A guide to selling property in Tenerife
A simple guide to help you through the minefield of selling a property in the Canary Islands.
You have probably come across many guides to buying property in the Canary Isles but have not found many about selling them, so because of the lack of such available information, we decided to create this simple guide to selling property.
Our goal is to provide you with some useful information based on our many years of experience in the overseas property market, as well as to help and guide you do the right things and hopefully save yourself time and money in the process. We would like to simplify what some people might think is a nightmare, when in fact it can be a very easy process, providing that you stick to a few simple guidelines that you will read about throughout the guide.
If you own a property in the Canary Islands and are thinking of selling it, then this sellers guide is just what you need. They say that you learn something new every day and our aim is to help you become more knowledgeable and wiser with regards to the selling process. We hope that this sellers guide helps you, and that you enjoy reading it as much as we have enjoyed creating it for you.
The selling process in a nutshell.
The actual process involved in selling a property is quite simple, and providing that you use a professional estate agent and legal advisor to help you from start to finish it should be both trouble and stress free. Many of the horror stories you might have heard of will normally be down to an owner trying to cut corners and trying to sell their property on their own without any professional guidance. The old saying, “things that are cheap often end up expensive” comes to mind.
Before you do anything, you should first decide why, and if in fact you do really want to sell your property in the first place. Make sure that you think this through first before making the decision so that you don’t waste your time and that of others. You probably bought the property for a very good reason in the first place, so please make sure you take the time to decide if this is something that you really want to do, or is it just something you are contemplating. It is important that you make the right decision, because after all, you don’t want to regret it at a later stage.
There are obviously many reasons for wanting or needing to sell a property, but if is only due to financial problems or lack of funds, you might even consider renting it out to help with the running costs until your situation changes. We know many people who have sold their property because times were tough in that moment, only to regret it later when things changed and their financial situation improved. Your agent and legal advisor are probably not allowed to give financial advice, but they will have lots of experience and alternative methods of helping you out. It is worth having a chat with them to see what other options are available for you.
Once you have decided that you really do want to sell, you need to take the time to find the right, professional estate agent who will help you sell your property at the right price and in a legal and professional manner. Do your research first and make sure that you pay them a personal visit to see how you get along with them. You will need to be able to communicate properly with your agent, after all they will most likely be helping you sell one of your largest assets, so you need to be able to see eye to eye with them and above all, have confidence in them.
The process itself is quite simple and your agent will guide you. Your property must be completely free of debts and occupants on the day that you sign over the title deeds (escritura) to the buyers. These debts include things like, mortgages, taxes, utility bills, community charges if they apply, as well as any local authority bills like rates and plus valia taxes.
Once your agent has someone interested in your property, the potential buyers will have to pay a non-refundable deposit, which is normally ten percent of the sale price in order to secure the sale. You would then sign a private sales agreement with the buyers which your agent or legal advisor will arrange. A final date is included in the agreement stipulating when you would sign the escritura at the notaries office. That is when the title deeds to the property are signed over to the buyer, they become the new owners, and you get paid.
Once you have signed at the notaries office, the property will then have to be registered at the land registry in the name of the new owners and all of the utility services will be transferred over to them.
The timescale for a sale to take place can vary, but as a general rule it can take around six to eight weeks from receiving the deposit and signing the private sales agreement. This can of course be quicker or slower depending on the circumstances of the buyer and seller.
Use a professional agent.
It is so important that you choose the right professional agent or agents to help you sell your property and there are many important things you need to consider before making the choice.
Before you decide which agent to choose, you should do your research and make sure that you find a professional one, one that has an office in a good location and is open to the general public. A good agent will look after you throughout the whole selling process giving you constant feedback at all times, especially after any viewings, making sure that you are fully aware of what is happening as well as letting you know what potential buyers are saying about your property.
Word of mouth can be a great way to find an agent, but if you do not know many people who have sold property in the Canary Isles, you can do a lot of research on the Internet. If you are looking for word of mouth recommendations, then it is important you speak to people who have actually bought or sold a property, and not just some random person you meet in the local bar who has never bought or sold an overseas property. There are plenty of people who think that they know it all, but don’t actually know what they are talking about. I am sure that you know of, or have heard of people like this before.
These days with the Internet, it is very easy to find an agent online and then check out their reviews made by past clients, either on their Google business page or social media channels like Facebook etc. Take time to read these reviews because they are normally quite neutral and unbiased.
You might want to go back to the agent who sold you the property in the first place providing of course they gave you good service in the past.
