DOWN TO BASICS

What type of property are you looking for, and in which area? Many potential purchasers think they are looking for one type of property and, surprise, end up purchasing something totally different. Unless you are very clear about what you want and are equally sure that it exists, look at different types of properties in different residential areas with an open mind. This exercise will also help you build up your knowledge of the present market values in the area.

Choosing a reputable estate agent can save you time and there are many highly qualified real estate agencies working on the Costa del Sol, alongside more opportunistic and less qualified ones. A recommendation from your lawyer or a long-time resident, should point you in the right direction. A good agent will share his market knowledge and experience in the property field, and once he has exhausted his own inventory, will dig out other properties from his colleagues with other agencies until he finds the right property for you. He should be sincere, communicative, professional and not pushy, and if you are not comfortable with your man you shouldn’t hesitate to move on


FEW POINTS OF ADVICE

· It will be almost impossible to find exactly what you want, even if you build it yourself. And if you do find it, don’t be sure your partner will agree 100% with your choice. Find a property with which you both can be happy (and this usually means a compromise).

· If you want to buy in a new or not fully built-up area, remember that empty land plots will be built on one day and that you may find yourself in the middle of an on-going construction site for many years to come.

· Make sure you have enough land around you to protect your privacy and views from a prospective building project.

· If you are buying an unfinished property, the developer is legally required to provide an insurance policy or bank guarantee to protect your payments in the event of incompletion. The developers must also provide proof of ownership as well as planning permission and licences. A lawyer experienced in conveyance of deeds will anticipate these contingencies.

· Unless you are absolutely sure that your children and grandchildren will visit you, it is generally a serious mistake to purchase a property with their use as the main consideration. Time and again, people end up selling their enormous homes when their family, for various reasons fail to spend much time with them. Purchase for your own use, taste and objectives first.

· Analyse realistically the potential costs of modernising an older villa or apartment that has romantically taken your fancy. Unexpected maintenance or replacement costs can be very unwelcome surprises.

· The best rule for determining the value of a property is to take real sales prices of comparable properties recently sold. To enable you to do this your agent must have very good market knowledge.

· A property bought today is an important part of one's assets and will one day be resold. It is therefore advisable to take into account not just one's own taste and wishes but investment criteria as well


NEGOTIATING THE PURCHASE

Your agent may not be as skilful in negotiating the price of your offer as he was in helping you find the property in the first place. Seek out the ‘top man’ in the agency to form a team with him. Experienced estate agents are generally better at handling the commercial elements of a sale (this is their job) than lawyers are, and will do their best to bring what are often opposing viewpoints (yours and the seller's) together in harmony. Your lawyer can always be consulted during the negotiation to ensure that the offer meets his legal criteria, and become actively involved in more complicated negotiations.

In making an offer it is important to feel out the bottom price of a seller but at the same time qualify yourself as a serious bidder. Try to get all your negotiating points together at one time rather than negotiate piecemeal: this saves time and often, unpleasant surprises. Make your offer in writing if possible (of course, subject to contract), and include not only the price, but also amount of deposit, when you are prepared to pay it, when you are prepared to complete, what you consider to be included in the price (for example furniture and fittings if applicable) and, an often neglected point, that all machinery equipment and installations should be in normal working order.

Show the colour of your money to the seller. He will certainly take your offer more seriously if you have a healthy deposit ready for immediate action in an account in Spain.

Be careful identifying the amount and in negotiating who pays the municipal plus valia tax (the increase of the index value of the land since it was last purchased to its present sale). By nature this is a local tax for the seller, but local custom dictates that this is often to the account of the buyer.

If you make too low an offer, your strategy can boomerang and it may simply insult the seller, and he may not even respond. What is the property really worth, in the market, and to you? Has the seller rejected other offers? What is the minimum level offer that will probably engage his interest?

Normally good psychology dictates that you should leave room to improve an initial offer. But if you have a first choice and a second choice property, and you would be happy with either of them, and you believe you are making a realistic offer, maybe you should advise your first choice seller that if he doesn’t accept, you will be offering on a second choice property before considering any counter offer.

When an offer is accepted, one should always use a lawyer to take the legal responsibility for checking the land registry (the last word on property ownership, where any liens and encumbrances will show up). He will prepare a private contract which will bind both parties to the deal, and eventually will prepare the public deeds for signature in front of a Spanish Notary, when the balance of the purchase price is paid and vacant possession of the unencumbered property is granted, thereby completing the sale.


COSTS INVOLVED

Costs involved in purchasing residential property and plots are 6% transfer tax, provided the vendor is not a developer or normally trading in the business of resales, or 7½% (7% VAT and ½ % stamp duty) for any new property (or where the seller is a promoter or habitual trader in these properties), excepting plots which are at 16½ % (16% VAT and ½% stamp duty).

Notary and Property Registry fees should vary between 200,000 pesetas to 400,000 pesetas depending on the value and complexity of the property.

The plus valía tax (described above) can be as little as a few thousand pesetas or as much as several million pesetas on a property with a lot of land that hasn't changed hands in many years. This tax must be quantified and negotiated with the seller.

In summary, the total official costs involved in purchasing property should be less than 7% for resale properties, or 8- 8½% if VAT is paid (new properties), plus the plus valía tax if applicable. Lawyer's fees are in the order of 1% of the selling price, more or less, depending on the lawyer. The seller pays agents unless otherwise agreed.




Locating and purchasing a property in Spain can be as simple, or as complicated a procedure as one wants to make of it. The old rule of “caveat emptor” - Let the Buyer Beware! - always holds true. Using sincere and well-recommended professionals (agents as well as lawyers) always helps.

And, of course, always listen to your own intuition! It is often one's best guide.




(With thanks to Christopher Clover)