Despite hints of an emerging recovery in the Spanish property market, there is still a huge stock of properties available in the market. The question arises from whom to buy and what are the advantages and pitfalls of each type of vendor?
The buzzword at the moment in Spanish property, bank-owned properties can sometimes represent a fantastic bargain but there are many factors also to consider.
The banks normally sell at the price of the outstanding loan or, if there is an agreement with the Bank of Spain, below that level. Prices are therefore not generally reflective of the market and competition from buyers is high.
Although now some of the largest property owners in Spain, the purchase process of the banks can be sometimes slow, bureaucratic and complicated. Information on the property and its associated costs can be difficult to obtain.
Properties are sold as seen and, whilst there should be no legal charges on the property, there could be debts outstanding from the previous owner to the utility companies.
It is imperative that someone experienced in this type of property transaction be involved to ensure the purchase completes satisfactorily.
Developers are under increasing pressure from the banks to satisfy their loan repayments: Many are offering their remaining properties at the outstanding loan amount.
Discounts from 40% to 60% off 2007 prices are the norm. Properties situated in high density developments, inland or in off-prime locations tend to suffer greater discounts as prices on the coast have become affordable.
It is important to look at key-ready properties as one can "see and feel" before purchasing and there is no risk of non-completion of the property. Assure yourself that the developer will address snaggings and deliver the property in habitable condition.
Few development starts have taken place since the crisis and there will be a lag as the market recovers: Off-plan purchasing will be the future as quality key-ready stock depletes.
Purchasing from a developer is not always a safe option in the current climate and so local knowledge of reputable developers is a must.
Bargains can be found from holiday home owners wishing to rid themselves of a second mortgage commitment or residents needing to return to their home country.
Private vendors tend to base their asking price on the outstanding loan amount and, depending on the time that they bought, the "Hit" they must suffer can represent a substantial saving to the buyer.
Decent properties with an asking price below market value tend to move quickly. There are many investors looking to achieve capital growth as the property market picks up in the near future and "Site unseen" purchasing has been known to take place.
Whilst it is true that one needs to act quickly to secure one of these properties, precautions should be taken as sometimes vendors are in a dire financial situation.
A competent professional would ensure the property is checked from a legal standpoint and that there are no debts associated.