Spanish Property Purchase: Buying Tips and Advice
Buying process: YOU MUST USE A LAWYER FOR ANY PURCHASES!
When you have found your ideal home the first step is to reserve the property with a holding deposit (this is usually 3,000€ but is negotiable depending on circumstances). This is normally paid to the lawyer where possible and only handed over to the owner after the initial searches have been made. This deposit takes the property off the market.
The owner cannot sell the property without refunding you twice the deposit. If you pay a 3,000€ holding deposit the owner will have to pay you 6,000€ back…it avoids gazumping. If you pull out of the purchase you loose the 3,000€ (unless there has been a problem found with the paperwork) again using a good lawyer should prevent any of this.
Upon the payment of this 3,000€ any stipulations you want entered into the contract should be made, apart from the obvious ones, These are what we call “subject to clauses”. i.e. subject to a mortgage being obtained, or subject to the furniture being included etc. Subject to clauses such as: debts on the property or motorways going through the living room are standard clauses in the contract, these are just extra clauses inserted into the contract which crop up from time to time.
If there are no paperwork problems the deposit will be released to the owner ASAP, remember the property is still for sale until the owner has received the deposit. Then a balance of the 10% (less the initial holding deposit) will be due within 14-21 days. It is normally at this time that the date will be set for completion of the purchase. This is normally up to 3 months, you will receive an “on or before” date: for example: If you pay your deposit on the 1st of March you will be expected to complete on or before the 1st of June but purchasing a house in Spain can be very quick and can literally be done in a matter of a couple of weeks if both parties agree.
That’s basically it. It’s very straight forward and we accompany you all the way, notary appointments, Nie number applications etc. It is a lot easier than buying in the UK and we are there to help you every step of the way.
If you are very busy you can even give the lawyer power of attorney to sign for you thus making it unnecessary for you to even attend the signing.
Before your visit
Property in Spain can sell very quickly and if you are seriously looking to purchase this trip, I would advise:
• You bring 2 passport photographs of each person (purchasers)
• Download and complete the NIE number application forms from our site, NIE Application Form , These are required in Spain to buy basically anything.
• Have access to 3,000€ for holding deposit. Credit or debit cards (you may need to inform your bank of your intentions). This is used to reserve and take the property off the market. (As a lot of credit cards have withdrawal restrictions, the 3,000€ holding deposit is a general figure and very flexible to suite your circumstances.)
Most importantly…You will need to have sufficient funds readily available to be able to transfer a 10% deposit within 14-21 days of the initial holding deposit. Too many people find the right property and because they do not have access to a 3000 euro holding deposit or the balance of the deposit they loose the opportunity to buy.
In Spain, opening a Bank account is very easy and the banks will contact you in the UK and arrange everything over the phone absolutely free, if time is short this trip I would suggest opening a Spanish bank account before your visit. It speeds the whole process up and saves wasting valuable time whilst here. This can be easily arranged free of charge!
Categories: Buying Tips Tags: Clauses
5 Tips You Should Know Before Buying A House
Too often potential home buyers will spend more time telling everyone what type of house they plan to buy and in what area, but not enough time researching their personal finances, the cost to buy, the location or the real estate market. They will visit a realtor’s office with no real plan other than what type of house they want and information about where they work. Before, wasting valuable time and money, prepare yourself before you walk into anyone’s office by doing the following:
1. Know your personal finances and contributions to your home purchase. Make copies of your last four weeks of pay stubs, bank statements, and references. If you know that you may leave your job, possibly be laid off or the company may be closing, you may want to reconsider buying a house. However, if none of this applies to you, consider how much you have in savings and investments and make copies of these statements as well. Also, research first time home buying programs that offer down payment assistance.
2. Know what is on your credit reports from all three agencies (Equifax, Experian, and Trans Union). Pull your credit reports and make copies, this way you can prevent lowering your score with too many inquiries from lenders. Begin to pay off unpaid balances, dispute any charges that you haven’t made and pay off credit cards.
3. Know what you want. Make a list of features in a house you must-have, would like and not want. Decide on a location and research on how the equity has increased in your area. Consider the price range you can afford. Ask yourself what mortgage payment would you like to make on the house? Some banks offer a free online calculator at their websites to determine home affordability.
