How is the standard purchase process of a property in Spain (I)?

The process to buy a property in Spain is quite straight forward and, although it may vary, even a lot, for special cases, the idea of these articles is to establish the general case. The starting point would be when the price and additional conditions (time frames, furniture, etc.) for a purchase are agreed between the parties. The process includes the reservation (or taking the property out of the market while the due diligence is performed), a Private Purchase Contract, the signature of a Public Purchase Deed in front of a Notary and the Land Registration of the property on the buyers name. Although the steps are simple, I am going to dedicate an article to each one of those to try to cover as many general aspects as possible.

1.– RESERVATION OF THE PROPERTY

Usually the first step is to take the property off the market with a deposit while the due diligence on it is performed. That deposit is in most of the cases held by the real estate agency or the lawyer representing the seller on a escrow account. In general, the document establishes that if the legal and physical situation of the property is correct for the sale, the buyers should proceed to the following step or they will lose that deposit. If something is not fully legal or a physical defect that makes the property unsalable appears during the due diligence process, the party holding the deposit should released back to the buyers.

a) What documentation is checked during the due diligence process:

- Nota Simple: it states who is the owner, the description of the property and the liens on the property.

- The property can be in the name of more than one individual or in the name of a company so in the first case, all owners should agree with the sale and sign the proper documentation or for the second case, a proper official of the company should be the one signing all documentation for the sale.

- The description of the property at the Nota Simple (including and not limited to address, sizes and neighbors) has to match with what the buyer is has been told it is buying.  

- The properties are sold, in general, free of liens. If any lien appears on the Nota Simple, the seller is liable to remove it from the record of the property at the Land Registry prior to the closing (that may include mortgages, embargos, urbanistic liens, etc.)

- Planning permission: that should be checked, specially in Marbella where the planning situation is not fully clear, to see if the property complies with the planning regulations of the area/urbanization/complex. This is not an easy step and should be dealed by a an expert on this issues like a lawyer, an architect or an experience real estate agent.

- Payment of the taxes (mainly council tax—IBI—and rubbish collection) and community fees: those expenses are charged against the property and should be checked that are up to date on payments.

b) A physical check by an expert technician or an experienced real estate agent to establish if the property has any defects that can or not be corrected or, or not, compensated. In case of major defects, like serious structural damage, the deal will be broken.

* Since each particular case is different, it is fully recommended that you check your own details with your lawyer.

 

What is going on with the housing prices in Marbella?

The information on the price index for the second quarter of 2016 for Marbella has been recently released by the Ministry of Housing showing the same situation we have been experiencing in, at least, the last three years that is that the prices are not showing a real upwards tendency. I honestly thought that we were going to see some increases but it is not the case for Marbella. In Estepona, things are a little bit different and a slightincrease can be observed in the curve.

Real Estate index price variation in Marbella & Estepona second quarter 2016

To contrast the information given by the Ministry, I have checked the index price given by one of the best real estate portals in Spain, Fotocasa. What we can see is that, although the values are different which is normal because the portal works with “for sale” properties, the tendency is about the same. I have included charts from Fotocasa for Marbella East, the Golden Mile and Nueva Andalucia. In Marbella East the prices are lower than at the end of last year, on the Golden Mile the prices went up a little at the end of 2015 but went back down during 2016 and in Nueva Andalucia they went up at the end of 2015 and are flat with a tendency down during 2016. Therefore, the same tendency as the official data: slight increases at the beginning of this year and since then flat.

To be honest, although I thought we were going to see increases in prices, I think it was more a desire for the normalization than a reality as I still can feel that the market is slow. What is true is that we are seeing active movements by developers and institutional buyers looking for land to build and opportunities in the market but the flow of final buyers is still slow.

 

East Marbella

East Marbella

Golden Mile

Golden Mile

Nueva Andalucia

Nueva Andalucia

El número de ventas sigue creciendo en Marbella y Benahavís

De nuevo buenas noticias, el número de transacciones cerradas en el primer trimestre de 2016 sigue al alza en Marbella y Benahavís. 2015 fue el mejor año desde el inicio de la crisis en 2008 y 2016 va por el mismo camino, especialmente en Marbella. En Benahavís, 2015 no fue tan bueno como el 2014 pero los números de transacciones cerradas de ambos años son mejores que los años anteriores a la crisis, 2006 y 2007.

