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The Property Buyer's Guide

A step-by-step guide for property buyers

The buyer's problem in finding the right property, negotiatingits purchase and closing the sale is much more difficult thanin one's own country. As in most resort areas, everybodyseems to be in the business, from the taxi driver to the hallporter in the Hotel. Property is everyone's favorite subject ofconversation. And almost everyone has an opinion, manyof which can easily confuse a potential buyer. Where to start?

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Finding a property

Some people spend years looking for aproperty. Others are lucky enough to finda property and have the confidence topurchase on their first visit to Marbella.Yet others need to take their time andview properties during three or fourtrips, until they feel really comfortablewith their eventual decision.

What type of pro p e rty are you looking for, and in which area?

Many potential buyers think they arelooking for one type of property and endup choosing something totally different.Unless you are very clear about whatyou want and are equally sure that itexists, look at various types of propertiesin different residential areas with anopen mind. This exercise will also helpyou build up your knowledge of marketvalues in the area, a major advantage innegotiating and ensuring that you aregetting fair market value for your moneywhen you buy.

Choosing a reputable estate agent cansave you time and there are manyhighly qualified agencies on the Costadel Sol, alongside more opportunisticand less qualified ones. In the past,qualified agents have either been APIs(Agentes de la Propiedad Inmobiliaria)or GIPEs (Gestores Inmobiliarios), butrecent legislation allows anyone (!) toopen a real estate agency. It is thereforeextremely important to look for anestablished, experienced agency withan excellent track record and good recommendations from non-interestedparties. A recommendation from yourlawyer or a long-time resident shouldpoint you in the right direction.

Good agents will really listen to you andinterpret your requirements. They willshare their market knowledge and experience with you and, if they exhaustthe properties suitable for you from their direct portfolio, they will work with properties from the portfolios ofcollaborating agencies to find the rightproperties to offer you. Key qualities tolook for in a good agent are: experience,professionalism, product knowledge,s i n c e r i t y, good communication, afriendly desire to help you in any waypossible in your property search and,above all, not pushy!

Many potential buyersthink they are

looking for one type of property and end

up choosing somethingtotally different.

Key qualities to look for in a good agent are: experience,

professionalism, productknowledge, sincerity,

good communication and afriendly desire to help.

MARY DUNNE, SENIOR SALES CONSULTANT AND BOARD MEMBER

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If you do not feel comfortable with youragent you shouldn't hesitate to move on. But when you find one who is easy to work with and understands what youare looking for, stay with that agent untilyou find the right property, or until youare satisfied that you have been offeredall the properties available through thatagency and its collaborating agencies.Sticking with an agency motivates theagent you are working with to pull outall the stops and come up with the rightproperty, as well as saving you fromhaving to tell the same story to everynew sales agent you approach.

A few points of advice

Compromise always pays dividends It will be almost impossible to find exactlywhat you want, even if you build it your-self and if you do find it, don't be sure yourpartner will agree with your choice. Find aproperty that you are both happy with(even if this means compromise!)

Do you mind being a pioneer? If you want to buy in a new or not fullybuilt-up area, remember that empty landplots will be built on one day and thatyou may find yourself in the middle ofan ongoing construction site for manyyears to come.

Protect your investmentMake sure you have enough land aroundyou to protect your privacy and viewsfrom a prospective building project.

Ensure the protection afforded by thelaw is given to youIf you are buying property under construction, the developer is legally required to provide an insurance policyor bank guarantee to protect your payments in the event of incompletion.The developers must also provide proofof ownership, as well as planning permission and licenses, and since 2002,an insurance policy against buildingdefects. A lawyer experienced in propertytransactions will anticipate these items.

Buy for y o u r own use first and fore m o s tUnless you are absolutely sure that yourchildren or grandchildren will visit you,it is generally a mistake to buy with theiruse as the main consideration. Time and

MICHAEL DOLAN, SENIOR SALES CONSULTANT AND BOARD MEMBER

MARJUT NORDSTRÖM, SALES CONSULTANT

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again, people end up selling their enormous homes when their familydoesn't visit as often as envisaged.Purchase primarily for your own use,taste and objectives.

Realistically analyze the potentialcosts of modernising an older villa orapartment that has romatically takenyour fancyReforms and unexpected repairs can beexpensive surprises. That said, secondhand properties will often have a betterlocation and may be less expensive thannewer properties.

Look at comparablesThe best rule for determining the valueof a property is to take real sales pricesof comparable properties recently sold.To enable you to do this your agent musthave very good market knowledge. Itwill also help to have seen enough properties yourself to get a basicknowledge of the market.

Think ahead to the day you sellA property bought today is an importantpart of one's assets. It is thereforeadvisable to take into account notjust personal preferences but alsogeneral investment criteria, such aslocation, design factors, quality offinishes and facilities.

LOUISE BOWSER, SALES CONSULTANT

CORNELIO OPREA, SALES CONSULTANT

Take into account not just personal preferences

but also general investment criteria,

such as location, designfactors, quality of finishes

and facilities.

