Despite the crisis, Spain is still a popular destination for expats, particularly Europeans. There are many great property deals to be had if you know where to look and how to buy.
2. Timing
As of 2012, Spanish property bargains are most likely to be in the hands of private owners rather than in banks’ repossessed property portfolios. The reason is that properties in good locations tend to be held by private owners for as long as their owners can manage, rather than being sold or being repossessed.
These are the properties that private owners are making the effort to pay the mortgages commitments on, but if the current economic recession persists, and mortgages are no longer affordable by the owners, it is likely that the properties will come on the market again. Nevertheless, the pressure on the financial situation could force a new wave of attractive properties in prime locations, either being sold directly by the owners or as repossessions by banks.
Here, sellers are generally ready to consider your offers immediately. On the whole, exhibitors, agents and developers, prepare special offers for exhibition visitors ready to buy. That is an innovative way to begin your adventure. You will mostly find that agents and developers are based in Murcia, Alicante and Valencia and consequently tend to offer properties in these areas.
Check local newspapers and online property portals where you are most likely to find bargains. For instance, you could find a two bedroom apartment in front of the beach in Torrevieja at €58K in a local Alicante newspaper.
If you are buying from a bank you might obtain a mortgage of between 80%-100% L.T.V. finance. If you are buying from a private seller or a developer, it is highly likely that you will secure a mortgage of around 60% L.T.V. The reason why you gain higher finance when you buy from Spanish banks is because in this economic environment, they tend to finance their own property portfolios.
This is despite the fact that their portfolios are usually being promoted by local agents. The advantage of buying from developers is that they are under pressure to sell, so potentially, you can secure a good bargain in terms of pricing, location, quality and specifications.
By developing a local network through agents, you will meet owners in need of cash who have to sell-up within a short period of time. You thus have two options:
a) Negotiate at the minimum selling price in order to secure your bargain; or,
b) Pay a deposit in cash and agree with the owner on a Let-To-Buy basis. In this case, you would become a tenant on the condition that you pay off the remainder of the mortgage on the
This is a good start when negotiating with the seller directly.
Doing this, could be a way to guarantee a bargain in the negotiation process as long as you demonstrate that you are a serious buyer, eager to purchase quickly. Any discount higher than 10% is generally a very good achievement in this current market climate.
These can deliver superb bargains but it is very difficult to succeed if you are a home buyer. The bureaucracy involved (administration, legal fees, bidding time etc), does not guarantee that you will have attractive options even when you bid.
But auctions can be suitable for property investors, specifically because the bargains that investors are looking for, do not always require a pre-determined location, unlike the case with home buyers. On top, hard-level bidding professionals take advantage of the fact that banks are already in possession of too much property stock, and consequently, are able to acquire the Spanish real estate properties in court auctions with a discount of up to 50%. In some cases, the discounts can be even larger.
Another alternative is to buy the real estate property before the auction is held. The negotiation power of the owner of the real estate property is weak because without a quick sale, the financial institution will ultimately repossess the property through the Courts.