling in the UK and many EU country's (look up Pyramid selling that's the Spanish Builder's).