Propiedades vendidas en Marbella primer trimestre 2016

Parece que la tendencia se esta estabilizando y que, a pesar de todos los desestabilizadores como la derogación del Plan de General de Marbella de 2010, el voto del Brexit y la inestabilidad política actual en España, esta para quedarse. Aunque este crecimiento aun no ha propiciado una subida de precios, si este crecimiento en transacciones es capaz de reducir el número de propiedades en venta en el mercado, es cuestión de tiempo que cambie también este índice de precios. Por tanto, y en general, estamos en una situación con un incremento en el número de transacciones, un número estable de propiedades en el mercado, después del importante incremento del inventario durante los dos últimos años, y precios estables con una ligera tendencia al alza. Este es un buen punto de partida hacia la recuperación de los precios y son muy buenas noticias para los que fueron duramente afectados por la crisis. En cualquier caso, espero que esta vez el crecimiento sea estable y no vivamos otra vez el periodo de especulación que vivimos de 2003 a 2007 que trajo las consecuencias que todos sabemos y hemos sufrido.

Propiedades vendidas en Benahavis primer trimestre 2016

The growth in sales numbers is stable for Marbella and Benahavis

Again good news, the number of transactions closed in the first quarter of 2016 in Marbella and Benahavis keeps its growing tendency. 2015 was the best year since the crash in 2008 and 2016 is starting in the same way, specially in Marbella. In Benahavis, 2015 was not as good as 2014 but the number of transactions closed both years are better than the ones of the pre-crisis years 2006 and 2007.

Number of properties sold Marbella 2016

Seems now that the tendency is stable and, despite all the destabilization issues like the derogation of the 2010 Urban Plan for Marbella, the Brexit vote and the instability in the Spanish political situation, is has come to stay. Although this growing tendency has not have yet a major effect on the increase of the prices, if this increasing number of transactions is able to reduce the number of properties for sale in the market, it will sooner or later impact the prices and we will start to see a positive change also in that index.  Therefore, and in general, we are in a situation with an increase in the number of transactions, a stable number of properties for sale in the market, after the important increase in the inventory in the last two years, and stable prices with a slight tendency up. This is a good starting point for the recovery of the prices and are really good news for those hardly hit by the crash. In any case, I hope that the growth this time stays stable and we do not live again the crazy and speculation period we lived from 2003 to 2007 that brought us the consequences we all know and suffered.

Number of properties sold Benahavis 2016

El aumento en los precios empieza a consolidarse

El Ministerio de Fomento acaba de publicar el índice de precios para el primer trimestre de 2016 con buenas noticias para todos nosotros salvo, quizás, para los compradores, ya que el aumento en los precios para Marbella y Estepona parece estar, poco a poco, consolidándose. Con base interanual y por primera vez desde 2008, se ven aumentos en el índice de precios de un 4% para Marbella y Estepona.

Variacion de precio por trimestre en Marbella y Benahavis 2016

He comentado en numerosas ocasiones sobre esta cuestión, y la última, el pasado enero, cuando todavía el crecimiento no estaba claro sobretodo viendo las sensaciones en la calle. Aunque el mercado sigue aún lento, parece que la tendencia al alza de los precios ya está aquí. Si se observa, el gráfico adjunto, se ve que en todas las localidades alrededor de Marbella, excepto por Fuengirola, los precios parecen haber empezado a subir. Para verlo aún mejor, he recopilado en el gráfico que se encuentra debajo, año por año, el incremento del índice de precio en las mismas localidades en los últimos tres años y podemos ver claramente la diferencia: en 2013 hubo un descenso medio aproximado del 10%, un mínimo descenso en 2014 como año de transición y aumentos en 2015. Todavía es un aumento moderado de un 4% pero lo importante es el cambio en la tendencia. Algunos analistas ya predijeron el mismo aumento para 2016 y parece ser cierto. Espero que la inestabilidad política en España y las elecciones no afectarán este renacer.

