Property prices

Just been reading the new price comparison over on kyero and was wondering what is the general experience of buyers here, does the data tally up to real experiences? I'd heard some properties were selling for much less than 20% lower than the peak which their data indicates

In the Manilva area where I'm based, I would say prices are down by around 40-50%.  I've been keeping an eye on the Madrid market and I would say prices are only down by around 20% there. 

Prices have dropped a lot, and buyers have been scarce. The market has picked up a lot in the last month or so. So much so that we are running out of realistically priced properties for our clients!!

 I think prices on the over built coasts have taken a real battering but inland in the nicer areas they have managed to fair very well not losing too much so in the long run a good inland property should hold it's value in my opinion. 

Most new builds are significantly cheaper than they where at peak, however it depends how desperate the developer is to off-load!

For example, the few remaining units where we live are still more expensive than when we purchased in 2008, as the developer is not desperate to sell. Having said that, a bank repossessed unit sold recently for less than what we paid for our property, but that property is smaller and in a less desirable location down at the bottom end of the Urb. and with little or no views.

On the other hand, the new units at phase two of the Urb. where we purchased our apartment back in 2006, are less than when we purchased because the developer has gone bust and the banks that now own the units are desperate to off-load.

However the re-sales of units in phase one of the Urb. where our apartment is located, are more or less the same as when we purchased.

So prices depend not only on location and build quality, but also how desperate the vendor is to sell, therefore you cannot use a broad spectrum evaluation as to how much percentage properties have lost in value, as some have not, even in the area where I live.

I think TechnoApe is correct, that there are a number of factors that affect the price; the desire/need to sell quickly being the main one.

We bought in December, having looked in the area we like for around 3 years. We could have bought some real bargains, but there was always something not quite right, it's a very personal decision. If you are buying purely for commercial purposes then you will find bargains. If you want something a little special for yourselves, in the area you like, then it is a different matter. Desirable properties will always command a premium. So its really about what concessions you are prepared to make, and as the saying goes......location, location, location.

What is the best way to make sure that you aren't overpaying. Is it to get a bank valuation? Most properties have been on the market for a long time and I feel that the prices are still over-inflated due to the high commisions charged by the agents.

 One way is to get a firm that acts for you as the purchaser not the seller.  They will contact agents in your preferred area and put forward a portfolio of properties for you to look at.  They then take a cut of the estate agent fees so effectively it does not cost you anything.  They also check the legality of the property, ensure its structually sound and negotiate price on your behalf.

Hi Nigela,

Thanks for your reply. My concern is that this just adds another person to the chain, attracting even higher commisions. What I want to know is where I can find the fair value of a property before everybody adds on their slice.

Trendytots

You on the right track and part of the problem is there are many wanting a slice of the action. It's not unusual to have 3 agents at completion. In fact I had one recently involving four agents!  Agent in UK passed on lead to Spanish agent who passed on client to freelance agent who worked client and sourced property from another listing agent and no matter what anyone tells you buyer pays!!

The problem in Spain is there are many disguised agents or helping the seller out etc. It's hard to find a property where there is no agent unless you start walking and ringing se vende signs. Spanish buyers don't like dealing with agent especially English agents.

If you do enough research you can usually ascertain price for an area depending on property/location etc.

But at the same time I know one or two agents who are very good at sourcing discounted/distressed properties but these do tend to sell quickly - so by all means have a good agent on side.

I agree with all comments. Banks will overvalue their own properties to meet their own criteria for what percentage they can lend. They just want to transfer the mortgage for an empty apartment from their books to a personal mortgage. They will undervalue somebody elses property because they don't want to carry any risk.

Agents cannot generally be trusted. My opinion is, and that is all it is, is find an honest agent that is up front about the deal on each property. For this you need a recommendation. That's where the challenge starts. You need to networki n the area you want to buy in. Ask people on this forum. Different people will have different opinions, ity's for you to decide who you think you can trust. But...always ask them for the whole story, the decievers normally give themselves away at some stage.

Dave

PS. I know somebody in the Benalmadena area that I would recommend if of any use.

Hi Trendytots - I think you need to decide where you want to buy and then spend time looking at prices and comparing them all to find the real bargains.  We had a property which another agent had listed for 10,000€ more than us, so you do need to shop around.

