Selling Your Property on in Spain
Buying or selling a property is amongst one of the biggest decisions an individual, couple or family will make in the course of their lives. When it comes to selling a property in Spain or on the Costa del Sol, be it your primary residence, or a holiday home there are many steps you can take to make the process much less stressful. We have put together this guide to help you sell your property in Spain, yielding the best price, in the shortest time, with the least stress.
Selling property in Spain involves a number of obligations and costs that must be faced by the seller.
The general rule selling a property in Spain is that the purchase is made free of liens and encumbrances, being up to date with payments and taxes, and free of tenants and occupants. But it is possible an agreement against this rule.
Step 1: Understanding the Current Property Market on the Costa del Sol
In the time since you purchased your home on the Costa del Sol, much may have changed, particularly if it has been a long time since you entered the market. Unless you follow real estate listings on a regular basis, or you are a real estate junkie; there is a good chance you are currently trying to figure out what the marketplace looks like.
At present the market across the coast is highly competitive and crowded. The 2008 downturn, and the ongoing lag, has created an environment where it can take several weeks to years to sell your home depending on the size and the price you would like to get for it.
The types of properties most in demand are live-in ready, and lower maintenance luxury holiday accommodations. Most people in the market for a home on the Costa del Sol are not looking for a primary residence. So larger, more expensive, higher maintenance properties that require a more permanent presence from the owners, spend more time on the market in order to sell for what they are worth.
Typically most buyers in the area come from a variety of countries across Europe, with a few buyers from other continents. They are drawn by the Costa del Sol’s beauty, sunshine and lifestyle to name a few. After all this area is considered the California of Europe.
Step 2: Preparing Your Spanish Property to Compete in a Saturated Market
While you cannot change the overall property market conditions, you can make your property more competitively edged. Start by making minor obvious repairs to areas buyers will most readily notice when showing, if you have been putting off installing a new doorknob to replace the one that has fallen off, now would be a good time to repair it. Small fixes like this go a long way to improving the buyer’s impression of your home.
It can also be advisable to move extra furnishings and personal effects out of the property. Rooms that appear to be full, look and feel smaller to prospective buyers, and it might lead them to either mark down or pass on making you an offer altogether. Tidy, well-maintained properties sell a lot faster, this is just a fact.
It is always a good idea to put the property up for sale in the best possible condition, trying to attract the buyers attention.
The good shape of the property must be from the point of view legal and physical. Is advisable to do in advance (if possible) the reparations needed by the property and the whole legal paperwork in the form of cancellations. Waiting until the purchase moment will bring that another one taking care of it on our behalf…Believe me, it will be way more expensive.
In case of defects is advisable to be remedied and, if not possible, to inform the buyer of its existence, because if he finds out after the purchase, has a period of six months to take legal actions.
Step 3: Your Pricing Strategy
Similar to any major decision associated with selling a property, you will need to discuss with your agent the pricing strategy. The pricing strategy is your road map to ensuring you get the best possible price for your property in the very competitive, Costa del Sol real estate market. In order to do this, there are a few things you must first determine:
- How quickly do you need to sell your property?
- What do similar homes go for in the current market?
- How long have similar home’s been on the market?
- Does your home have unique features?
- Have you included agent costs?
- Have you included closing costs?
- What is your bottom line offer that you will accept?
- What money will you allow for home upkeep and repair while you wait for it to sell?
- What money is needed to make your home market ready?
- What money are you spending to advertise your home?
Ask yourself, how quickly do you need to sell your property? If you are not constrained by time, your ability to gain a higher price for the property is greatly increased.
What have other homes or properties, with similar characteristics (square meterage, number of bedrooms, bathrooms, conditions etc.) recently sold for in the area? This will help you determine roughly what the market value of your property is.
Research the listed competing properties, and find out how long they’ve been on the market. Again, this may help ensure you’re pricing within the proper range.
Does your property have any unique features that similar properties do not? For example, if your property has a beautiful Mediterranean view from the terrace that the competition lacks, your property will likely command a premium price over the same home located around the corner.
It is important to avoid a couple of key mistakes many home sellers in the area make. The first is, over or under pricing their home. If you overprice your home, there is a risk that agents will not show it, or buyers will simply choose not to view the property because it is more expensive than comparable offerings. On the other hand, if you under-price your property, you are potentially giving away part of your assets!
It is also important to consider…
- Notary Costs
- Plusvalia Tax
- Capital Gains Tax
- Cancellation costs on debts or mortgages
- Banking costs
- Money transfer costs
- Land registry costs
- Stamp duty taxes – Impuesto sobre Actos Jurídicos Documentados (IAJD)
- Administration management costs
- Real Estate agency fees
- Legal Fees
A Word of Caution on Net Pricing: If you have decided to you use an agent to market your property we would always recommend deciding on a sales price that includes the agent’s fees. The reason for this is;
If you say to your agent “I would like 500,000€ net, and you can add your fees on top” this may lead to agents adding different rates of commission resulting in your property being offered at different sales prices with different agencies. This may cause confusion and even mistrust in a potential buyer.
A possible scenario would be that one agent shows your property to a client for 535,000€, but the same client sees your house with another agent at 525,000€. Now this gets to be a real issue when the client returns alone to see the property from the outside and gets chatting with your neighbour who happens to mention your net asking price is 500,000€ at which point the client decides to make you an offer of 485,000€. Of course you will still have to pay the fees to the agent who introduced the client in the first place resulting in your asking price being reduced considerably. This can leave your sales strategy in tatters and the potential buyer left somewhat confused.
