Please note that the information provided in this article is of a general interest nature and intended as a basic outline only. You are well advised to contact a professional for advice specific to your circumstances. Nothing contained in this article should be seen or taken as the writer or the publisher providing legal or financial advice.
I have discovered an excellent cobbler’s shop in Old Town Marbella. Jose skill and artistry with leather are exceptional and his soling and heeling are brilliant and above all very reasonable.
High on the shelf above the polishing wheels and strange smelling glues are two pairs of beautiful English shoes gathering a deepening layer of dust. Jose tells me that these fine shoes are the property of one Juan Antonio Roca Nicolás – the now disgraced planning chief of Marbella.
They have sat there since S. Roca’s detention nearly a year ago as part of the Operacion Malaya mounted by Central and local government in Madrid and Seville to clean up the Costa del Sol’s act. In part the action was aimed at restoring confidence to the property and tourism sectors that had been damaged – though certainly not beyond repair - by the excesses of the latter years of the Gil administration in Marbella.
If you read the back of any repair ticket issued by any cobbler from Birmingham to Bombay you’ll see that there is usually a three to six months window after which unclaimed shoes can be sold to recover the costs of their repair.
When questioned as to why he has not put these shoes on www.Ebay.es – the local Spanish version of the Internet auction house phenomena - Jose laughs as if to say that their current owner will soon return to claim his shoes. This reluctant owner of what is prosaically called in English law “an unpaid seller’s lien” acquires good title under contract from the owner of the shoes to enable them to make a sale to a third party. In S. Roca’s case, I suspect few would willingly step into his shoes.
A Report prepared by Sigma –Dos for the Sur newspaper (March 2007) asked local people what they thought about the Malaya case. Astonishingly nine out of ten of those questioned believed that the former councillors, lawyers and business people arrested were guilty however only 53.2% felt that they will be convicted. It seems a lack of evidence is cited as the most likely reason for the accused to avoid conviction.
So may be Jose the Cobbler has a point. Does he really believe that he’ll soon see S. Roca returning to reclaim his shoes? May be…..
Increasingly we are seeing property owners who are keenly looking to sell their newly delivered apartments and older re-sale properties. Invariably these are multiple purchasers who have been required to complete and who are seeking to recover their investment. This is matched by an active market of those who have been in Spain for sometime and have large and valuable homes that they rattle around in. Rather than taking one of the many equity release options they have chosen to trade down to reduce their outgoings. Others are seeking to trade up having purchased some years ago an “Adosado” – a town house style property more suited to holidays – to which they have now relocated often sending their kids to one of the many excellent international schools but the house is just too small.
A number of colleagues in the estate agency business are reporting that business is brisk in all of the above sectors. So this year’s new spring buyer may not be just the traditional purchaser who has weathered yet another freezing winter in Northern Europe and who now feels that their bones could use some year round warmth. I thought they’d all put off their buying decision for a couple of years whilst the market experienced a “correction”. It seems there are a growing number of serious purchasers who will benefit from some purchase price reality that has existed for the last 18 months or so.
However, the laws of simple economics come into play when supply exceeds demand. The net result is a “buyer’s market” where only the fleet footed and well-prepared sellers can attract the spoilt-for-choice buyers.
Are you a serious seller?
Its is said that the majority of more mature Spanish property is always for sale. The thinking being, given the rise in values over the last five plus years, that a seller with substantial equity in their property may chose to sell if a purchaser came along and offered the right price. Well, for a serious estate agent such a seller is a complete nightmare. They are not committed to working with their agent to make a sale and seem ambivalent as to whether they should sell or not. They are just testing the water. In the current market such an attitude will not result in a sale.
So just how does a Seller place his/her property head and shoulders above the rest – and how can they close that sale?
1. Instructing an effective marketing and sales estate agent.
Over the last couple of years there has been much jostling amongst estates agents keen to grab an increase market share. What should a seller look for?
- Find a specialist in the region where your property is located or a more major business that has a local office. In either case the staff should have regular experience of the current values of properties in your urbanisation or town.
