The process of buying and selling a home: everything you need to know about it
The purchase of homes in Spain fell between 2007 and 2011 and, therefore, prices also declined in the market. As of that year, transactions of this type rebounded slightly and this trend continues to rise. In fact, at the beginning of 2017 there was a rise of more than 5 % in real estate prices. The most requested type of property is being second-hand, whose purchase amounted to 31,600 in January.
With these figures, it is clear that we are increasingly willing to own a home. Do you want to sell or buy a house? Then you’ve come to the right place. Below we tell you the steps you must follow in any sale or buy of real estate. We also give you all the keys that you should keep in mind when doing it.
Buying and selling a property: where to start
The usual home or a summer house are spaces where we will spend a lot of time and in which we want to feel very comfortable. Therefore, acquiring one of these properties is not a simple decision nor should it be taken from one day to the next. So what is the first step we must take to buy a property? We have to be aware of the budget we have. It is important that this is a realistic figure, so we should take into account our salary, the money saved, the amount we can pay per month and for how many years we are willing to assume the monthly payments. It is preferable that we have some unforeseen events that may arise.
When we are clear what we can afford, it will be time to decide what type of home we are interested in and in what area. Obviously, our expectations must be realistic. If we have doubts, it will be better to look at the market prices to get an idea of how much it costs what we want.
Once we have adapted the budget to our needs, it will be time to start the search for the ideal home. Where to start? We have 5 main ways we can buy a home:
- Real estate agencies.
- Promoters and builders.
- Institutions that offer subsidised housing.
After seeing these options we must consider if we want a new construction property or prefer a second hand one. In case of choosing the first option we will have to take into account that many of the flats offered by the promoters are not yet built and therefore if we decide to buy one it will have to be off plan. This option does not always convince and that is why most people choose to take a home a little older.
To look for second hand homes we can walk around the area and call those houses with “For sale” signs. Most of these phones will belong to individuals. Another alternative is to go to bank offices to show us the floors they own. This option is quite risky because many homes for sale have squatters inside and it is difficult to get the power of property ownership, even though we buy the property.
Without a doubt, the most comfortable alternative is to go to real estate near the area to tell them what we are looking for and what our budget is. The agent that will attend to us will handle our case and will call us right away to show us the property that fits our needs.
When we start to visit apartments, we will have to analyze the price-quality ratio. For example, if our maximum budget is 300,000 euros, surely we see houses that cost less but – are they ready to move in? We are the ones who must decide if we buy a cheaper property and invest a significant amount of the budget in the renovation or if we prefer to buy a house that hardly needs a coat of paint on the walls.
Once we have decided on a property, it will be time to make an offer. It is true that the house will have a starting price, but the usual thing is that we can negotiate with the seller. It is possible that if the apartment sells for 250,000 euros, we get it for 240,000 and that the oe who sells signs the scripture. We can propose different ideas to reach an agreement. First of all, it is important to go to the Property Registry to request the land registry report (‘nota simple’). This document certifies whether or not the property is free of charges.
The next step is to apply for a mortgage. There may be people who have the money in cash, but it is not the usual. Most often we need to request a mortgage loan to buy the home. It consists of asking the bank for the money we do not have to buy a property. Normally, we will go to different financial institutions to get a mortgage with the lowest possible type and without soil. What does it mean? When the bank lends us money, it charges us interest by returning it slowly and in comfortable terms. Therefore, that interest rate should be as low as possible. We have the option that this percentage can be fixed or variable.
As for the Euribor, it is the interest rate to which the Euros are lent. When we buy a home we are obligated to pay for having applied for the mortgage. The Euribor can go up or down, so we must make sure that we have no floor clause in the mortgage contract. These clauses state that we can not pay less than that amount, even if the Euribor lowers. For example, if we have a floor clause of 3 % and the Euribor is 1.5 % we will be obliged to continue paying 3 %.
Once we have confirmation of the mortgage from the bank, we will have to sign the lease agreement. It is a document that commits both the buyer and the seller to make the purchase effective, usually in 30 days. At the time of signing, the seller usually receives 10 % of the price of the property. During the period stipulated, the buyer will have to complete all procedures to obtain the loan and pay 100 % of the amount to the seller. One of the most important issues is that the entity will send a valuer to the real estate to verify the real value of it.
The last step is usually signing of the deed before a Notary Public. Both parties meet to finalize the transaction and make the transfer of the property.
Expenses arising from the sale and other issues to be taken into account
- If we buy a newly construction property will be subject to a VAT of 10 %.
- If the property is second-hand instead of paying the VAT will have to pay the Tax on Property Conveyances and Documented Legal Acts.
- Knowing these circumstances, it is better that we do not go to a single bank to ask for the loan. It is preferable to compare the benefits of each entity and stay with the one that offers us the conditions that most interest us.
- When we have the home ownership, we must go back to the Property Registry to change the name of the owner. If we have bought the apartment through a real estate agency, they will be in charge of the procedures.
- It is also important to know that most often the bank asks us to pay cash at least 20 % of the property, so that they only have to leave us the remaining 80 %.
- In case the mortgage is granted to us in a bank where we do not yet have an account, we will be obliged to open one there. Surely we should also domicile the paycheck with them, and even open a pension plan and take homeowner’s insurance.
We hope with this post that we have resolved all your doubts about the sale of real estate. If you have any question, contact us. At DeluxEstates we will be happy to help you.
Posted on 6/10/2017