Here in Orihuela Costa there are some very nice properties selling at less than half the price of 3-4 years ago.  The end price depends on lots of things - agents yes, but also what the seller can afford to drop the price to, and how desperate they are to sell.  The banks have been very slow to cut prices here but we sold a bank repo last week for 99,000€ which had originally been sold at 211,000€, so they seem to be beginning to cut their prices in line with individual sellers.  Having said that, I would not trust a bank valuation as their over-inflated valuations are what got a lot of people into massive negative equity in the first place!

The problem with Kyero and other price analysts is that it is very hard to find out what a property actually sells for here and asking prices are all over the place.  I sold a house a few weeks ago where the next door property , which was identical, was listed at more than 70,000€ more than ours.

Actually Fultond has hit the nail on the head with if only agents would tell the truth!

Agents seem hell bent on telling lies and the truth always comes out in the end.

How many times have I heard buyers say the agent says it's all legal/registered only to waste time and money to later find out that is not the case!

The good news is a lot of cowboys have gone out of business but we still have many disguised agents with websites but no fixed place of business.

The other problem you have in Spain is the question of who the agent represents - ie buyer or seller or both?

In Spain there are many agents who do not list properties and rely solely on the multi-listing systems to source properties.

This should mean such an agent being able to negotiate and get you the best deal because they have no relationship with owner/seller?

Of couse agents that list will usually try to sell one of their own properties first where they get 100% of the commission in preference to a multi-listing property whereby they will only get 50% of commission.

So worth asking if this is a property they have listed then you can negotiate also on commission .....

Agreed Faro. I have dealt with one of those agents with a great web site but no fixed place of business, who appeared to be very genuine, and was up front about the relationships with other agents. Some of them can work hard to find the right property at the right price throgh networking and endeavour. However saying that I didn't buy from him. I would prefer to be closer to the seller, as you do not know the scruples of the middle men.

When we finally bought, we found an agent that was also a property management company and had a close relationship to the sellers. We met the sellers, however the agent did the negotiating between both parties. The sellers were told what our maximum offer was, so I presume they were happy with the commission being charged. A good agent can keep both parties happy and still make a reasonable profit. The agent also did all the running around between the sellers, the lawyers, and us, to make sure the deal went through without hiccup.

 Hi Trendytots

Most agents charge a lot of commission in Spain - if you use a buying agent then they will agree to split the comission with the selling agent - it effectively costs you nothing but you get someone who is acting for you and will negotaite on your behalf - they have an idea of what the market is worth.  This is not the right thing for everybody but if you want a bargain and do not have the knowledge then i think it is an option you should consider.

I purchased a property off plan - I was told by the agent (a normal oneacting for the seller) that all bank guaranteesand licenses were in place - in the end I found out that the licenses wernt in place building work was stopped and has never restarted and at the moment it is  looking like i have lost 65,000 euros.  The site was a large siter with more than 2,000 buyers - many in the same boat as me.  If I had aused a buying agent they would have known the licenses wernt in place.  When I thought I was going to get my money back (3 years ago) I contacted a firm called Search and Survey and actually looked at properties with them.   I would recomend this to anyone buying in Spain - I think it is safer and not more expensive.

Nigela/Trendytots

Estate agents whether acting for buyer or seller will always lie. That's a proven fact!!!!

But what you do need is a good solicitor/lawyer who should do all types of searches before you hand over one penny. Don't even pay a 100% refundable reservation deposit - because you never will get it back!!!

I would suggest before you go any further you find a good solicitor/lawyer who will be ready to move when you find your dream property.

 The trouble is how do you know you have a good solicitor?  When I went to purchase my property there were a lot of solicitors acting for different people buying on the same site - they all got it wrong.  You would have thought with 2,000 buyers all using many different solicitors some would have got it right.  

Nigela

Good point!

1. Independent - too many solicitors/lawyers were introduced by estate agents and hence would not bite the hand that feeds them.

2. Experienced - Spanish lawyers are poorly trained and need to learn it all on the job. The property boom saw many firms expand quickly recruiting junior and inexperienced lawyers and then letting them loose on clients/files.

I think this is a question you would not ask in the UK?

I have been reading this thread with some interest. It seems to me that old habits die hard. I have previously warned people on this forum about the way agents, including UK agents, add huge amounts of commission on top of the prices being asked by the owners and then lie to their prospective buyers about what price is acceptable by the owner.

