For example, unless you’re forced to sell, it definitely isn’t advisable during a property slump when prices are depressed. It may be wiser to let your home long-term and wait until the market has recovered. It’s also unwise to sell in the early years after purchase, when you will probably make a loss unless it was an absolute bargain. Having decided to sell, your first decision is whether to sell it yourself (or try) or to use the services of an estate agent.
Although the majority of properties are sold through estate agents, a large number of people also sell their own homes. If you need to sell a property before buying a new one, this must be included as a conditional clause in the contract for a new home.
Spanish banks charge what they like when making foreign transfers and they may charge up to 0.7 per cent of the amount transferred as a ‘fee’. This can amount to a lot of money if you’ve sold a property in Spain and are transferring the money abroad.
It may be cheaper to obtain a banker’s draft and pay that into your foreign account, but check the fees first. Failing that, you can withdraw cash from your Spanish account free of charge, but the amount may be limited and it is, of course, risky to carry too much cash with you.
It’s important to bear in mind that (like everything) property has a market price and the best way of ensuring a quick sale (or any sale) is to ask a realistic price. As in most countries, it’s easier to sell a cheaper property, say one priced below €200,000, than an expensive property. However, there’s also a strong and constant demand for exceptional villas priced from around €350,000 upwards, particularly if they’re especially attractive and in a popular area or a superb location.
If your home’s fairly standard for the area, you can find out its value by comparing the prices of other homes on the market or those that have recently been sold. Most agents provide a free appraisal of a home’s value in the hope that you will sell it through them. However, don’t believe everything they tell you, as they may over-price it simply to encourage you. You can also hire a professional valuer ( tasador) to determine the market value.
You should be prepared to drop the price slightly (e.g. 5 or 10 per cent) and should set it accordingly, but shouldn’t grossly over-price a home, as it will deter buyers. Don’t reject an offer out of hand unless it’s ridiculously low, as you may be able to get a prospective buyer to raise his offer.
When selling a second home, you may wish to include the furnishings (plus major appliances) in the sale, which is a common practice in resort areas when selling a relatively inexpensive second home with modest furnishings. In this case, you should add an appropriate amount to the price to cover the value of the furnishings. If you don’t wish to include them you can use them as an inducement to a prospective buyer at a later stage, although this isn’t normal practice.
The secret to selling a home quickly lies in its presentation (assuming that it’s well priced). First impressions (exterior and interior) are vital when marketing a property and it’s important to present it in its best light and make it as attractive as possible to potential buyers. It may pay to invest in new interior decoration, new carpets, exterior paint and landscaping. A few plants and flowers can do wonders. Note that when decorating a home for resale, it’s important to be conservative and not to do anything radical (such as install a red or black bathroom suite, or paint the walls purple). White is a good neutral colour for walls, woodwork and porcelain.
It may pay you to do some modernisation such as installing a new kitchen or bathroom, as these are of vital importance (particularly kitchens) when selling a home. Although modernisation may be necessary to sell an old home, you shouldn’t overdo it, as it’s easy to spend more than you could ever hope to recoup on the sale price. If you’re using an agent, you can ask him what you should do (or must do) to help sell your home.
If a home’s in poor repair this must be reflected in the asking price and if major work is needed that you cannot afford, you should obtain a quotation (or two) and offer to knock this off the price. Note that you have a duty under Spanish law to inform a prospective buyer of any defects that aren’t readily apparent and which materially affect the value of a property.
Selling Your Home Yourself
While certainly not for everyone, selling your own home is a viable option for many people and is particularly recommended when you’re selling an attractive home at a realistic price in a favourable market. It may allow you to offer it at a more appealing price, which could be an important factor if you’re seeking a quick sale. Even if you aren’t in a hurry, selling your own home saves you an agent’s fees, which can be up to 35 per cent.
How you market your home depends on the type of property, the price, and the country or area from where you expect your buyer to come. For example, if your property isn’t of a type and style or in an area that’s desirable to local inhabitants, it’s usually a waste of time advertising it in the local Spanish press.
