The Buying Process in Spain in 20 Steps
So let us start from the beginning. Just so you are aware of the buying process in Spain
- Make a decision to start you search. You have watched the tv programs You have been on holiday You have tasted the Spanish lifestyle and yearn for more sunshine, a more relaxed lifestyle, and better health. Now is the time to go for it and start the buying process in Spain.
- Deciding on a budget Your budget will be an important initial factor to decide as it will determine the property type and location of the property. Is this going to be a permanent move or are you just thinking about getting a holiday retreat? Are you using cash or do you need a mortgage? When purchasing a property in Spain you should allow 12-15% on top of the purchase cost for buying costs
- Apply for a mortgage in principle Mortgages are available to non-residents and residents alike but the amount borrowed will be different. It is best to talk to a broker who can find the best mortgage to suit you and the type of property that you desire. Urban properties are far more mortgagable than Country fincas.
- Set up your currency exchange company This is important to get you the best possible exchange rate for your reservation deposit as well as your 10% and balance payments. You will also save money on bank charges.
- Choosing a Real estate agent On the Costa Del Sol there are in excess of 1000 agents. The surprising thing that people do not necessarily understand is that all the agents work together in collaboration and use MLS systems so they all have access to all the same properties. It is not necessary to visit many agents as each agent has the ability to arrange and tour with you on all of the appointments to all of the available properties. This saves you time and effort at no extra cost. You only need one agent.
- Research your preferred area Your agent will be able to explain to you all of the Advantages and Disadvantages of all the areas whether you are aiming to be on the coast in the country or in the city.
- Online search Decide on the property type you require and your agent will search the MLS database for you. Save all the links that you find online and forward them to your agent to review.
- Book a viewing trip When you have a selection of properties that interest you make plans to tour with your agent.
- Touring with your agent Your agent will organise all of the viewings for you. A typical viewing Itinerary will take 3 days.
- Find a property and make an offer Once you find a property that you like and decide that you want to go ahead. You make an offer and the agent will forward the offer on your behalf. The offer is whatever you feel is comfortable for you and your personal circumstances. But the agent will advise you based on feedback that they already have from the vendors. Be aware that Spanish vendors are not normally as open to offers as other nationalities. Some vendors have mortgages on the properties and need to cover their costs. Due to the 2007 crisis, many vendors have already reduced by up to 50% of the original price. A general rule of consensus is to offer between 5-10% less than the asking price. Though every case is different. Some vendors only accept the asking price. At this point, you state any requirements as to what is included in the purchase such as furniture.
- Negotiating the offer The agent will negotiate on your behalf this may take a few attempts back and forth. Be patient and trust your agent.
- Offer is accepted Once a price is agreed it is usual to Meet a lawyer for a free consultation to answer any questions that you may have and have the buying process explained to you.
- Reservation deposit After negotiations and on agreement of a figure for the purchase between yourselves and the vendor. It is normal in Andalucia to sign a reservation and deposit contract. This is first checked by your lawyer. Then a reservation deposit of either € 3000 or € 6000 is placed. Depending on the price agreed upon and the requirements of the agents involved. In most cases, this money is transferred or paid to the lawyer acting on your behalf. It is held in a client account or passed on to the agent or developer. When your lawyer is satisfied that the paperwork is correct. Once the vendor has signed this contract they are obliged to remove the property from the market. Some contracts have penalties in place others do not so you check with your lawyer. You request that the contract is subject to certain conditions. For example subject to a mortgage approval or subject to a survey etc. When the property is reserved for you, your lawyer starts all the searches. He checks the documents to make sure that the property is owned by the said vendor. It is duly registered and legal. There are no debts or charges on the property. The cadastral value and the services that are in place. It is often helpful for you to provide the lawyer with as much information about the property as possible. Such as information from the agent and photos. An inventory of what is included in the sale is drawn up at this point and added to the contract. Although in many circumstances, little things come to light at this stage. These can in most cases be rectified between the lawers. An important point is to use a reputable lawyer that is experienced in the property type and area that you are purchasing. This process takes about 2 weeks in general. If a mortgage offer is necessary it can take up to 6 weeks and a bank valuation will be required.
- Request a mortgage valuation At this point the agent will instruct the bank valuer.
- Power of attorney NIE and bank account When the lawyers are satisfied that you can go ahead with the purchase you will need an NIE (identity number) and bank account in Spain (for utility payments) Your lawyer can do this for you with a power of attorney if necessary.
- 10% Private purchase contract When the lawyer is satisfied with all the correct paperwork he prepares a private purchase contract. This is signed at the Public Notary. It is a binding contract in which both parties agree to the sale/purchase of the property. Both parties agree on a date of completion between 4 to 6 weeks in general. At this point, the purchaser pays the vendor 10% of the agreed purchase price minus the reservation deposit.
- Sign at the Public Notary Finally, on the agreed date for completion, the new title deed is signed upon completion in front of the Public Notary. The keys are handed over. If you have applied for a mortgage the mortgage title deed is signed in front of the Public Notary upon completion.
- Collect the keys and real estate follow up Your agent will collect the keys if you are not in Spain and follow up with you for any services you may need such as internet, insurances, property maintenance, builders, gardeners, holiday management.
- Lawyer tasks Your lawyer will then ensure all of the following: Register both title deeds with the Land Registry, Pay the Public Notary fee, Pay the Public Land Registry fee, Pay the legal taxes at Malaga Tax Office, Set up all necessary direct debits and standing orders from your new bank account in Spain, Set up utility contracts, local taxes, rubbish in your name. For an extra fee, you can request a Spanish will but discuss this with your lawyer.
- Take possession of your new home. You have now completed the buying process in Spain!
New Builds and off-plan property
The buying process in Spain for a new build or off-plan property is slightly different: When you choose the new home, the developer asks you for a deposit, usually € 6,000 – € 10,000 which will be taken from the final purchase price. The agreement is subject to preliminary legal checks, mortgage loan available on the property and a building survey, the deposit is returned if there are problems. Always consult with your lawyer before reserving a unit and paying a deposit.
New build payment schedules
Reservation Deposit: € 6,000 – € 10,000
Down Payment: Usually 30%
Balance in instalments or upon building completion
The above information is a general guide. Seek legal advice before you make any commitments or sign anything.