4. Know a mortgage broker instead of a mortgage lender & get pre-approved. The broker will work with many different mortgage companies, while the lender will just represent one. He or she will verify that you can indeed purchase a home loan in a specific price range. To obtain a pre-approval, a lender evaluates your credit history, and calculates your housing and debt ratios. You should expect to verify your income, length of employment and source of down payment.
5. Know a Real Estate Agent. In most states, a real estate agent must disclose which party he or she works for. When you contact an agent, verify that the agent can work as a buyer’s agent. They should not disclose confidential information about you to the seller’s agent. Ask the agent about his or her services if you. Also, request a blank copy of the buyer agency contract and study it. Don’t let anyone pressure you into signing an agreement that doesn’t feel right.
A good agent will walk you through the process and return your calls quickly.
Categories: Buying Tips Tags: Bank Statements, Buying A House, Personal Finances
How to Buy Houses with Little or No Money and No Credit
Buying houses with little or no money and no credit is not a myth. In fact, the process of using creative financing is exclusive to real estate investing and offers the buyer the maximum leverage possible – zero investment. So technically any profit the investor makes selling or renting the house is an infinite return on his capital ($0)! If there is a myth about using no money to buy a house, it is the myth that an investor must give the seller a monetary consideration to “seal the deal”. This is a myth because all contracts read “for the sum of $___ dollars or other good and valuable consideration…” and in this case, the valuable consideration is always the purchase of the property. Hence, no good faith money is needed to put the house under contract. An escrow deposit or “earnest money” deposit may be required depending on the seller and the offer the buyer makes.
It sounds good so lets look at the most common ways to make it happen:
The seller signs a Purchase and Sale Agreement with the stipulation that an escrow deposit will not be made until after the inspection period elapses. If the investor makes a good case for the reason, he may be able to get a 60 day inspection. This may sound outrageous, but it is common practice in our business. It works because we ask for it and compromise to 30 – 45 days instead of the usual 10 or 15 days that most investors get. This extended period gives the investor adequate time to find a buyer either wholesale or retail.
The investor can use seller financing in a couple of forms:
1.The most popular is “Subject To” financing where the seller allows an existing mortgage(s) to stay in place and the investor immediately starts making the monthly payments usually when the homeowner has vacated the property.
2.The homeowner allows a “Subject To” financing with his first mortgage and the buyer gives the seller a second mortgage for his equity for most of or the rest of the purchase price. This is appropriately called “Owner Financing” and can even be more than the purchase price if the seller agrees to help finance the funds needed for the investor’s rehab of the property.
3.The seller can lease option the house to the buyer who has a pre-determined time to re-lease option the property to an end buyer. The investor collects a larger “option consideration” that the seller gets, and he charges a markup of the lease payments to have yet another profit center. Lease options have come under regulatory scrutiny for investor abuse so get professional legal assistance before you try one. The industry secret to a lease option with a buyer is to do a “double contract” which is a lease and an option separately, but do a single contract with the seller. The single contract accrues equity with each payment while the double contract is a true lease and the buyer can be easily evicted versus a foreclosure in the case of a single document.
4.An option contract is just what it sounds like “an option with a pre-agreed upon “strike price” or purchase price for a set period of time. The usual “financial consideration” to get an option from a seller is $100 or whatever can be negotiated. The beauty of the option contract is the investor doesn’t have to have any carrying or overhead cost for the house.
5.An Equity Agreement is a contract between the seller and the investor that stipulates how the house is to be rehabbed and sold and the proceeds to be split among the seller and the investor. If you do one of these it is critical to have everything in very detailed writing so there is no misunderstanding between both parties.
In summary, the most popular of this partial list of purchase methods for little or no money and no credit is the “put it under contract for the longest possible time” and sell it wholesale. The really large profits come when the investor can work at getting at or near retail when he sells. The limiting factor for the investor is an accurate determination of all costs, expenses, and a salable market price so the house can be priced attractively enough to sell very quickly.
Categories: Buying Tips Tags: lease option, Second Mortgage, subject to