Marketing is the key to selling your home. The first step is to get a professional looking ‘for sale’ sign made (showing your telephone number) and erect it in the garden or place it in a window. Do some research into the best newspapers and magazines for advertising your property, and place an advertisement in those that look most promising.
It’s also a good idea to add the words ‘no agents’ at the end of your advertisement, otherwise most of the calls you receive will be from agents keen to sell your home! You could also have a leaflet printed (with pictures) extolling the virtues of the property, which you could drop into local letter boxes or have distributed with a local newspaper (many people buy a new home in the immediate vicinity of their present one).
You may also need a ‘fact sheet’ printed (if your home’s vital statistics aren’t included in the leaflet mentioned above) and could offer a finder’s fee, e.g. e500, to anyone who finds you a buyer. Don’t omit to market your home around local companies, schools and organisations, particularly if they have many itinerant employees. Finally, it may help to provide information about local financing sources for potential buyers. Unless you’re in a hurry to sell, set yourself a realistic time limit for success, after which you can try an agent. When selling a home yourself, you must provide a contract or engage a lawyer to do this for you.
Using an Agent
Most owners usually prefer to use the services of one or more estate agents, in Spain or in their home country, e.g. when selling a second home in Spain.
If you purchased the property through an agent, it’s often advisable to use the same agent when selling, as he’s already familiar with it and may still have the details on file. You should take particular care when selecting an agent, as they vary considerably in their professionalism, expertise and experience (the best way to investigate agents is by posing as a buyer). Many agents cover a relatively small area, so you should take care to choose one who regularly sells properties in your area and price range.
If you own a property in an area popular with foreign buyers, it may be worthwhile using an overseas agent or advertising in foreign newspapers and magazines, such as the English-language publications.
Before he can offer a property for sale, an estate agent must have a signed authorisation from the owner in the form of an exclusive or non-exclusive contract. An exclusive contract ( exclusiva) gives a single agent the exclusive right to sell a property and usually includes a clause prohibiting a private sale. A non-exclusive contract allows you to deal with any number of agents and to negotiate directly with private individuals.
Most people find that it’s better to place a property with a number of agents under non-exclusive contracts. Exclusive contracts are rare and are for a limited period ( plazo) only, e.g. three to six months, and state the agent’s commission and what it includes. Choose an agent who regularly sells properties in your price range and enquire how the property will be marketed and who will pay the costs.
When selling a property, the agent’s commission is usually paid by the vendor and is included in the purchase price. Fees normally vary from around 5 to 10 per cent, depending on the price of a property, although they can be as high as 35 per cent in some rural areas. Fees are higher with an exclusive contract than with a non-exclusive contract. Shop around and negotiate for the best deal, as there’s fierce competition among agents to sell good properties (many agents ‘tout’ for properties to sell by advertising in the expatriate press).
If you sign a contract without reserving the right to find your own buyer, you must pay the agent’s commission even if you sell your home yourself! Make sure that you don’t sign two or more exclusive contracts to sell your home – check the contract (exclusive contracts tend to be binding) and make sure you understand what you’re signing. Contracts state the agent’s commission, what it includes, and most importantly, who must pay it. Generally, you shouldn’t pay any fees unless you require extra services and you should never pay the agent’s commission before a sale is completed and you’ve been paid.
Capital Gains Tax
Anyone selling a second home must pay capital gains tax (CGT), depending on when it was purchased and how long it has been owned. When a non-resident sells a property, 5 per cent of the price (called the retención) must be retained by the buyer (the notary will ensure that this is done) and be paid to the local tax authorities as a deposit on any tax due.
If you’re a resident in Spain and are selling your principal home and buying another in Spain, you must sell your home first before buying another in order to benefit from the CGT concession for residents.
If you need to buy a home before you’ve sold your current home, one solution is to buy it on a private contract and not register it until after you’ve sold your present home, but you should obtain legal advice on this option.
This article is an extract from Buying a home in Spain. Click here to get a copy now.