- Look at the estate agents web presence – are they seeking to shift hundreds of other off plan prospects or are they able to provide a professional and focused service for buyers?
- Rate – much has been written about the costs of retaining the services of an estate agent. In their defence costly marketing has a very important role to play, an agent often has to work a lot harder to sell a property in Spain. Granting an agency the exclusive right to sell – which I would advise against – may have the effect of reducing the rate charged.
- Price – don’t let your estate agent ask you “What do you want to achieve?” We all think our properties are much more valuable than they really are and the agent is the expert on price – or they should be. If you start to receive offers but they are substantially under the asking price consider whether the price is simply too high or whether the prospective purchasers are trying it on for a bargain. Don’t stick resolutely to the asking price if after a couple of months you have had merely low or no offers. You may have to compromise. It will put you in a position to move forward with your own plans that may involve a purchase enabling you to make a lower offer.
- Review – Insist on regular reviews from your estate agent showing the work done by them to market the property, the leads that have replied and visited the property. It is also vital to get feedback from those who have visited as to why they haven’t offered. If your property is “sticking” after a couple of months of conscientious marketing either the market is just not there for your property or the price is wrong. If you are a serious seller you’ll need to consider these elements.
- HIPs – I have been exploring with a couple of estate agents the idea of a seller funded Home Inspection Pack. This seems likely to become the norm in the UK but it is yet to hit Spain. The idea is that all documentation relating to the house, its deeds, (Escritura), any building licenses obtained for renovations, its services – electricity and water bills and local taxes – the equivalent of the Rates - should be collected together in one pack to ease the buying process. There is nothing worse for the purchaser’s lawyer than the need to request endless different documents that a serious seller could collect together in an efficient way from the start of the sales process.
2. Retaining a good Abogado – a lawyer:
Given the effectiveness of the Spanish Land Registry some believe that the cost of retaining an experienced property lawyer to process a sale is an expense worth saving. My advice is that such thinking is flawed and may risk the sale and generate consequential expense. Your Abogado will:
- Prepare and processing the sales contract.
- Deal with the redemption of any mortgage and other outstanding sums required due on the property, including as local taxes.
- Complete and correctly file all necessary tax returns.
- Try to minimise the seller’s exposure to Capital Gains Tax.
- Obtain a Tax Certificate from the local “Hacienda” – tax office - to negate the buyer’s necessity of making a 3 % retention of the purchase price.
- Assist the sale - All parties that comprise the buyer need to hold NIE number to make a purchase. We have seen examples where the lawyer has been able to obtain an NIE number for a purchaser at very short notice thereby potentially saving the sale.
3. Dressing the Property for sale:
“Unloved” or over designed interiors are – along with price – one of the most noted “turn off’s” for a potential purchaser. Consider employing the services of a “House Doctor” who will stage your house in the best possible light for sale. A member of TRG, Start2Finish is such a service who is very active in the Marbella region of the Costa del Sol. They visit resale properties with a view to neutralising bad or outdated taste and “dressing” them for potential buyer interest. Time after time “Start2Finish” is required to advise it owner clients to bin tired or outdated furniture which has been brought over from their previous home by the purchaser, often many years before.
Below is a simple guide of the costs of selling in Spain – what the seller is responsible for:
- The Seller’s own Capital Gains Tax – recently reduced to 18% from 35% for non-residents - on any increase in Escritura or Deed value declared to the Hacienda at purchase.
- Plus Valia Tax – This is a local municipality (Town Hall) tax based on the increase in the value of the land from when it was last sold. This is a one off payment. We have seen circumstances where this tax is paid in an agreed division between the buyer and seller. To avoid any confusion is important to decide at the outset of the purchase whether the buyer should be asked to shoulder none, part or all of it.
- Selling Agent Fees – plus IVA - as agreed with the Estate Agent – these can range from 3% to 10%
- Legal Fees – between 0.75% and 1% (plus IVA and disbursements) of the purchase price.