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Buying Property in SpainBuying property in Spain, or any foreign country can be a difficult time for anyone. Even buying a property in your home country can be difficult - legal issues, fluctuating property markets, mortgages, estate agencies..........
And then you have to deal with many new issues when buying in Spain - language differences, market differences, taxation differences, etc.
This article will give a bit of information to start you off if you are thinking about buying a property in Spain.
Off plan market The basics of the off plan market is that you would buy a property that isn't built yet - you buy it "off the plan".
Usually in Spain, a developer (the company that builds the apartments, villas or townhouses) will have scale models, plans and a show home available for you to view.
You would normally go to view this through an estate agency in Spain. The estate agency employers Sales Consultants (well, they tend to be "self employed" Sales Consultants, but they will only work with one company), who will meet you and take you around different developments.
On the completion of a successful sale the estate agency will get commission on the sale value of the property (usually between 5% and 10%), of which the Sales Consultant will get a percentage.
Make no mistake - if you are met in Spain by someone to take you to view properties to buy, then they will be on 100% commission - no salary! So be prepared for the hard sell!
The benefit of buying a property in Spain off plan is that you pay a lot less than you would when the property is completed - the down side is that the property (usually part of a development) is usually at least 12 months from completion.
Property Developments in Spain Developments are enclosed communities which usually encompass several properties (usually around 40 apartments, villas or townhouses), gardens, a pool (or several pools) and a lot of the time, some other facilities.
Whereas in the UK you pay council tax, in Spain you would pay towards your development, which covers the cost of pool and garden maintenance, security, etc. (and it has to be said, these developments are usually kept very nice looking).
Benefits of buying a property in Spain Your property will usually increase in value (depending on location). If you buy off plan for example, your property may cost around 150,000 euros. On completion of the development (ie the first point at which you can live in your property), the value may have risen substantially).
The variable tourist seasons around the country mean that you could comfortably rent your property for half the year and completely cover your mortgage, freeing the property the rest of the year for your own use.
In reality though, it may not be possible for that to happen, and you should not rely on that as an income.
Pitfalls of buying a property in Spain There are many.
1. Real Estate agencies. Everyone and his brother owns a real estate agency in Spain and most come from a time share background, so be prepared for a hard sell. Don't expect UK business standards with these companies.
2. As said earlier, all sales consultants working for agencies make a lot of money from selling you a property and most are on very strict targets (3 strikes and you're out isn't an uncommon philosophy). So expect to be hit with the hard sell from day 1 and don't believe everything they tell you (check up on it from reputable sources).
3. As mentioned, UK business standards are a different class compared to Spanish Real Estate agencies (who, by the way, are mostly run by Brits!). Don't take anything for granted - information about the property - the price you will pay - the local area - anything! Check for yourself and if you can't - get someone you trust to check for you!
4. A common sales tactic is to get clients to take out a second mortgage on a second property - why sell one when you can sell two? Even if you don't have the capital off hand for a second mortgage it is possible to take it out based on your first purchase. When you go to buy a property, make sure you buy what you went for and not what you were talked into.
5. Take time to think about what you are going to do. Many agencies offer trips to the local area from wherever you live so you can go view the properties. The Sales Consultants get a very hard time if you go home without buying anything, so they will be putting the pressure on. Don't let that worry you! Take all the time you need and don't be pressured into anything.
6. Beware of changes! If you are buying for the view, then be sure that the view is protected (ie that the developer also owns the land in front of you and has no plans to develop it). Also make sure your new property can have all amenities installed! I've seen people move into a half million euro villa only to be told the electricity could not be connected because their property was too close to a pylon!
7. Construction - there are many, many developers who will quite happily use the cheapest materials available to save a bit of money. Be sure you aren't buying from one of them! Can you hear people in the next apartment when you are viewing it? Yes? If so would you want to live there?
8. Don't be sold by the hype. In the UK (and US for that matter), marketing is commonplace, but it is regulated. In certain areas of Spain, it isn't and a lot of companies say what they please. Research your real estate company beforehand and don't be fooled just because they have a stand at the airport or full page advertising in the Times! Still, that can be said of any UK / US business too! (spot the cynic!).
Conclusion - buying a property in Spain Do your homework beforehand and don't be sold easily and you will do fine. There are many great properties for sale in Spain and the Spanish are a very friendly people (it's the ex-pats and tourists that are the problem!).
If you are sensible and don't rush into anything you can easily come away with a great investment.
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