Negotiating the purchase

Your agent may not be as skillful innegotiating the price of your offer ashe or she was in helping you find theproperty in the first place. Don't hesitateto seek out the Sales Director orManaging Director of the agency to help you negotiate your purchase.Experienced estate agents are generallybetter at handling the commercial elements of a sale (this is their job) thanlawyers are, and will do their best tobring what are often opposing viewpoints

(yours and the seller's) together in harmony, as any good negotiator shoulddo. Your lawyer can always be consultedduring the negotiation to ensure that theoffer meets his or her legal criteria, andbecome actively involved in more complicated negotiations.

In making an offer it is important tofeel out the bottom price of a seller butat the same time qualify yourself as aserious bidder. Too low an offer will notengage the interest of the seller, andmight prove counter productive.

Try to get all your negotiating pointst o g e t h e r at one time rather than negotiate piecemeal: this saves time andoften, unpleasant surprises.

If your offer is too low, your strategycan boomerang and it may simply insultthe seller, and you may not even get aresponse. It's important to know howmuch property is really worth in the market, and to you. Find out if the sellerhas rejected other offers and what theywere. What is the minimum offer thatwill engage his interest?

Make your o ff e r in writing if possible(of course, subject to contract), and include not only the price, but also thedeposit amount, when you are prepared topay it, when you are prepared to complete, what you understand to beincluded in the price (for example furniture and fittings if applicable), and anoften neglected point, that all machineryequipment and installations should be ingood working order.

Show the colour of your money to theseller. He will certainly take your offermore seriously if you have a healthydeposit ready for immediate action in abank account in Spain. This is normallyin the area of 10% of the purchase price. Many agents today also offer credit card facilities, wherein a small deposit from €5,000 to €50,000 can be taken to “seal a deal” with a seller, and the depositremains in the agent's client accountduring the week to ten days it can takethe lawyers to prepare the private contractand a transfer of the 10% to arrive.

Municipal Added Value (Plus Valía)tax (the increase of the index value ofthe land since it was last purchased toits present sale). This tax corresponds,by its nature, to the vendor who isresponsible for its payment, unlessotherwise negotiated.

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Try to get all your negotiating points

together at one time rather than

negotiate piecemeal.

GRAHAM STEEL, SALES CONSULTA N T: EXPERIENCE AT YOUR SERVICE!

Measure the land you purchase. If youare looking to buy a plot of land and notopographical survey exists, it may beadvisable to negotiate a “Euro per squaremetre” price subject to survey, to avoidany unpleasant surprises.

Good psychology dictates that youshould leave room to improve aninitial offer. However, if you believeyour offer is realistic and perhaps have asecond choice in mind, it can be a wisestrategy to let the seller know that if hedoesn't accept your offer, you will beo ffering on another property beforeconsidering any counter offer from him.

When an offer is accepted, always get alawyer to check the land registry (the lastword on property ownership, where anyliens and encumbrances will show up).He will prepare a private contract thatwill bind both parties to the deal, andeventually prepare the public deeds forsignature in front of a Spanish Notary,when the balance of the purchaseprice is paid and vacant possession of the unencumbered property is granted, thereby completing the sale. There areexcellent lawyers in Marbella, most speaking fluent English and other languages. The best way to find one is bypersonal recommendation, or by askingyour agent.

Of course, many of the above commentsare more intended for the purchase ofresale properties, as new developmentshave a fixed price list and payment schedule, often with very little roomfor negotiation, at least with respect to price. Sometimes some extras or modifications can be negotiated withinthe purchase price, depending on thepolicy of the developer.

In summary, finding and buying aproperty in Spain can be as simple, or ascomplicated a procedure as one wants tomake of it. The old rule of C a v e a tEmptor, (Let the Buyer Beware!) alwaysholds true. And a final tip: listen to yourintuition! It is often one's best guide!

By Christopher CloverCopyright © 2007 Panorama Properties S.L. All rights reserved

MunicipalAdded Value

Tax(Plus Valía)

The Plus Va l í a tax (described earlier) can be as littleas a few hundred Euros or as much as many thousandsof Euros on a property with a lot of land that hasn’tchanged hands in many years. This tax corresponds,by its nature, to the vendor who is responsible for itspayment, unless otherwise negotiated.

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Transfer Tax(I.T.P.)

Property Purchase Costs

The total official costs involved in purchasing a constructed residentialproperty should be less than 8% for resale properties, or less than 9% ifVAT is paid on the purchase price, plus lawyer’s fees.

Payable by the buyer for thepurchase of any Real Estate(villas, flats, land, commercialpremises, garages), provided thevendor is not a developer ornormally trading in the businessof resale properties.

7%

Vat and Stamp Duty

For any villa or apartment, orgarage that is annexed to anapartment, where the vendor is adeveloper, promoter or habitualtrader in these generally newproperties.

7% + 1%

Vat and Stamp Duty

For p a rcels of land, commerc i a lp remises or c o m m e rcial garagespaces, where the vendor is adeveloper, promoter or habitualtrader or a company. This coversvirtually all newly urbanizedland parcels and newly builtc o m m e rcial pre m i s e s . This onlycovers resale properties whenthe vendor falls into one of theabove categories.

16% + 1%

Notary andProperty

Registry Fees

The cost increases according to thenumber of pages or complexityof the title deed, and value of theproperty.

Approx.€2,000

for both

S u m m a r y

Lawyer’s FeesL a w y e r’s fees are in the order of1% of the selling price, more orless, depending on the lawyer andthe price of the property.

1%Approx.