I really hoped that with the recession and downturn in Spanish sales, that Spain would take the opportunity to clean up its act and irradicate all the corruption and under-hand dealing, but it seems alas I was mistaken. It would appear that as buyers start coming back to the market, the agents are simply up to their old tricks. Nothing seems to have changed, Agents and solicitors in Spain still cannot be trusted. If you are going to buy in Spain, then just accept that somewhere along the line you are going to be ripped off - even if you are not aware of it. Shame.

To Roybud

I think your comments are really a bit hard on hard working agents who in the main are trying to market properties in a very hard market  and they are not all charging huge amounts of commission and I do not think that many lie to their clients as you say.

We only charge a commission of 3% of sale price and that is not a lot when you consider the amount of work and time we have to spend with clients also the large amount of  distance we have to travel to do veiwings maybe you should try it yourself.

Problem is for every good one there are 10 bad ones so it's easier to generalise.

I find this to be the case with every ex-pat I deal with in Spain such that I try to avoid doing business with them.

My pet hate at the moment is ex-pats insisting on charging VAT, always wanting to be paid in cash, and producing anything but an official VAT invoice when I know full well they have no intention of declaring the sale.

I find Spanish people are more open about it and either they don't charge you VAT or if they do they give a proper invoice and declare it.

Don't get me wrong I have no issue in paying VAT if it's correctly accounted for but not just to give some ex-pat an extra 18% profit.

I find there  are different rule for estate agents, because if you buy  anything through an agent you are going to get what you paid for and if the agent cannot get what you paid for your money is returnd, that is except estate agents. They take your deposite and if the builder fails to build you don't get the property. Do you get your money back from your agent? No the agent tell you it's not his resonsabilty and you must go to the developer yourself, some agent.

Fpegman

Let me illustrate. Below I have copied a post I made earlier today on another thread in this forum under 'Estate Agents'.

Hi Vee

You mention two agents below. If you check their respective websites you will see they both have the same house advertised at two different prices: Casa Andaluza 110,000, Undiscovered Spain 118,000. (There may well be others too) Undiscovered Spain state on their homepage "we bring you the best houses at the lowest prices direct from the owners" - oh really!! Who is going to pocket the extra 8 grand then - the owner, I don't think so...

It seems things are just carrying on as 'normal' in Spain. Unsuspecting buyers are STILL being ripped off by greedy agents adding large commissions on top.

Fpegman, How do you explain the 8k difference in price? In my experience, the way it generally works is the vendor sets a net price they want to receive and the agent adds their fee on top of the vendors price. Lets assume that the vendor has set a price and wants to net 105k after agents fees. If Casa Andaluza sell the property for their asking price of 110k they will receive 5,000 commission and the vendor nets their 105,000 - seems reasonable.

However, if Undiscovered Spain sell the property at their asking price of 118k, they will still only give the vendor 105,000 (why would they give them anymore?) and they take 13,000. Outrageous!!

However, what is even more likely is that the vendor has set a net price of 100k so Casa Anadaluza would get 10,000 (not quite so reasonable) and Undiscovered Spain will get 18,000!!!! (Totally outrageuos and dishonest!!!!)

I appreaciate that there are honest and hard working agents out there trying to do the best for their clients (remember estate agents usually work for the seller not the buyer). However, as long as the practice illustrated above continues, how the hell can buyers trust ANYONE?? I think it is time that this sort of practice is exposed and the agents that are guilty of doing it are named and shamed and surely the good agents (I assume you count yourself as one) should be taking the lead on this. Your job would be much easier if buyers knew that this type of corruption, as far as I am concerned that is what it is, no longer existed. Why don't you property professionals try and do something about it?

I suppose the problem is that the corruption goes so deep in Spain that even if you managed to stamp it out amongst the agents that still leaves the vendors, the lawyers, the notary's, the mayors etc etc etc. We live in hope...

 One way of helping to stop this is if you go into an estate agent to look at buying a property ask (or look around at info on the premises) check what commission rate they are advertising - if you dont like the information given then walk out.  Estate agents should act for the seller - but if they have no buyers they will not last long.

If you are looking to buy a property - or organise viewings - via the internet then when you have found the property you like you should look at several agents around to see what price they are charging and when you have found one you think is good then perhaps check with that agent to see what their commission rate is.

You are wrong to say Estate Agents in Spain act for the seller.

I know many agents who do not even list property and rely solely on the multi-listing systems to source property.