By settling on a sales price that includes agent fees all of the above can easily be avoided.
Step 4: Agents in Marbella
The first decision you must make regarding agents is if you plan on using an agent at all. There are many benefits to using an agent including not having to worry about advertising and marketing your property. In fact, most agents already have a steady stream of clients looking to purchase homes through their network, which can help you get the best possible price for your property.
When choosing an agent there are several key factors to look at:
- They have a strong and demonstrated knowledge of the local area. Different clients will have different needs depending on their tastes, and a good agent will know where the necessary amenities are. (IE Local schools, beaches, restaurants, golf courses, etc.)
- The agent’s website and online presence is professional, and recently updated.
- They are able to provide advice on how to maximize the price for your home.
Step 5: Commissions & Offers
Generally speaking, most sales agreements with a listing agent are set up with a standard commission. This commission rate should be specified in the listings agreement. Case in point, on the Costa del Sol commission generally falls around 5% plus applicable VAT tax. It is not uncommon for lower priced properties to have a slightly higher rate of commission, taking into account the amount of effort and time it takes to market a property in the area.
When you receive an offer on your property, you should not feel obligated to accept, or even counter the offer. However, you should make sure you have the offer in writing, and view your agent as a member of your team. If you have the time to wait, and the agent feels they can get a better price, then it might be advisable to turn down, or counter the offer.
Once you accept an offer it is important to consult your agent, lawyer, and even accountant to ensure you pay all of the correct taxes associated with the sale. Each of these professionals is well versed in helping you to plan your sale and make sure all of the documents are legally binding.
Step 6: Ensuring That Your Agent is Marketing Your Spanish Property Correctly
One of the biggest steps in selling your home is being sure that the agent, or agents, that you have selected to sell your property are in fact marketing it correctly. Keep in mind throughout all of this, that depending on the type and sales price of your property, it could take weeks or several months to sell.
You may feel like your property has been on the market for a while, but you haven’t had any viewings, or maybe even that you have had very few viewings and you feel potential buyers may be wasting your time.
Firstly, it’s important to speak to your agent and make sure that your property is being given the adequate exposure. Another thing you will need to keep in mind is if you have a very high value or unique property. Remember, this will only attract a select amount of potential buyers who would be interested in such a property.
If your property is priced correctly then there is no reason why in this market you shouldn’t be getting viewings to your property, realistically depending on the property you should be getting between several viewings a week to one or two a month. If you feel your property is priced comparably to other similar properties nearby its worth bearing in mind that they are probably not getting any viewings either.
If you want to sell your property in a short period of time, it’s advised to be prepared to sell your property at a lower price than what you expected to get for it. It’s best to talk to your agent about this to make sure you don’t accept an offer that is too low.
When establishing your asking price, another thing that sellers should take into consideration is how much room they are willing to spare for negotiating. Basically no buyer ever wants to pay for the full asking price of your property.
Step 7: Preparing Your Spanish Property for Showings and Photographs
It’s important that your property is shown to potential buyers in the most attractive way possible.
It’s worth investing in a few fixes here and there to make the property more attractive to buyers. Also, when taking photographs or preparing for a potential buyer to come and view your property; make sure as much natural light flows into the house as possible. Of course staging is essential when trying to sell your property; so being clean, tidy, and presentable is common sense. Remember that overcrowded rooms can make them appear smaller, so you may want to remove certain pieces of furniture or decorative accessories.
You may want to think about another small investment, which is hiring a professional photographer to come in and take professional photos. The photos can be provided to all the estate agents you are working with, to ensure that your property is being featured on their website in the most attractive way possible. On a final note, make sure to check if the photos have in fact been added to their websites.
Your main agent should put up a “For Sale” sign outside of your property. In the real estate world, this particular rite of passage has always worked. This practice almost always attracts enquiries from people simply driving around and seeing the neighbourhood.
You should also keep in mind that agents tend to show first the properties they already have keys to, instead of having to make a potential buyer wait to view your property.
Step 8: Lawyers and Tax Advisors on Costa del Sol
It’s important to involve both a lawyer and tax advisor to ensure that you are aware of all the legal proceedings and tax obligations of selling your property.
Both parties will be responsible for making sure you are aware of all the information prior to selling your property. This ensures no unwanted surprises later on with any legal obligations. Basically you want everything ready for the buyer including all in the correct order.
Step 9: Negotiating and Selling Your Property on Costa del Sol
Negotiating a price between the seller and potential buyer should be something that your agent will take care of – this is exactly why you pay your agent’s fees. Your agent will generally be able to negotiate your price better than any lawyer will. Once a deal has been made, the rest of the sale will be taken over by your lawyer who ensures all legalities are met, and your lawyer should consult with your agent when necessary.
Something to keep in mind during negotiations is what exactly is included in the price (furniture or not, for example), how much of a deposit the seller would like, completion of the sale date, etc. It’s important to get all these things negotiated before you go ahead with the legal side of the sale. You don’t want to be negotiating these things during the legal proceedings of your sale, since this could significantly increase the lawyer’s fees.
If you are out of the country on a regular basis, it’s advised to use a trusted friend or even your lawyer as your Power of Attorney, so people aren’t waiting around for you to be back in the country to close a sale. This way, whoever has your Power of Attorney can assist in completing the first steps of selling your property.