Variacion interanual de precios en Marbella y Benahavis entre 2013 y 2016

The increase in the housing prices starts to consolidate

The Ministry of Housing just released the data of the housing price index for the first quarter of 2016 with good news for all of us, except maybe for the buyers, as the increase in the housing prices for Marbella and Estepona seems to be, yet slow, consolidated. On a yearly basis, and for the first year since the 2008 crash, we are seeing increases in the index price of about 4% for both Marbella and Estepona.

price-index-marbella-benahavis-winter-2016

I have been talking about this issue and, even, when I wrote in January about the price index I still had some concerns about the recovery because I was still feeling, at street level, that the market was still slow, but seems that we are definitively getting out. Taking a close look to the chart we will see that in all the municipalities around Marbella, except maybe for Fuengirola, the prices seemed to have reached the bottom and are starting to increase. 

price-variation-marbella-benahavis-winter-2016

To get a closer view, I produced a chart with the year-to-year increases in the price index in the same municipalities in the last three years and we can see clearly the difference: in 2013 an average of 10% decreases, minimum decreases in 2014 as the transition year and increases in 2015. We are talking about a still moderate 4% increase but the important fact is the change in the tendency. Some analysts already predicted the same increases for 2016 and seems to be right. I hope that the political instability in Spain and the brexit vote will not affect this recovery. 

What is being sold in Malaga Province

I have always considered that it is important for us to know exactly what is being sold in the area we work at. In this line, the data of the percentage of units sold per price has always attracted my attention because most of the sales in the province of Malaga are properties under 150.000 €, 60% of the total units closed, and in the area I work at, Marbella and Benahavís, that is a product that hardly exists.

transaction-per-price-range-marbella-benahavis-costa-del-sol

On the chart attached, it can be seen the percentage of units sold on different price ranges and how it changes with time. There are two important conclusions we can extract from this chart: the first is that 60% of the units were sold under 150.000 € and that between 85% and 90% of the units were sold below 300.000 € and , the second , is that the tendency shows that in 2015 there were more properties being sold on the higher ranges, on properties on top of 750.000 €, where the percentage doubled in the last three years. Why is that important to Marbella and Benahavís, because, as it can be seen on the charts below, only 3,7 % of the properties below 150.000 € in the province of Malaga are in Marbella and Benahavís and, on the other side, 64,7% of the properties of top of 750.000 € are here. Therefore, and as conclusion, this change of tendency in the market for higher end properties will affect more positively to Marbella and Benahavís than to the rest of the municipalities of the province of Malaga as we are seeing on the positive evolution of the transactions of these two councils.

properties-for-sale-malaga-province-percentage-150000
properties-for-sale-malaga-province-percentage-300000
properties-for-sale-malaga-province-percentage-1000000

¿Qué se está vendiendo en la provincia de Málaga?

Siempre he considerado importante saber exactamente que se vende en la zona que trabajamos. Así, los datos porcentuales de las unidades vendidas por precio siempre han llamado mi atención ya que la mayoría de las ventas en la provincia de Málaga son propiedades inferiores a 150.000 euros, 60% del total de las unidades vendidas, y donde trabajo, Marbella y Benahavís, es un producto que raramente existe.

Malaga, Marbella and Benahavis - porcentaje de ventas por precio

En el gráfico adjunto, podemos ver el porcentaje de las unidades vendidas según los diferentes rangos de precios y cómo va cambiando según el tiempo. Hay dos importantes conclusiones que podemos apreciar: la primera es que el 60% de las unidades vendidas son por debajo de 150.000 € y entre el 85% y 90% de las unidades vendidas por debajo de 300.000 € y, la segunda, la tendencia muestra que en 2015 había más propiedades vendidas en los rangos superiores, en propiedades de 750.000 €, donde el porcentaje se dobla en los últimos tres años. Es importante para Marbella y Benahavís porque, como podemos ver en el gráfico, solo el 3.7% de las propiedades por debajo de 150.000 € en la provincia de Málaga están en Marbella y Benahavís, y, por otro lado, el 64.7% de las propiedades de más de 750.000 € están aquí. Por lo tanto, y como conclusión, este cambio de tendencia en el Mercado para las propiedades de más nivel afectará  más positivamente a Marbella y Benahavís que a los demás municipios de la provincia de Málaga como estamos viendo en la positiva evolución de las transacciones de estos dos ayuntamientos.