Some of these agents are quite good at finding buyers and put all their effort into finding buyers and then finding property. I guess a better title would be property finders.

Remember in less than 5 mins I could set myself up as an estate agent - subscribe to a multi listing system and claim to have 5,000+ properties on my books and being Spain I would also claim 25 years experience in real estate (I have none - but who cares).

This is also the argument for high commission because commissions are always split. I saw a deal recently which involved 4 agents!!!!

But this is not all bad and what you should be asking an agent if this is a property he/she has listed. If listed then you can dicuss price/commission. If it's not a property they have listed then it's harger depending whether there is a relationship between the 2 agents etc. But then you at least know the agent has no direct relationship with the seller and then you can really work at shafting the seller and getting the property at the very best price - sorry it's a buyers market!

Personally I would suggest ignoring asking price altogether and do you own research and make an offer and you might be pleasantly surprised at what gets accepted.

You are right, any 'Tom, Dick or Harry' can set themselves up as an agent and the problem is there is no professional body to set and monitor standards.

It is a question of transparency and who pays the agent. If agents don't act for the seller then who do they act for and who pays them? If they are acting for the buyer as a 'property finder' and the buyer is paying them then surely the buyer is entitled to know how much they are paying for this service. But this is never disclosed and because the agent (or multiple agents as you say) add their slice on top, their commission is effectively hidden within the asking price and this can mean the asking price varies considerably from agent to agent as already illustrated, leaving unwary buyers vunerable to being ripped off.

I believe many agents, particularly the British agents, prey on this vunerability and buyers will often pay a far higher price than needed because they don't understand how the system works.

Many agents, not all, seem to exist somewhere in a grey area between seller and buyer but don't act specifically for either - so they must be acting for themselves. To clarify things and to make the market place transparent, agents should state clearly who they are acting for and who is paying them. The person paying them, either buyer or seller, should then be told how much the fee is. We don't mind paying for a service as long as we know what the service is, how much it costs and what we are getting for our money.

roybud

You've hit the nail on the head there. Estate Agents act for themselves and are blinded by £$£$£$£$£.

They're carving up a high commission built into selling price depending or who listed property who introduced buyer etc. He who has the buyer is king and no major difficultly finding property for sale. 

I'll refrain from getting started on the British in business in Spain because I'm not too fond of them. About one in ten are good!

The only solution is for a buyer to do a lot of research. Sometimes you have to use agents to buy because the ex-pats selling always go with agent and it's fair to say that some agents can be very good in finding bargain properties and giving you the nod that the seller is absolutely desperate - behind on community - behind on electricity - behind on mortgage and if does not sell ASAP will lose property to bank. Again it's very much a buyer's market and sometimes I am even shocked by the price at which property gets sold in these situations!

An example for you all, as some followers may know we have searched high and low on and off for 12 years looking for that special house , on the way we have met every asshole Agent from Andulcia to Valencia , now we have found a house what we do we find , anotrher Asshole who has the property on her books!!

I found it some months ago , Agent has had it on her books for 5 years but we realised why, she does not pass on any offers to the Vendor unless it is enough for the AGENT TO CREAM OFF A LOT OF `COMMISION`!!

We have since found out she is charging the Vendor 5% , who incidentally is back in UK suffering from Alziemers so really does not what is going on, the son has power of attorney , no money to repair roof etc and the place is becoming sad and dilapidated , all because this Greedy Bitch wants as much out of it as she can!

We offered a very reasonable price but told the owners want a minimum sum of whatever , this we know is daft as its needs much work and larger house next door needs none and is asking eq of 40.000 more, work needed on house we like needs that and more spending on it , can`t be just because it has a larger garden either!!

Tried finding out the owners details via Town Hall but they can not allow us to have contact details , we have to employ a Lawyer to do this so we can be sure the Vendor knows of our offers etc, they have no money so we know they would be happy to sell now or another winter while hole in the roof is not going to make it worth much at all if its still not sold in another few years time!

Thats the kind of thing only some Greedy bloody English Ex pat would do , there is no professional attitude or ethos with these people , we just feel so frustrated and so very sad for the Owner who has no idea what is going on , or even probably that her house is becoming slowly derelict !!

This is inland North Costa Blanca !!

Vee

Vee !!!!!!!!!!

To Si's Partner

Surely you are not going to drag up that old chestnut you have already aired this rant before