The Complete Spanish Property Selling Process – All you need to know.
Finding an Estate Agent for your “RESALE” property.
The Ideal Agent
Unlike selling your property in the UK, it is quite common for Spanish Property Agents to accept a new listing without requiring an exclusive listing contract. This means a vendor can place their property with several agents at the sameReal Estate Agent time, getting maximum marketing exposure.
Spanish Property Agents will also cover greater geographical areas than their UK equivalents. This is helpful to owners with property in out of town locations as they can use agents with offices in busy towns and cities that are happy to bring house hunting clients to your property from many miles away, giving you access to more buyers.
Agent’s fees vary from 3% to 5%, or sometimes a fixed fee can be agreed before signing their listing contract. (Mandata de Venta). It is most important to consider that Estate Agents in Spain are not regulated to the same degree as their UK equivalents and their methods and working practices are varied. Since the Financial crisis of 2008, there has been a vast increase in unregistered estate agents working from their homes or “back bedroom” – Needless to say, they cannot offer a full sales service to either buyers or vendors and operate either illegally or outside of the laws and regulations. It is common for these “so called” agents to tempt vendors with low-fees due to them having no overhead such as: insurances, office premises or staff and in many cases not paying taxes. We strongly advise against using this type of operator especially when their contact details do not show an office address and landline telephone details. We also advise against paying any fees up-front. Agents using this method will rarely have any further enthusiasm to make visits with buyers. Always use a “No Sale No Fee” established Estate Agent with professional and high profile premises.
We recommend using high profile estate agents, with local premises and regular local and international marketing presence to ensure your property gets seen by a vast international audience of prospective Spanish property hunters.
Having chosen your agent/s – Make sure you have the following documents available prior to the agent valuing and photographing your property:
The sellers own title deed, known as the Escritura Publica and a report from the property register called the Nota Simple
IBI- paid up receipt for annual property tax.
Receipts paid up for the annual fees of the community of property owners and last minutes of AGM if buying on Urbanization with shared facilities.
Receipts paid up for all utility bills
Copies of Passports for those named on the title deeds
Copies of the vendor’s NIE.
A reputable estate agent will keep copies of these documents for every property they have listed on their books. If the agent doesn’t have an office facility, either local to the property, or in Spain, then most likely they will not be in a position to keep this information safe. Never allow an agent without official premises to hold keys to your home.
Valuing your property for Marketing Purposes.
Once the agent is in possession of the above listed property details, they will access the cadastral via the internet and do some research on comparable property in the area before they offer a valuation.
It is important to note that any unregistered extensions, pools or other building work that isn’t on the title deeds or has no planning permission cannot be used in the property marketing literature, or be seen as part of the valuation process unless the vendors intend to pay the necessary legal and registry costs prior to selling the property on to new owners. The first thing a buyer’s legal representative will do is check that the property has no unregistered extensions etc. If you think your property has any un-licensed improvements it is helpful to inform the Estate Agent so they can be aware and promote the property accordingly. The Estate Agent will also be in a position to inform and assure the Spanish Property for Saleprospective buyer that these anomalies will be brought up-to-date when registering it in the new owner’s name.
All good estate agents will offer you – the vendor – advice about pricing your property to sell quickly. Valuing property here in Spain is quite scientific, and your Estate Agent should be able to explain how the valuation was arrived at. The agent will sometimes offer two different valuations depending on whether you need to sell the property quickly to take advantage of exchange rates, or, if you prefer, a higher price should you be willing to sit out the current market conditions in the hope of a better price for your home. Many buyers require some kind of mortgage and therefore the agent should be able to tell you what a local bank would value your property at for loan purposes. If your preferred selling price is too high, it will be flagged up by a banks valuation department and almost certainly put off a potential buyer.
Photographing your Property
Good photography is a key element when promoting and marketing a home. A professional Estate Agent will understand this and advise you what to do on the day the photographer arrives. Opening curtains, raising window shutters and lighting each room, putting on all available occasional lamps is advised so that the photographs have maximum impact. Removing coats, handbags and any other personal items from each room saves time for the photographer.
What are the costs associated with Selling a property in Spain
Selling your property in Spain is hardly any different to the UK conveyance process. In both cases the vendor will pay Estate Agents fees and a Lawyers fee. It is possible to avoid the necessity for a Lawyer if you are confident the Estate Agent will look after your interests leading up to – and beyond the sales completion. A reputable Estate Agent will offer to cover the legal costs of the vendor in most cases and keep the vendor up to date throughout the sale.
Capital Gains Tax
Apart from the usual Estate Agent and legal fees the vendor will also be responsible for 2 taxes. The most significant is the Capital Gains Tax (CGT). For non-residents a 3% CGT on the declared value is retained at the Notary on the day of the sale. This will be submitted by the Lawyer within 30 days of the sale. In some instances, part, or all of this tax can be reclaimed. The Estate Agent or Lawyer will be able to calculate this prior to the completion. Full fiscal Residents in Spain will be obliged to submit their CGT (usually 21% of the actual capital gain element of the sale) with their usual tax returns. Again a part or full refund is possible subject to the financial status of the property sale. An accountant or lawyer will be able to advise you of the situation at the time.
