Buying a property abroad can complicated. This chapter should explain the basics of buying a property, legal documentation,money matters and inheritance
People Involved In Buying
Agent
- A good agent is one who can offer a wide variety of properties for sale.
- Greater security is offered by dealing with an agent who is professionally qualified or belongs to a professional organisation.
- For first time buyers, uncertain of the laws and customs of the country, a good agent will give additional assistance during the difficult moving-in stage.
Agents dealing in Spanish property do take a high commission. The lowest start at around 3% but the average is 10%. When selling a finca it can be 25%. How do they justify such exorbitant charges? Their answer is ambiguous, making reference to high advertising costs, commissions due in two countries and complex transactions involving different nationalities.
The commission rate for selling a new house on behalf of a builder is
usually fixed at around 10%. If a number of agents are selling the same property they may compete with each other, discounting their commission by offering furniture packages to prospective purchasers.
A different commission structure operates for the sale of a second-hand property, commonly termed a resale property. In some cases the agent operates on a fixed commission, but more customary is the following arrangement:
- The agent asks the seller the price he wishes for the property.
- The agent advertises and negotiates the sale of the property at another, higher price.
- The difference between the two prices is the agent’s commission, which is rarely less than 10%, can be up to 15% and can in special cases reaches 25%.
- This pricing structure gives rise to considerably animosity. It is compounded when buyer and seller seldom meet, creating an atmosphere of mistrust in relation to the commercial motives of the agent.
Abogado(Solicitor)
It is important to remember the appointment of a legal representative is principally to protect the buyer. The agent is working for the seller. Rather like many other aspects of daily life, it is a system of checks and balances. But let us be clear at the outset. The Spanish system of house conveyancing is different. You are not dealing with solicitors who draw up and exchange contracts on completion.
So what does the
abogado do?
- Draws up a contract if asked to do so.
- Helps complete the conveyance of the property.
- Provides help and guidance on legal matters, principally the content of the contract and payment methods.
- Makes arrangements to obtain and receive a power of attorney should this be necessary if the parties will not be available to sign the escritura.
- Obtains an NIE number so that a client’s personal identification is by name and also number.
- Makes arrangements for signing the escritura and final property payments.
Bank
A bank may be recommended by a friend, an agent, an abogado or be linked with a bank back home. Here are some recommended criteria for selecting a bank:
- Some staff, preferably the manager, should speak English.
- In order to have access to major services such as mortgages and investments, the bank should be a major player in the Spanish marketplace.
- Money transferred into Spain for the purchase of a property will come through the clearing bank system. The bank back home and the Spanish bank should both be main branches to prevent delays in money transfer.
Need a mortgage? The Spanish bank is a provider. Need a short term bridging loan? Forget it. These two statements demonstrate a difference in attitude towards borrowing money. A loan is for business, a mortgage is for home finance and the two are kept strictly separate.