Here at Solseeker Worldwide Properties we are often asked to give an opinion on the current opportunities in Spain and to explain where the terminology or the latest "buzz words" have emanated from. There are some fantastic opportunities for astute buyers and understanding the real estate jargon, will enable you to focus on exactly which type of property will match your search criteria. Below are some of the questions which come up time and time again from buyers. 

Question:         What is a distressed property? 

Answer:           A Distressed Sale doesn't mean a problem exists with the property. Simply that the current purchaser is struggling to raise finance to complete the purchase, usually due to a change in their personal circumstances. Some off-plan property Investors have a desperate need to sell before completion as either; 

• Their circumstances have dramatically changed (death, Divorce, emigration, loss of job etc.), or
• They exchanged/completed on properties they could not financially keep, with the sole intention of flipping (selling on)
• These property owners are forced to make a decision, either;
• Sell for far less than the market value (distressed)
• Have the property repossessed by the Developer/bank and loose their 30% deposit

Question:         What is a repossessed property? 

Answer:           Developer:

When the developer finishes a project he has no alternative other than to foreclose on uncompleted sales. The developer will not give back the 30% deposit, as they have not failed in any part of their contract, nor do they wish to profit from someone's misfortune. The developer simply wants to leave the development and get on with his next project. 

As already mentioned, the developers simply want to move onto their next project and as they have already received about 30% of the purchase price from the previous buyer, they will often let us sell the properties at the original (2-3 years ago) price. This results in the property being approximately 10-50% under the current market value. We have been arranging up to 80% finance for our investor clients on these properties (subject to status and valuation). Obviously, these properties are the ultimate investment and usually sell within days. 

As we have a large network of Agents and Financial Advisers with investors waiting to buy. A combined 30 years of experience in the Spanish real estate market including repossessions and "distressed sales", we have recently negotiated with a number of developers to market their repossessions professionally and with due diligence.                  

Answer:            Bank:

Often from the more established market of mature property such as Spain there is an ever growing stock of properties which may be characterised as "Mortgagor Stock" "Mortgagor" is the English legal term for the "lender" in a mortgage arrangement. 

This is most usual where the Mortgagor has taken security over a property in return for having lent funds to a borrower called the

"Deudor (Hipotecario" in Spain, for the purchase or improvement of the property. The Mortgagor will have lent against a then relevant valuation but now finds that the borrower has failed to maintain the mortgage payments and is in default. The Mortgagor will usually be seeking to recover at minimum the funds loaned plus, if they are lucky the professional costs employed in their collection. 

Given our long-standing relationships with Spanish banks we are able gain access to their repossessed lists prior to them being published to the general public. This allows us to present properties which are the most desirable for someone looking to capitalise on real bargains.

Question:         What is a below market value property? 

Answer:           The expression "BMV" - Below Market Value has been coined to identify, in marketing speak, attractively priced properties which are pitched for sale at a price which is a certain percentage below the "real value" in the market careful investigation will show what "value" such claim are based on. Our properties will all have been valued recently by authorised organisations and reflect the current market conditions. Please bear in mind that if you wish to mortgage the property then the bank will authorise a valuation prior to any subsequent mortgage offer. 

Again our experience in the Spanish real estate market has allowed us to bring to market properties where the Below Market Value claim can be substantiated by recent valuations. We will also provide regional analysis and conduct comparables to support our findings. 

Question:         What costs are involved in purchasing a distressed property? 

When buying a property in Spain there are a number of taxes and fees applied to the purchase which must be taken in to account and planned for financially in order to avoid any problems. As a general rule of thumb, allow for 10% of the purchase price of property in Spain to cover the various taxes and legal fees. These taxes and fees are paid at the time of completion and signing of the deeds at the notary. A full and detailed buying guide is available and not only recommended, but in our opinion paramount in your decision making process.

Question:         Is an Inspection of the property necessary before I purchase? 

We strongly recommend that you take advantage of the Inspection Visits organised by our company prior to purchasing a property. Given that  the interest and demand in distressed, repossessed and discounted properties is very strong, it is wise to pay a refundable deposit to secure the property so that upon arrival it is still available. We will then organise a pleasurable itinerary to view the properties of your choice, organise meetings with lawyers and banks all on a one-on-one basis with one of our regional experts. Our aim is to make sure you are completely satisfied with your choice and understand fully the purchase.procedure.                      

Question:         Can I rent the property out after I have purchased it? 

Yes of course you can rent the property out after you have purchased it. Some of the properties in our portfolio have guaranteed rental schemes to take advantage of. This is a hands-off approach enjoyed by many of our existing clients. However, more traditionally in Spain clients opt for flexible personal usage coupled with local property management, this allows full access to the property at any time you wish, but allows you to enjoy rental yields during the periods which you do not choose to visit. During your visit we will discuss at length the advantages and disadvantages of both rental scenarios.