sareb property repossessions

What You Need To Know About Buying Repossessed Properties In Spain

While it may be unfortunate for some, there are thousands of repossessed homes available in Spain despite a turn around in the market.

Many people like the thought of buying a repossessed home as an attractive option because the price is usually going to be much lower than a regular property.

The Outlook On Repossessions

The Spanish Registry released some of the latest figures, in 2017 there were 8758 repossessions on the market, in the second quarter that number decreased to 6744.

Compared to the second quarter of 2016, there was an overall decrease in repossessions numbering close to -41.20%.

During the year of 2017, the following regions of Spain had the highest number of repossessions:

  • Valencia
  • Andalucía
  • Madrid
  • Catalonia

Pros and Cons Of Purchasing Repossessed Property In Spain

One of the main advantages of purchasing a repossessed property in Spain from the bank is the ability to secure a really low interest rate and a chance of financing at 10%

However, one should keep in mind that when purchasing from a bank, there is a good chance the property will not be in good condition and it may have a lot of debt behind it.

Top tip: do your research and due diligence before purchasing any property or choose to have an experienced lawyer help you.

Many property owners who are repossessed tend to leave their homes in a very bad state.

In many cases, the electrical cables have been cut, windows have been smashed, and entire bathroom fittings and plumbing have been ripped out!

Repossessed homes are often sold with outstanding debts, however, many banks will still try to get the most out of a property that is repossessed.

There are some banks in Spain that are more flexible in terms of bids and pricing, however, there are also banks that tend to keep a more stable price for their portfolio.

 

sareb

 

In addition, there are banks that make policy changes in order to sell off their portfolio at certain times. An example of this scenario comes from the Banco Popular by Banco Santander during the month of June 2017, in which they planned to sell off 30 billion euros of property with Blackstone.

When a crisis hits, it is much easier to bargain with a bank than it is today. Today, it is going to depend heavily on the condition of the bank and how ready they are to get rid of a specific property.

It is also important to regard the specific desire and demand for the property. If there are several parties interested in the property then you are not going to have as much leverage to bargain.

The vast majority of Spanish banks use real estate agencies and third parties to show and market the properties. Usually, the bank will pay the agent a fixed price around 2% to help find the right buyer for the property. Generally, an agent will receive a much lower commission percentage as compared to selling traditional property in Spain.

Property is seized by the bank due to nonpayment of the mortgage by the owner. For non-payment cases, the bank will typically require the debtor to cover all the expenses that have been incurred during the procedure due to non-payments.

Bank managers have full access to all individuals who are falling behind on their payments as well as which properties are about to become repossessed and seized.

If you plan to purchase a repossessed home in Spain, it’s important that you not only have a Spanish bank account, but also good working relationship with the employees and manager of the bank you use.

While employees and managers have direct contact with headquarters when it comes to submitting bids, a real estate agent may submit a bid as well

In many cases, the bank and the agent do not know the full extent of the property, so you’ll need to do  all of the property and legal checks.

In fact, you might want to hire an inspector to check for any unseen damage before you purchase a property.

Another thing to keep in mind is the fact that not all repossessed properties are going to be available online. Talk directly with your branch to see what offers are available and have them alert you when new properties come on the market.

Where To Find Repossessed Spanish Properties Online

In many cases, you can find repossessed Spanish properties directly on the bank’s website.

Another option is to check out the Spanish bad bank also known as SAREB, which compiles groups of listings from the above websites.

In addition to the resources above, there is also an official auction website in Spain, although it is only available in the Spanish language.

You can find the site under the name of “Portal de subastas BOE“.

 

Subastas navigation

 

 

To search for potential properties,  go to the advanced setting page which can be found at https://subastas.boe.es/subastas_ava.php, and then seek out the province you desire by clicking on “inmuebles”.

 

5 Common Mistakes Made by Home Buyers

Looking for property online without any clear plan

There are many great properties in Tenerife and there are many options to choose from. Most of the apartments and houses for sale on the estate agent’s website look so fabulous that you can forget what you are really looking for. This may make you regret later. So before you start your online search, know the following:

-Maximum price that you are required to pay for the property
-Size of area you want to live and specific requirements of the location
-Number of rooms that you need
-Whether or not you really need a communal pool, balcony/terrace or a garage

There are some items that you can compromise on but having a clear list of specific items you really need will help you avoid being swayed by attractive pictures or clever descriptions. Having a list of requirements when looking for a house or apartment to buy will help you save money, time and visits to houses that don’t meet your needs.

Not considering added purchasing fees

Just like buying property in any other place, buying a property in Tenerife entails some costs over and above its listed price. Considering things such as the mortgage and additional expenses will help you know the total cost in advance so that you may have money set aside to pay the notary, pay taxes and meet the expense of the added value tax ( in case it is a part of the purchase agreement). Added value tax is believed to be borne by the seller by law but in reality, it is borne by the buyer of a property.

Not considering the state of the property before buying it

Some of the properties are offered at bargain prices because they are in a state of disrepair and require the buyer to do some renovation before moving in. Those people who have never renovated a house or apartment may underestimate how much time and money is required to get a house or apartment back to a habitable state.

Despite the fact that there are bargains to be had, it’s good to ensure that you seek professional estimates of the building work needed and look for appropriate discounts accordingly.

Buying in haste

The current economy has made many sellers want to make a buyer purchase a house as soon as possible. Real estate agents are experienced in sales and some of them know how to subtly or not so subtly convince a potential buyer to buy a certain house.