Plus Valia Tax
This is a tax levied by the town hall on the land transfer element of the property and even applies to apartments. Usually the charge is calculated as a percentage of the value, however it is not easy to get a specific estimate until the submission is made, but, Plus Valia is not usually a large amount, the average being about 400€.
Utility bills and IBI (council tax) make up the final deductions from the vendor’s funds. If your utility contracts and town hall rates are up to date, then the most amicable solution is to divide these items fairly between buyers and vendors in relation to when the sale completes within the billing periods. The vendor is only responsible for bills incurred up to the morning of the completion; any billing thereafter is paid by the buyers. Again, the Lawyer or agent will take care of it all, with meter readings on the morning of the sale. It is important that vendors do not cancel their utility contracts as this could result in meters being removed, resulting in the vendor having to pay for the reconnection fees if the property has been advertised with mains electricity and water connected.
During the sales process your Lawyer or Estate Agent should keep you informed about deposit/reserva transfers and completion dates and times.
What Happens When Your Agent Finds a Buyer?
It is quite common for buyers to make their offer at the end of their buying trip. A professional Estate Agent will ask for the prospective buyer to make their offer in writing. This will be passed onto the vendor immediately in an attempt to acquire a Reserve or Deposit and sales contract drafted whilst the buyer is still here in Spain. The vendor will receive the offer from the agent via email. The email should contain the offer price, the buyer’s financial arrangement details and the prospective completion window, along with any terms or conditions the buyers may have stipulated, such as the inclusion of furniture, white goods or even garden furniture etc.
Also laid out in the email should be the itemised costs related to the offer price, showing agents fees, IVA (VAT) an estimated list of other costs as shown above, enabling the vendor to see the approximate figure they will receive after all stoppages. From this figure the vendors are then in a position to accept or decline the offer. A vigilant and motivatedViewing a Spanish Property Estate Agent will then make themselves available to broker a better deal for the vendor if the offer is too low.
Once an offer is accepted by all parties, a reserve of 3000€, or a deposit of 10% will be required from the buyers. This can be done even if the buyer returns to their home country, though the proceedings will take a little longer.
In order to ensure the property is off the market, a buyer must make a reserve payment or full deposit, otherwise the agents will continue to promote the property and the buyer will be in danger of losing the property. The Estate Agent will make buyers aware of this at all times.
Once a deposit/reserve is in place, the agent will ask the vendors to sign a new Mandata de Venta, this will be an exclusive marketing contract giving the agent up to 6 weeks exclusive right to market the property until the sale completes. Should the sale fall through, then both agent and vendor will revert back the original non-exclusive contract.
Reservas and deposits are sent to the Lawyers “client account” and during the sales process the balance of funds to make up the buyer’s total costs will also be sent to the same account. There are now strict money laundering laws across Europe, requiring Notaries to ensure the funds are recorded and the purpose of the transfers are relatable to the exact value of the transaction. It can cause delays if these exact funds are not passed over the Notary’s desk on completion day, and unless there are extreme circumstances we recommend that all funds are held with the lawyer right up until the day of the sale.
Once a completion date has been mutually agreed between all parties (buyer, vendor, lawyer, agent, Notary) The Sales/Purchase contract (Contrato de Compra/Venta) is sent to the buyers and vendors to be signed and countersigned. At this point the 10% deposit arrives with the lawyer and the sale is now secure on all sides. Usually the lawyer will put a sell by date to the nearest end of month date just in case there are any delays, enabling the completion date to be altered if any parties involved are delayed.
On the morning of the completion the buyers and vendors will be taken to the Notary’s office by the agent or lawyer and will review the schedule of costs with the lawyer ensuring both parties are agreed on the costs and retentions involved. The lawyer will then read out the draft title deed to explain what the Notary will be saying in Spanish. When everyone is happy, the Notary will arrive and the process will take place. This can take around 45 minutes, after which, cheques are passed over by the lawyer to the vendors and the buyers will receive the keys to the property. After the signing of the new title deed by all parties a copy (copia simple) will be handed to the vendors and buyers for their records. It will take a further 6-7 weeks before the original deed is returned from the registry office and handed to the buyers.
The Background Work Post Sale
Between the lawyer and estate agent, all the back-up paperwork, such as submission of taxes, utility contract changes, land registry updates etc. will happen without the buyers and vendors being involved.
Finally, when the lawyer has received back from the land registry the fully incorporated title deed with their official stamps, bound in the Notary’s cover, the buyers will be invited back to the lawyer’s office to formally be handed all the documentation such as the new original title deed, tax submission receipts and utility contracts along with any refunds of monies left over from the 10% purchase costs.
The vendors will also see a residual refund of their retentions held back at the time of completion to cover outstanding utility costs etc.
Should the buyer or vendor have any problems during or after the sale, both the estate agent and lawyers should alwaysMurcia Coast Country Guide Buyer be on hand to resolve these queries to satisfactory conclusions.
Power of Attorney
It is possible for both buyer and vendor to be absent from the completion at the Notary if they wish. This can be achieved using Power of Attorney (POA). The process is exactly the same but with the agent or lawyer signing the new title deeds on behalf of either party. The extra cost involved is around 200€.