Step 6 – Do your research and don’t leave your brain on the plane
First of all, if you are new to the area you want to buy in, take time out to find out about the place with online research and by visiting. Get to know the different areas, visit at different times of the year if possible, check out places at different times of the day.
Don’t take the area on first impressions, as there are big seasonal variations – some developments become a ghost town over the winter, or can become uncomfortably crowded in the summer. Do your research and if you can’t visit several times, make sure you ask as many questions as possible to get a complete picture.
Treat your property hunt seriously, research as much as possible from back home and then view a property hunting trip like a fact-finding mission so you can get the most of your visit. Also, be careful of blowing the budget when the sun is shining, and the sangria is flowing. Choose a realistic budget and don’t overstretch yourselves, you can always buy a bigger property when you have a foothold on the ladder and know that you love the area.
Step 7 – Make an offer
Be guided by your estate agent. He/she will likely know the vendor’s circumstances and motivations for selling the property. Some element of discounting may already be built into the price, but other vendors may price their properties a little higher than required in order to factor in any offers.
Don’t be guided by the media, who often ‘advise’ making unrealistic offers irrespective of a property’s location, spec or size.
Remember that a ‘deal’ can only be done when you and the seller are BOTH content with the price. Negotiate hard for sure, but also realise that negotiations are a two-way process.
Once a price is agreed, make sure that the deal is committed to paper, signed off by both parties and that a reservation deposit is paid. Following these steps is the only way of ensuring that the property is taken off the market.
Step 8 – Negotiate on legal fees
Most lawyers charge a standard fee of 1% + IVA of the property price (with a minimum fee of something like €2,000).
This means that if you spend €500,000, your legal fees will amount to €6,050 (1% + 21% IVA), but if your property is costing €1,500,000, your legal fees shoot up to €18,150. To me, this doesn’t seem fair. Effectively you are being charged three times more for the lawyer to do the same job. It’s still one property, with one set of title deeds.
Of course, if there are complex issues that the lawyer needs to resolve, then this would justify an increase in fees. But I would strongly recommend either a reduced percentage fee or a flat fee in advance.
Step 9 – Use a currency specialist
If you are purchasing in a currency outside of the euro-zone, you should definitely use a reputable currency broker to transfer your funds into euros, instead of using a high street bank. It can make a HUGE difference! Check out the following hypothetical illustration:
Option 1 – High Street Bank
- Purchase Price: €500,000
- Exchange rate: €1 = 0.8850 GBP (or 1 GBP = €1.13)
- Amount to Pay in Home Currency = 442,500 GBP
Option 2 – Currency Broker
- Purchase Price: €500,000
- Exchange Rate: €1 = 0.8696 GBP (or 1 GBP = €1.15)
- Amount to Pay in Home Currency = 434,800 GBP
As you can see, even a small(ish) swing of 2 cents in the value of the euro can translate into a €7,700 saving on this particular purchase. Bear in mind that specialist currency traders will normally get the best rates for you as this is all they do. It’s their core business. For most banks, foreign exchange is just one of many services that are offered.
Speak to your foreign exchange specialist in advance and ask for their advice.
There are lots of options for clients. You can forward-buy at an attractive rate or you can spot-buy when the rate hits your pre-determined level. All these tricks will save you thousands!
Step 10 – Enjoy your new home
If you’ve followed these steps, you should have had an enjoyable property search and now be the proud owner of a perfect property for you. Whether you’re planning on living here full time, or just coming over for the holidays, now the fun really begins. Settle in and make the house a home, pop open the cork on the bubbly and start enjoying the wonderful Spanish lifestyle.
For more information, top tips and tricks to ensure your Spanish property purchase goes smoothly read From the Ground Up – The Insider’s Guide to Buying Spanish Property, which is now available on Amazon.
Read more property-related articles in our dedicated section here.