Before you start looking for the property arrange for a solicitor to represent you. He/ she will be needed at the very moment you decide to put in an offer. When you have made an offer and it has been accepted you need to put down a deposit. Unfortunately this is where a lot of people go wrong. Just ask yourself if you would sign a paper and commit yourself in the same way if you were in your home country, where you after all speak the language. Probably not. So why do it in Spain where the laws are different? Bottom line – don’t sign on the bottom line unless you know exactly what you are doing and you have a legal representative.
To buy a home it being a holiday home or a permanent home is a big financial commitment. Unfortunately it is not uncommon that things go wrong in the process which so easily could have been avoided with some planning.
Finding a Trustworthy Agent
There are numerous estate agents in Spain. Find an agent that you trust. It is important to do this before you go rushing off looking for homes or you may end up with no representation. This is especially important if you are buying a property off plan. An off plan is a property which is not yet built and which may not even have planning permission in place.
Before you even look for a property begin the process by getting a mortgage in principal from a trusted Mortgage lender/ broker. Do this first. With a mortgage approved it will significantly strengthen your offer when you find a property.
Risks and Rewards
It is always a greater risk when you buy an off plan. However the reward is greater in the return on your investment – appreciation in value since the cost of an off plan is lower than a property which is constructed and registered. An off plan property doesn’t in fact exist, so no search can be made on the particular property. It is extremely important you do some market research of the area, developer and of course agent. If you buy an off plan which has not even got planning permission it is advisable you research nearby developments and the local area in case there have been problems earlier. It has also happened that a constructor shows the plan to a prospective buyer, however once the property is registered in fact not all square metres shown are actually registered. This of course devalues the property.
If you’re looking to buy investment property abroad make sure you research the property market of the country you’re examining. Look at it from the points of view of stability, growth potential and the liquidity of the resale market – after all, it’s all very well buying a property that then increases by 30% but what if you cannot then sell it?
The option to establish an offshore company for the purchase of real estate abroad is an option available to most people, but whether it is an appropriate course of action to take depends on many factors. Such factors include where in the world you wish to purchase, the value of the property and the laws relating to foreign ownership of real estate in that country. By using an offshore company to buy abroad an individual can sometimes avoid or reduce their taxation liability, avoid certain expenses and even laws. But the applicability of this option is something that can only be determined on an individual, case by case basis. If you would like to discuss the suitability of this option for your particular circumstances we have direct access to some of the most experienced experts in the offshore company formation, use and on-going management fields. Please contact us with your requirements and we will have an adviser contact you at your convenience.
If you’re buying off plan or remotely (e.g., from the comfort of your arm chair back home) you need written confirmation that what you see is what you get. All too often agents will show you the top of the range property and finish when your budget is going to buy you something slightly different. You need every detail confirming from the size and location of the plot, the size of the property with each room broken down, detailed floor plans with the location of windows, doors and integral items (from air conditioners to kitchens), the finish on doors, walls, floors, bathrooms, kitchens, external areas etc. And get some idea of the build quality. You might expect the quality to be on a par with what you have back home but you could be mistaken, what if there is no damp course or no cavity wall for example?! If possible visit other sites that the particular developer or builder has already completed to see the standards to which he builds to, and have all important site completion details written in to the contract with a clause stating you do not hand over final monies until you are 100% satisfied. Please don’t assume anything! So many people get caught out because they don’t ask the right questions at the right time.
Do research into the local market and find out how the property buying process works in your chosen country. Never ever assume anything; never ever accept it when someone assures you of a fact…get facts and assumptions confirmed by having them written into the legally binding contract. Know that if something looks like a bargain and is selling at a price that is ‘too good to be true,’ chances are you should walk away! Employ the same defensive tactics as you would employ if buying ‘back home!’ I’m not suggesting you set out determined to see the bad in everyone and convinced that each person you speak to is trying to rip you off, but at the same time I’m telling you that not everyone you come across will have your best interests at heart!
You need to know whether you will be asked for a securing deposit when you register an interest in a property, you need to know how much this will likely be. You have to know whether an offer is legally binding, you need to understand how property law works in your country of choice. All this research can be done before you even set foot on the plane! If you arm yourself with solid basic facts then you will be in a strong, confident position and you will be less likely to fall for estate agent exaggerations.
Don’t be rushed into making a decision or parting with cash. Make sure you employ independent and qualified legal support to ensure your interests are protected. If you are unsure of the meaning of any paper work you are asked to sign make sure you get it translated. Pay attention to detail – make sure boundaries are marked on the contract you sign, make sure your solicitor confirms them with the local land registry office.
When you consider just how significant a purchase ‘property’ actually is to the average buyer, it’s very hard to fathom why so many people are willing to purchase unseen, to buy off-plan or remotely via the internet, and basically without the slightest inkling of just what it is they’re getting for their money.
You will no doubt be seduced by the surroundings of your chosen destination into dreaming of the idyllic holiday-like lifestyle you can enjoy all year round when you secure your dream home in the sun, but you have to ensure you tread carefully because there are traps and pitfalls at every stage of the property buying game and these facts do not change just because you change country.
