As estate agents on the Costa del Sol, we come in contact with buyers from all over the world. They flock to Andalucía especially for the sun. Some want to move here permanently while others are looking for a holiday home to use part of the year. Whatever the reason, buying in Spain, like any foreign country, is different to buying at home.
So, you’ve found that great villa or apartment and you’ve spoken with your agent, and you have agreed that you want to put an offer in on a property to buy. What happens next? If you are an estate agent reading this, then you know all too well what happens next. For buyers, it may not be so obvious.
You need to be sure before you make an offer on a property because once this happens, a chain reaction of events will kick into action, caused by the offer being made. In the scenario below, we will assume there is an estate agent involved on both sides of the process.
RESERVE THE PROPERTY
Your agent will put the offer to the vendor’s agent. The vendor’s agent will then put the offer to the vendor. You can expect to negotiate, but once the price is agreed and accepted by both parties, the vendor will have a reservation contract drawn up and a reservation fee will be requested to take the property off the market. This is usually paid to the legal team of the vendor, held in escrow until a Private Purchase Contract (PPC) has been drawn up and agreed to by the legal teams. A reservation fee is usually anywhere from €6,000 upwards depending on the size of the property.Until this reservation fee is paid, estate agents are free to continue to market the property, so speed of payment is important here for the buyer, particularly if you really love the property! Payment of the reservation fee will block any other buyers from putting an offer in.
PRIVATE PURCHASE CONTRACT (PPC)
Once the reservation fee has been paid this creates some ‘breathing space’ for both parties while the Private Purchase Contract is drawn up. The PPC covers the payment of typically a 10% deposit which is non-refundable. Then a date and time is set to sign the escritura (or property deed) at a notary office.Parties involved at this stage are the buyer, the vendor, the agents both sides, the legal teams both sides, possibly surveying companies and building companies if there is work to be done pre-sale. Before the PPC is signed, both legal teams will have completed their due diligence on the property.
So, you can see that once you engage in an offer situation, you need to be sure you are committed to the offer because there a lot of people involved, working in the background to make it happen. Ok we accept that things change and sometimes offers fall through. That's life! But in general, it's best to only put an offer in when you are sure. However, in order for things to run smoothly we recommend you consider the following before offering:
Do you need to visit the property again? It’s not unusual to expect second and third viewing requests. Second, or even third viewings, can often highlight things you missed which may have an effect on your offer, so this is extremely important. If you need a mortgagte, has it been pre-approved by a bank? Better to be sure before you put that offer in.
LICENCIA DE PRIMERA OCUPACIÓN (LPO)
If you intend to use your home for holiday rental income while you are not using it, you will need the owner of the house you are purchasing to provide a Licencia de Primera Ocupación (First Occupation License or LPO for short) which you need to be able to legally rent your home on a short-term basis in Spain. More on LPO’s later. It’s best to ask about this before you put an offer in or even before you view the property. You will need an LPO in Andalucía in order to obtain a Tourist License to rent on a short term basis via AirBnB or whatever you choose.GET YOUR MORTGAGE PRE-APPROVED
If you need a mortgage, we recommend you get this pre-approved BEFORE you start viewing properties, and well before you put an offer in. At the moment, with rising interest rates, banks are looking very closely at credit ratings, and Loan To Value Ratios are high. Most vendors will not take their properties off the market with a reservation unless you have the finance side of buying clear and in place. See more about mortgages in this blog.BUYING WITH CASH FROM INVESTMENTS?
Buying with investment cash sounds great for vendors, but it’s always good to ensure you can access your cash within a timely manner before you put an offer in so that there are no disappointments further down the track. Most vendors expect to complete within 2-3 months so factor this in.ONE OFFER AT A TIME
Manage one offer at a time. We often see buyers putting more than one offer in on different houses at any one time. You can see the amount of work each group goes through to get a deal across the line for you. Developing some empathy towards the process and your agent will go a long way!So, there you have it. These are the main areas to consider when you find ‘the one!’, but worth bearing in mind that once you decide to put an offer to your agent, make sure you really want it and are prepared for negotiation. Listen to your agent because they will be able to guide you as to what constitutes a solid offer and what does not. And most of all, relax and enjoy the process!! We know it can be ‘nail biting’ stuff but if you consider our suggestions above, this will help you succeed in buying a property.
You can search over 10,000 properties on our portal here, or if you require the services of an estate agent on the Costa del Sol, send an email to info@bluegeckoestates.com or call us on +34 625 416523.
#STARTLIVING #estateagentcostadelsol #bluegeckoestates #costadelsol #costadelsolproperties
