The buying process

The Buying Process – Holmes Property Sales

Where should I buy:

The first order of business for any buyer is to decide on WHERE he wants to buy. The process of choosing the location should be arrived at using a pyramid system, i.e., starting from a more general location to a very specific one. The questions that must be asked to identify the specific location are as follows:

•    What are the reasons why I wish to buy a property? Travel accessibility, availability of facilities that are desired or needed, environmental ambiance and social compatibility must all be considered. Once done, you will be in a position to arrive at a decision as to which location meets these criteria.

•    Once the general location is identified, which specific area within this general location suits my needs? Am I for a long term investment and therefore do not mind buying in an undeveloped area that may give me better returns in the future, or do I want something fully developed to provide me with immediate comfort?

The Property:

It will be much easier if buyers can pre-establish their essential requirements or definite features to be avoided. Accessibility, stairs and steps, views, privacy, noise, style of construction, parking, etc. and of course size, number of bedrooms and bathrooms, size of kitchen and living room.

Price and getting a feel for the market:

To facilitate your search for the right property, it is essential that a maximum budget be decided before beginning to view properties. In this way, you avoid wasting time and provide vital information to the agent, so that he may focus on properties available that are within your means.

To get a better feel of the market, if the property meets your general necessities on paper, by all means visit it. This will not only give you a clear idea of what types of properties are available, but also provide you with valuable information of the values. With this knowledge of market values, when the time comes to negotiate the purchase, you will feel assured that the appropriate price for the property is being paid.

Having established these three initial guidelines, an agent will then be able to focus his attention on showing your properties that meet your criteria. Often, having viewed a few selections, a buyer will realize that he perhaps did not have the right requirements. As you view, it is important you pass your opinions on to your agent, as then the search can become better focused to your specific requirements.

Remember, a good agent is there to help you find the right property.

Choose a reliable agent:

This is the singular most important factor in your search for the right property.

In choosing an agent, knowledge of the area and experience is of utmost necessity. Holmes Property Sales, S.L. has worked in Sotogrande since 1979. It is the longest established real estate agency of the area and has always focused its attention exclusively in Sotogrande. Just like we recognize our limitations in selling in other areas outside Sotogrande, we too are recognized by our peers as the experts and professionals to rely on when in comes to finding property in Sotogrande.

In Spain you will find that everyone is “in the business”. Beware of the taxi driver, the waiter, and the most dangerous of all, “the friendly face” that introduces himself to you at the bar, by the pool, in the hotel. It is dealing with them where horror stories begin.

A good agent is one who tries his best to act professionally, ethically and honestly to both buyer and seller, as his reputation within the community is of utmost importance.

A good agent will have good working relationships with other good local agents. So you may well find, that if you are comfortable with the agent you are with, it is best to “stick with him”. If you do, he will check with his associate agents, and he instead of you will do the running around in order to find the right property.

Why use an agent?

The immediate advantages a buyer has in referring himself to a reputable agent are as follows:

1.    At no cost to him, the buyer is able to avail of the agent’s valuable know-how of the area.

2.    The larger inventory of properties that a reputable agent has will offer the buyer a wider choice to enable him to find the right property and at the right price.

3.    When a direct vendor, a developer, or a promoter sells, because of their bias, they will always claim that their property is the best. Whereas being unbiased and making use of his wide inventory, a reputable agent’s goal will be to direct you to the property you need.

In the end, the buyer should feel relieved to know that with the knowledge the agent has provided him, he will have bought the property that best suits his needs at the best price.

Choose a lawyer:

Unless you already have been recommended to a reliable lawyer, only heed the advice from someone who is independent. A developer or an agent is not necessarily the best person to make a recommendation, unless they provide you with a selection of lawyers to choose from.

The lawyer you choose must speak your language and make you feel comfortable. It will be your lawyer that will ultimately ensure your buying process is safe.

Should you be considering a re-sale property, we strongly advise that you pay for an independent house buyer’s survey report from a qualified surveyor, structural engineer or architect.

Cost of purchase:

Transfer tax (I.T.P.) of 8% (up to 400.000 €), 9% (for any amount over 400.000 € up to 700.000 €) and 10% (for any amount over 700.000 euros) – By law, this tax is payable by the buyer. It is a tax applied for the purchase of a property. The tax is calculated on the higher amount of the following, the  purchase price, the  “Fiscal value” of the property,  (the rate-able value multiplied by a multiple set by the Town Hall)  or the “Bank Valuation” of the property if the property is being purchased with a mortgage and the valuation is included in the mortgage deed,  It is therefore important to check what value the I.T.P is likely to be calculated on before committing to a purchase.

I.V.A (VAT) Is applied to the sales price of properties owned and being sold by developers instead of I.T.P. Usually when this is the first time the property in its current state is being sold. I.V.A on constructed properties is 10% of the purchase price plus 1.5% Stamp duty. Check that the entity that is selling the property can apply I.V.A to the sale before you pay the I.V.A, if they are not entitled to charge I.V.A on the transaction you could still also be liable for the I.T.P.

NOTE: For plots of land, commercial premises or commercial garage spaces owned by a developer, promoter or juridical entity, the tax to be paid is V.A.T. (21%), plus Stamp Duty of (1.5%).

Notary Fees – By law, the first copy of the title deed is payable by vendor. The cost (no more than 0.5%) increases according to the number of pages and complexity of the title deed and the value of the property.

Registry Fees – By law, this is payable by the buyer. These are calculated on the same basis as the notary fees explained above and are at most 0.5%.

Lawyer’s Fees – Lawyer’s fees are in the order of 1% of the selling price, more or less, depending on the lawyer and the price of the property.

Mortgage Costs- If you plan to purchase with a mortgage you need to consider that there are additional cost involved.

1. Arrangement fees = approx 1-1.5% of the Mortgage amount.

2. I.T.P on the Mortgage Value = Rule of thumb approx 1.2% of the Mortgage amount.

3. Notary Fees = Approx 0.5% of the Mortgage Value. (Mortgage amount plus total interests and penalties)

4. Registry Fees = Approx 0.5 % of the Mortgage Value. (Mortgage amount plus total interests and penalties)

Municipal Added Value Tax (Plusvalía Municipal) – This tax can be as little as a few hundred Euros or as much as many thousands of Euros, depending how large the land is and for how many years it has been owned. By law, payment of this tax corresponds to the vendor, but sometimes the vendor tries to have the buyer pay for it. Before accepting it, check with your lawyer to see what the amount is to be paid.

Summary – The total costs of purchase involved normally amount to a total of 9-10% if the vendor is an individual, and 12.5% if it is a developer entity. To this costs, you need to add the 1% lawyer’s fees. If you are buying with a Mortgage you will also need to add the Mortgage costs.

By Jackie Cruz - Manifesto · December 1st 2011