Malaga, Marbella and Benahavis - porcentaje de propiedades vendidas 150.000
Malaga, Marbella and Benahavis - porcentaje de propiedades vendidas 450.000
 
Malaga, Marbella and Benahavis - porcentaje de propiedades vendidas 750.000
 

El Mercado mantiene su tendencia positiva

Los datos publicados recientemente por el Ministerio de Fomento para Marbella han confirmado la tendencia general del 2015, el número de operaciones por año ha recuperado los niveles pre-crisis. Como se ve en el gráfico, la tendencia al alza de los últimos años continuó en 2015 con nuevas subidas en el numero de unidades vendidas. 

Aunque no estamos todavía en un mercado de compradores, si los números siguen subiendo de esta forma, podríamos ver el cambio en este 2016 o en 2017. 

Por contra, en Benahavís, aunque los resultados del año también fueron bastante buenos, los datos han confirmado lo que yo ya sentí en la calle, en el cuarto trimestre no se notaba tanta actividad. De hecho, ha sido el peor cuarto trimestre desde 2011. No tengo una explicación clara para esto salvo las subidas y bajadas normales del mercado o las incertidumbres en la economía europea pero ya veremos con los datos del primer trimestre si fue solo un dato coyuntural o si tenemos que preocuparnos de nuevo porque el mercado no acaba de consolidarse. 

Esta información del primer trimestre que se publicará a principios de Junio nos dará una idea sobre si los problemas con el Plan General de Marbella, la inestabilidad política del país o los últimos atentados terroristas están afectando al mercado. El tiempo lo dirá pero los comentarios que estoy recibiendo de mis clientes norte europeos son neutros en el sentido que no les están preocupando especialmente las negatividades que acabo de mencionar.

The Market keeps on with its positive tendency

The data recently released by the Ministry of Housing for Marbella confirmed the general tendency of 2015, the number of operations per year has recovered its pre-crisis values. As can be seen on the chart, the upward tendency observed in the last years has continued in 2015 with new increases in the number of units sold. 


Although we are not yet in a buyers market, if the numbers keep on going up this way, we may see the change in 2016 or 2017. 

On the other hand, in Benahavis, although the results for the year 2015 were quite good, the numbers confirmed what I had already perceived at street level, the fourth quarter was not that thrilling. In fact, it has been the worst fourth quarter since 2011. I do not have a clear reason for that except for the usual up and downs of the market or the uncertainties of the European economy but we will see on the first quarter of 2016 if it is just a temporary situation or if we have to worry again because the market will take some more time to be consolidated. 


Furthermore, I think that that information for the first quarter of 2016 to be released at the beginning of June will give us a clear insight about how the problems we are having with the planning permission of Marbella, the political instability in Spain or the recent terrorist attacks in Europe may affect the market. Time will tell but the comments I am receiving from my north European clients are, in a way, neutral in the sense that they are not perceiving the negativities I just mentioned.

Marbella, ¿Están los precios realmente subiendo?

En el último mes de diciembre el Ministerio de Fomento publicó el índice de precios para el tercer trimestre del 2015 mostrando en Marbella dos trimestres consecutivos de subida. Los incrementos son leves pero al menos es un cambio en la tendencia de los precios. Sin embargo, los precios siguen siendo más bajos que el año anterior.




Vimos la misma situación en 2014 y la tendencia nunca llego a materializarse pero este año se podría estar ante el punto de inflexión. Muchos analistas ya han previsto que 2016 va a ser el año de la consolidación, estabilización y normalización del Mercado inmobiliario en España con potenciales incrementos entre 4 y 6%, algunos van hasta 10% del aumento. La mejora de los números del paro, la reducción de los tipos de las hipotecas, la continua recuperación de la economía en general, que esperamos no quede afectada por la inestabilidad política, y los bajos precios son los propulsores del aumento de la demanda, especialmente de la demanda española, fuertemente mermada en los últimos años, y, como consecuencia, de los precios.




Si miramos el cuadro adjunto, CaixaBank esta ya anticipando la vuelta al optimismo en el Mercado que se vio en el 2005 y 2006, es decir, aumento en precios y ventas. 

Finalmente, un pequeño comentario de Estepona donde los precios siguen bajando. Marbella tiene más fama y renombre que Estepona por lo que la demanda es mas alta y ayuda a frenar la bajada de precios aunque creo que también vamos a ver en Estepona la estabilización comentada arriba.

Your new home awaits.