Navigating Spain's Property Market #4

This is #4 in a series of guides to help overseas buyers navigate the property market in Spain. The 1st guide covered the super-important issue of getting the right location for the buyer’s criteria and the 2nd was all about how we actually carry out a search. Number 3 went over what to look out for during the viewing phase and this blog moves on to the next stage, what happens once a property is chosen as ‘the one’. As with everything we do there are real differences between between how this can work with an estate agent compared with property finders like us, bearing in mind that the estate agent works for the seller whereas we work in the interests of the buyer.

Once our clients have a property in their sights it’s time to start the negotiations. Our task is to secure the property for the lowest possible price versus the seller who, of course, would prefer the highest possible price. What this means in practice is that the selling agent, who may already have quite a good idea of what their client will accept, will suggest an opening bid not too far from that figure. We may also have some idea of what the seller wants, particularly if we are dealing with them direct and no agent is involved, as it will have been discussed during our inspection of the property. Even when there is an estate agent involved we get hints and we expect to be told if there have been previous offers and at what level.

As agents for the buyer we are not concerned with what the seller wants but what’s right for the buyer. We take into account the back story, the reason for the sale, how long the property has been on the market and what similar properties nearby have actually sold for recently. I quite like to start a negotiation without knowing what my clients are prepared to pay but sometimes they will have already told me. Either way, my approach is to go low at the start, you can always go up but can’t come down. Sometimes, we are asked to suggest the what the opening bid should be but other times our clients tell us where to start and in these cases we will always tell our clients if we believe their opening bid is too high. In a recent case, this approach led to a successful purchase only slightly above what their opening bid was and definitely lower than it would have been if we’d started with their number.

In another case, my clients told me what they were prepared to pay for the property they had chosen but I already knew that the sellers would accept below that. I realise people find it hard to believe that I would disclose that because by doing so I would be reducing the commission due. But it really is different when you are working under contract for the buyer, we really do mean it when we say we are working in their interests only and I had information that I was contractually and morally obliged to disclose.? By the time we were done, my clients had negotiated the price to a level that meant they got the house, paid our fee and were still well below the figure that they said were willing to pay.

To survey or not to survey, that is the question! I can’t remember a single occasion when I was an estate agent in Spain suggesting the buyer get a survey before proceeding. As my job then was to sell a property, even if I knew it had some ‘issues’, the last thing the seller would have wanted is for them to be highlighted in a survey. Now, as I’m working for the buyer I always suggest having a survey, ideally before making an offer.? However, if there’s a lot of interest in the property and a risk of losing it, it’s better to get going on the negotiation, making the opening bid ‘Subject to Survey’. While it’s true that if the buyer is getting a loan there will be a bank valuation but that’s not the same as a building survey. In addition, the overseas property market has been dominated by cash buyers in recent years and, unless the buyer commissions their own house buyer’s report, they are buying blind and unaware of any defects that might affect the price they are willing to pay.? Property buyers in Spain should be aware that there are no laws requiring sellers or their agents to disclose anything negative about a property. In jurisdictions where laws to protect consumers have been strengthened, for example in the UK, sellers and agents may now be obliged to disclose the bad stuff or face fines and possibly prosecution, but in Spain it’s still very much caveat emptor, as the Romans used to say, let the buyer beware.