Spanish Bank Repossessions
Buying bank repossessions can be attractive because of the potential low prices., banks are usually keen to off- load their own stock of properties to avoid paying the ongoing fees but it is an area where you must be very careful as properties are often SOLD AS SEEN
All the banks have their specialised estate agent arms that deal with the agents, for example Banco Sabadell with their company Solvia and at Sonrisa Properties we have links with most agents and offer a large selection of Spanish bank repossessions, many agents have these properties
With bank properties, our advice is don’t just focus on price, at Sonrisa we look at the complete package including, location, all ongoing fees, rental potential, finance options and condition.
These are new properties, where the banks have taken them back from a developer that has gone bust and they have been left standing for many years. Examples include hundreds of apartments around The Polaris World Golf resorts of Condado Alhama, and Terrazes De La Torre, properties on Corvera Golf, United Golf and Hacienda Del Alamo, but also Coastal properties around San Pedro in Alicante Vera in Almeria.
Previously Owned, Distressed Sales
These are properties that have been repossessed from individual owners, these are offered in various conditions and are typically left in a very poor condition, partly furnished but the better properties move very quickly. These properties are normally not in areas that suit the UK buyers and are more targeted to Spanish buyers On these properties we would always advise that condition checks are required, including checking for outstanding bills because an overdue account, for electricity water or community fees stays with the property, not the previous owner, often the utility supplier will not connect any services until all previous bills are paid. In a recent example a buyer had to pay over €5k to get water and electricity re-connected, in another example the IBI, council tax, hadn’t been paid for 5 years, a €4k bill. If you like a area often a better prices resale property can be found
The Buying Process
The buying process for a bank property is no different to buying any property and it is always possible to make an offer, but the process can take longer. Normally if you offer the full asking price you then pay your normal €3k deposit, the bank or agent confirms the contract and issue the private sales contract. If you make an offer, or if there are multiple bidders the banks have a sealed bid process, you will be asked to submit a best and final offer, through the process you get no opportunity to survey the property for defects, normally no services will be connected, so if you offer make certain that you understand ALL the conditions as they vary by bank. I have heard agents tell clients that bank properties are safer buys, that they don’t need the services of a lawyer to buy the property, our advice always employ your own independent lawyer
Buying Costs/Tax and Mortgages
The buying fees, legal fees and tax are the same when buying a bank repossession are the same as a resale or new property as explained on this site, THE BUYING PROCESS, without taking a mortgage you should allow between 12%-13% to cover everything.
There can be unexpected costs involved when someone pays a bargain price for a property, which your agent might not mention. All buyers pay the initial sales tax on the property, this is known as Impuesto de Transmisiones Patrimoniales (ITP). Everybody pays a percentage of the declared sale price, that is also shown on the deeds, typically an additional 10%. The tax authority is interested in the fiscal value of the property, the price set by the valuation that the local town hall will set for the IBO payments, with the minimum value they have, for all properties. For a period, up to 4 years they can raise a penalty charge, based on the difference in what they believe to be the value of the property and the price you paid, for example you paid €50k, taxman says it is worth €100k, your liability 10% on the difference or €5k. This doesn’t just apply to bank repossessions but any property purchased in Spain but it is possible to avoid the tax.
The best advice we can offer is remember if a property looks too good to be true it normally is