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Buyer Beware!

If you are considering buying a property in Spain (or renting), you should be aware that it is nothing like doing so in the United States, for example. The real estate market in Spain is not highly regulated as you might be accustomed to. There is no ethics governing body that ensures that all agents are working with the same high standards to protect client's best interests! Most agents in Spain will only show you their properties, and not that of other agencies, simply because their goal is to get the seller's and buyer's commissions. Instead of trying to sell their seller's property for the highest price in the shortest amount of time, they want double the commission.

Here are some examples of lessons learned that can make your real estate investment less stressful:

The rental market in Valencia is extremely competitive! There are far more renters than there are rental properties. Landlords and leasing agents know this. If it is too good to be true, it probably is! Always plan ahead when trying to find a rental. If you come to Valencia and expect to be able to find a rental in a day or a week, think again. ALWAYS visit the property in person if you can. If not, have a friend or a real estate consultant go visit the property for you. There are a lot of scams online with fake properties listed. NEVER pay any money before signing the lease and having the keys in hand. Landlords try to create such urgency with the hopes that a renter will skip all the necessary steps to ensure the apartment is valid. NEVER send any personal information such as NIE numbers, passports or financial information before you can confirm the lease agreement. If they tell you they can not proceed without a down payment or personal information before signing the lease, you should move on!

If you are considering purchasing a newly renovated home (especially one that was not previously a residence), you can also experience some of the same issues as the example above. Do not let any seller, or seller's agent, pressure you into making a decision without taking a few precautions. Often, a newly renovated space does not have the utilities turned on or have a water meter installed, for example. Many sellers do not want to pay for utilities while the home is being renovated. So always make sure before you sign the dotted line, that the utilities are installed and turned on. This is especially important in order to do a final inspection before you sign for the property at the notary. Further, you should always make sure that the "arras" (purchase agreement) stipulates that the utilities are on and who pays for what and when. Always ask for an energy certificate which must be provided so that you know how energy efficient the home is. A real estate advisor like myself, would look for these conditions in the purchase offer. But, if you buy without a real estate professional, many sellers will try to take advantage of you.

Always do a final walkthrough before you sign for the property at the notary. You want to make sure that the seller has not damaged the property since you have seen it last. You also want to make sure everything is in working order. Finally, you will want to confirm that nothing has been removed from the home that should have been previously disclosed.

Most agents in Valencia are seller agents. As previously highlighted, they do not want to show another agency's properties. If you work with them, and they represent the seller, are your best interests really being looked after? I would argue no. It is very wise to work with a buyer representative so that your best interests are being looked after. In Valencia province, the buyer pays the buyer's agent's commission. Outside of Valencia province, the seller pays both the seller's agent and buyer's agent commission. So, if you are paying, then you should have a consultant that will represent you!

Again, do not put yourself in a situation, where you are only giving yourself one week or one month to find a property. It takes far longer than that on average. When I was looking for our apartment from the USA, it took me 6 months of scrolling through over 1000 apartments before finding the one we purchased. Plan ahead. Give yourself time. Be flexible!

For those needing a mortgage to purchase a home, you will have to start that process 30-45 days before you write an offer on a property. Sellers in Spain, will not consider an offer if it is contingent on obtaining a mortgage until you have the FULL written commitment from the lender. You should always make application with a Spanish mortgage company BEFORE leaving your employment in your home country. There are different qualification criteria if you are a resident versus a non-resident. Please read my previous blog on financing in Spain. If you need a mortgage broker recommendation, please let me know!

Finally, always have an attorney involved with your purchase. Most will charge 1-2% of the purchase price. They will ensure that there are no liens, encumbrances on the property. They will make sure that the seller you are buying from is actually the owner of the property and that they have the legal right to sell that property. This is definitely not an expense that you try to skimp on. The risk of not using one is far more expensive than the cost of that attorney. Also, never use an attorney that has an affiliation with the seller or seller's agent.

There are so many more examples that I could give you that would fill a book! If you want advice on navigating the Spanish real estate market, I would encourage you to schedule a consultation through my "book online" section of my website. Any fees you pay me, will be reimbursed if you purchase your home with me or my associates.

Good luck!


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