Buying Property in the Costa Tropical of Andalucia
We bought a home in La Herradura outside Almuñécar in the Costa Tropical of Granada,
Spain, in 2003 and have lived in the area ever since. Coming from the US where real estate and real estate
agents are highly regulated, we were shocked to find some of the practices that are currently taking place
every day. Based on our experience here is a little advice for the uninitiated:
- Research your real estate firm (inmobiliaria) thoroughly and get references from local bankers, tradesmen, attorneys, other homeowners, etc. The more established firms, whose owners are well rooted in the community, are the most honest. We have found that many real estate sales people, especially the lesser established, are willing to break the rules in order to secure a sale. Be on your guard.
- Find an independent attorney for closing the deal - don't blindly accept a referral from the real estate firm trying to make the sale. Attorneys and real estate firms often collude for their mutual benefit, not yours.
- Attorney fees are negotiable - do not accept their initial quote unless you feel it is truly "market" value (market = not much higher than what you could get by negotiating quotes from several other attorneys). So in other words, get several quotes and negotiate.
- Prior to making an offer, find a good general tradesman to inspect the house for mechanical or structural defects, especially if you are a foreigner. Spanish home construction & mechanics may be very different from that in your own country, use a local person that is experienced in the local Spanish way of building - do not trust your instincts.
- Some sales people will tell you that it is not "Spanish custom" to negotiate the sales price - it is a “take it or leave it” market. Do not accept this. If the seller does not like your offer then they simply don't have to sell you the house and you can either (i) raise your offer or (ii) find another house. In reality Spaniards are hard negotiators and this "they don't negotiate" is absolute nonsense. Everything in this world is negotiable. Don’t feel pressured to enter a higher offer than you feel comfortable with.
- Contrary to what many people understand, real estate sales agents in Spain are not required to be licensed and are not regulated like in many other countries around the world. There is no code of ethics. The most egregious things we saw were:
Both (i) and (ii) are highly illegal in many countries.
- Sales agents not submitting bona fide offers below the sellers asking price. Only the seller knows what he / she will accept.
- Sales agents being compensated by whatever price they can get for a property over a set price by the owner (for example, the seller is willing to sell for any amount in excess of 100,000 with the agent keeping everything over the 100,000 mark - what a huge commission potential and incentive for an agent to distort the truth).
- Get mortgage quotes from several banks, and again - negotiate. Spanish banks are able to customize loans locally. They are well regulated, and unlike many real estate sales outfits, are trustworthy. Spanish bankers are well compensated and have enough job security where they don’t necessarily benefit from being too aggressive.
- Check with the ayuntamiento (town hall) that there is an escritura (deed, or registration of ownership) on file and that the name on the escritura corresponds with that of the seller. We've repeatedly heard of homes being sold by individuals who do not own the property, and then disappearing with the deposit or sales proceeds soon after.
- Check with the ayuntamiento that the house is built on properly zoned land. We've also heard of unscrupulous builders building on land that they do not own, or land that by law is not zoned for development (for example “green zones”, are designated natural habitat areas). When this happens, the houses are torn down by the ayuntamiento when the illegality surfaces. These unfortunate buyers take a total loss, and the builders often disappear or hide the assets - good luck with collecting via legal proceedings in this unfortunate event.
- Be careful about any property with empty land around it (in front, immediately or further down and to each side) that can be later built upon, blocking your former beautiful sea view. We know of too many instances on the Costa Tropical where a beautiful sea-front home later faces into the back of an ugly hotel or apartment block. This area is quickly being developed so watch out!
- Don’t let sales agents rush you. Look at as many houses as you want to before buying. Sometimes if you show interest, they’ll often claim that others are about to buy the house in order to rush you into making a buy decision, remain neutral until you are truly ready.
So in summary:
- DO YOUR RESEARCH
- HIRE AN INSPECTOR
- DON’T RUSH
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Posted: Sept 8, 2008 at 4:13pm - IP: 188.8.131.52
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