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Buying Property On The Balearic Islands

by lasanclas, May 12, 2014

What do I need to know when purchasing a property on Ibiza?

1. Additional costs

  • Before you start looking for a property you should consider that on top of the advertised sales price you have to deal with taxes and further costs (Notary, Registry- etc). Normally these costs amount to about 11% to 13% of the declared value.
  • In Spain the broker’s mediation commission is included in the sales price which means that the buyer does not pay the real estate agency any commission, and on Ibiza this is the practice too!

2. Mortgages and Loans

In case the purchase of a property is depending on a mortgage, best get informed about bank conditions BEFORE you start seeing properties.

Although foreigners are promised mortgages of up to 60%, and Spaniards up to 70% of the property or estimated value (the lower of the two is used for the calculation), in our experience ultimately, and with many excuses, there will either no or a much lower payment.

Therefore to save you the disappointment, only start with the search for a property when you have received a written confirmation on the sum to be financed by the bank after they have checked all your documents and have translated certificates of earnings and possessions.

3. Valuation and expert’s opinion

On Ibiza there are no independent valuation reports, as known for example in other EU countries.

Even expensive bank valuations do not have any significance regarding quality, structural fabric or real market value.

Therefore whether you think the price of a property is worth it or not depends mostly on your own reckoning.

Generally it makes no sense either to calculate the price per square meter, as this value does not give you any information on how expensive or cheap a home on Ibiza is.

A trustworthy broker will inform you very honestly about good deals or not so good deals and will also explain why.

4. Possibilities of negotiating the price

Whether the advertised sales price is negotiable or not will depend on various factors. These include:

  1. Reason of the sale. In the case of emergency sales, which at times take place due to personal tragedies or financial problems, there is room for negotiation, from 10% to up to about 30%.
  2. Starting price. Has this been set very low in order to reach as many interested parties as possible, then there is usually very little room for negotiation (about 5-10%).
  3. Location and demand. The more special the location is or the more demand exists, the less the chances are for the owner’s willingness to negotiate the price. On Ibiza, sought after locations are a guarantee for stability of value. Since 2013 prices in these areas have even risen continuously. Thus the room for negotiation is only about 0 to 10%.

To get a feel for attractive and not so attractive offers we recommend you look at comparable properties.

From the first day our company LAS ANCLAS has focused on providing only properties with a healthy and fair value for money.

5. Dream property found

So when you have found your new Ibiza home and have agreed on the price with the owners, the next step to secure the purchase would be the conclusion of a sales-purchase contract.

Competent real estate agencies with years of professional experience can set up legally binding sales-purchase agreements and advise you on all the necessary steps. As a rule the pre-contract is legally valid once it is signed and a 10% down payment is made.

In case you are a first time buyer of property on Ibiza it is advisable to additionally consult a lawyer or a Gestoria. The costs will amount to about 1% of the purchase price.

The company LAS ANCLAS will advise you with regards to reputed lawyers or Gestorias.

6. Transfer of the property

A period of 3-8 weeks is usually agreed upon for the conclusion of the transfer of the property.

This usually gives both parties sufficient time for dealing with the necessary steps, but this period is nonetheless negotiable individually.

At the moment the sales-purchase deed is signed before the notary you will receive the keys to your new home, which means that the seller has to have moved out of the property by then.

7. Necessary steps leading to the purchase before the Notary Public

  1. Foreigners must apply for the Spanish tax number
  2. A bank account has to be opened
  3. In order to make your purchase as pleasant and uneventful as possible, our company once more takes care of the revision and procurement of all the necessary documents, as well as proof of payment of running costs (local taxes, community charges, water, electricity, loans, etc)

8. The day of the purchase

Shortly before the signing of the sales-purchase deed the notary will check all the documents, receive an updated deed extract over the internet and block the property for other sales.

The contents of the deed will be translated and / or explained to you by a person of your confidence. The notary, when he appears, will then repeat this procedure in broad terms.

In case a mortgage has to be cancelled or constituted, authorized bank representatives will be present to sign the necessary documents at the same time.

If all the parties involved agree with the contents of the deed, the payments are exchanged for the keys, the deed is signed and…

CONGRATULATIONS!!!

… you are now the owner of a property on one of the most beautiful and hottest islands in the Mediterranean!

Finally the notary will hand over a copy of the title deed (copia simple) and after a few weeks the original will be ready to be picked up.

This post is also available in Deutsch and Español.

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