However, it is a good idea to always remember that buying a house is not an impulse buy and it is a good idea to take your time before deciding whether or not to buy it. Take a breath and see whether the house you want to buy meets your needs. For instance, it may be good to consider the location of the property, financing and so on.

Buying in the wrong area

Many expats believe that the coastal areas of Tenerife are good places to live in. Major tourists’ resorts of Las Americas and Los Cristianos glitter after the dull urban sprawls of grey UK cities.

However, is purchasing an apartment or house in the tourist district ideal for your family? Once this glitter wears off a little bit, most of the buyers end up reconsidering their buying decisions and relocate to places such as Arico or Adeje town where you can get larger properties at affordable prices.

In conclusion, it is good to decide what your needs are, take your time and avoid being pressured to make a quick buying decision. Also, consider the Spanish property portals when looking for property in Tenerife as it may help you find the best property in Tenerife.

 

A Beginner’s Guide To Buying Property In Tenerife

There are various advantages for people from the UK and elsewhere to purchase property in Tenerife. Not only does the climate offer a summer-like temperature all year round, but Tenerife also offers a low cost of living, beautiful mountainous background and a low-key lifestyle for foreigners and locals. It is no wonder that they name the area the Fortunate Islands.

The majority of people are currently exchanging dowdy UK lifestyles for a beautiful sub-tropical climate. Feeling a renewed sense of confidence and wealth, the aspirations of many European forty-somethings, fifty-somethings and sixty-somethings is growing with demand for property in Tenerife, particularly around the south of the island. However, there are specific subtle differences in the property transaction procedures of Spain and its islands; therefore, it is essential that you do research in advance and have a team of experienced professionals to guide you through the purchase.

How is property sold in Tenerife?

The majority of the property is sold via estate agents, just as is the case in the UK and elsewhere.
We recommend you find an established Tenerife estate agent due to their vast knowledge and experience in the property sector of the island.
When you see an advertisement or locate a property you would like to view on a property website; you can contact the agent and make an appointment to view the property. If you are interested in buying the property, you will need to make an offer to the relevant estate agent.

Property owners in Tenerife are aware of the property market value, but negotiation of the purchase price is typically done via the estate agent. It is common for properties to be sold with furniture and it is unlikely that any formal surveying of the property will take place. This is why you must be careful and use common sense when considering the condition of the property.

What Is The Property Purchasing Procedure In Tenerife?

If the offer made is accepted by the seller, you will be required to pay a deposit of 10% on average. It is recommended that you appoint an independent solicitor at this point to care for your interests. The cost of a solicitor will vary regarding the value of the property being purchased and the amount of work involved in the transaction; however, a standard apartment purchase would generally include solicitor fees of €1,500 to €2,500.

After you have paid the 10% deposit, the solicitor appointed and the estate agent will meet to apply for a “nota simple” from the local Land Registry. A nota simple is a type of document that informs the lawyer of any charges, embargos or mortgages currently existing on the property. Assuming all is well, either the estate agent or solicitor will draft a private contract of purchase and sale that must be signed by the seller and you as soon as possible.

While it is common for the contracts to be drafted in Spanish, it is possible to obtain a side-by-side translation in your preferred language. If you have concerns about what you are signing, do not sign! After signing the agreement, you will be legally bound to complete the transaction in the set timeframe and may lose all of your deposit if you do not adhere to the regulations.

Once the contract has been signed, the transfer of the property will be completed in approximately four to six weeks. The transaction will be finalised at a local notary’s office where the notary will check and confirm the terms and conditions of the contract. It is required by law that the seller and buyer or their assigned representatives are present. If you cannot attend the meeting, you must grant a power of attorney to another individual who will act as a representative on your behalf.

During this meeting at the notary’s office, you will be required to present some banker’s drafts or guaranteed cheques totalling the agreed upon purchase price. If the seller has a property mortgage, you should provide a draft that will be made payable to the seller’s bank as a repayment of the mortgage loan.

If the seller of the property is a non-resident, 3% of the purchase price will be paid directly to the tax authorities as sellers not living in the area must pay the amount to satisfy the Spanish tax authorities before having it refunded. All other payments are sent to the vendor from the banker’s draft. You need to be careful when transferring money in Spain as the banks tend to charge large amounts when receiving transfers. It is common for these charges to amount to thousands of euro.

What Additional Costs Need To Be Paid?

A solicitor will also require sufficient funds from you to cover any costs or taxes arising from the property transaction. Below are some of the additional costs that may occur.

Transmission tax can be approximately 6.5% of the overall transaction value, particularly for resale properties.

The notary and registration fees are approximately €2,000.

A property solicitor’s fees are approximately €2,000 including the changing of utilities.

On a property with the value of €200,000, there would be a typical representation cost of 8%; however, solicitors often ask for 10% so you should ask for a list of the expenses with the transaction several months afterwards.

It is important to note that new properties purchased, where you are the first owner, will present a 1% property tax and you will not need to pay more than 7% vat. This means that there will be a total of 8%; thereby, an increase in property costs of 1.5%.

After all this, you should now be the owner of a dream home in a sunny climate where the council tax amount should be approximately €100 per annum. If you reside in a community, however, you will be required to pay a community maintenance fee to maintain the gardens, the pool, the lifts and any other communal resources.

Any Other Information?

The final piece of information offered when purchasing a property in Tenerife is to draft a will. As you will be making several visits to solicitors and at least one visit to a notary, it is recommended that you draft a will while in Spain. It does not cost a great deal and can spare loved one’s problems if any problems occur.

It is also recommended that you apply for an NIE number. This number assists with registration and needs to be done before a property purchase is conducted.