You do not want to put your property for sale with a one-man band agent, a so-called estate agent who only has a website and works from a spare room at home. Believe me, there are plenty of these smooth talkers around who will be willing to “help” you sell your property. Would you deal with this type of agent at home? I doubt it, so don’t do it here, especially in a foreign country where you do not understand the language.
It would be a good idea for you to pay the agent a personal visit at their office and have them explain to you the whole sales procedure and how they will work with you to help you sell your property. You will no doubt have lots of questions and we recommend that you take the time to write them all down prior to your meeting with them. Hopefully, the information you will learn throughout this guide will help you be more prepared, ask the right questions, and therefore make the right choices.
Where do they advertise?
Most people who are searching to buy a property these days start their research online, so it is really important that your agent has a good online presence and marketing strategy. This starts with their own website, which you must take time to look at to see if it is professional and well presented, but most of all easy to use. With literally thousands of properties online these days, your agents’ website has to really stand out from the crowd, but more importantly, it must be very user friendly. A potential buyer will soon go to another agents’ website if they find a website difficult to use.
First impressions are really important when potential buyers are searching online for property, so you need to make a good impression straight away. Your agent needs to be using high quality photographs and a detailed description of your property, as well as a professional downloadable presentation brochure. If they don’t have these features, you might consider moving on and look for another agent that does have them. Get them to show you their website and print out the marketing material they use for other properties similar to yours. Ask yourself if this is the right impression you want to make to a potential buyer regarding your own property. Would you be happy to receive this type of information and sales material if you were looking to buy?
As well as their own professional and user-friendly website they should be advertising on a number of property portals like Rightmove overseas, Kyero, Canarian Properties, Idealista and Pisos.com just to mention a few. These portals may vary depending on the nationality of your agent and the market they are targeting, but they should be using at least a couple of them to get your property seen internationally and to be seen by as many potential foreign buyers as possible, not just buyers of your own nationality. Get them to physically show you where they advertise and don’t just take their word for it.
Do they work with other agents?
It is really important these days to choose an agent who works in collaboration with other professional estate agents. It can save you a lot of stress if they do, because you might only need to list your property with just one agent instead of various agents. You would then only have to deal with one agent, who in turn will deal with all the other agents they work with, who will all be marketing your property, and therefore taking away any potential stress and headaches from you.
If you choose an agent that works with others, and can prove it to you, there is a good possibility that they will sell your property faster than an agent who works on their own. This is common sense. The wider you cast your net, the more potential buyers you will catch.
What are their agency fees?
This is obviously a very important question to ask and is sometimes the very first question an owner asks, but please do not choose an agent just because they are the cheapest, it does not mean that they are the best one for you. You should stay focused on finding the best agent, one that can get the job done in a professional manner instead of basing your choice on how much they charge. There is an old saying that states that cheap things often end up being expensive in the long run, and this is the same for your agency fees.
Agency fees may vary from agency to agency, and can range between 3% to 6%, but the going rate for a professional agency is 5% plus IGIC, which is the Canarian equivalent to VAT or IVA. Most estate agents work on a “no sale, no fee” basis as well, which means that if they don’t sell your property it will not cost you anything.
If you are the type of person who is looking to get a bargain and want to negotiate the cheapest commission possible, you have to realise that most estate agents only make money when they make a sale, and given that the property business in general is commission driven, even down to their sales staff who may only get paid when they sell a property, you might want to take a moment to imagine the following scenario:
The sales person is working on a commission only basis, which means that they only get paid when they sell a property. They have a client looking to buy, and have two properties to show them. One of the properties is at the normal commission of 5% and the other one is yours, and you have negotiated a lower commission of 3% thinking that you have got a good deal. Which of the two properties do you think the sales person will be more motivated in selling, yours at the cheaper rate, or the other one at the full standard rate? Don’t waste time thinking and worrying about how much the agent is going to make out of the sale. Stay focussed on the end result, which is selling your property in the timescale you want, and achieving a fair price.
Some agencies might try and tempt you into signing an exclusive or sole agency agreement in exchange for a slightly lower fee of something like 3% or 4% but it is not necessary for you to enter into such an agreement. Firstly, there is no need for you to sign up with only one agent on a sole agency basis, and secondly, you will be limiting the audience of potential buyers. Many owners regret having signing an exclusivity or sole agency agreement because they are usually locked into it for a long period of time and do not have flexibility to do what they want with their property. Imagine signing up with an agent for 12 months and then finding out after two months that you are not seeing any results and don’t like the way they work, you will be stuck with them until the agreement runs out. Then what do you do?
Find an agent that works in collaboration with a wide range of other agents, especially agents of varied nationalities. There are lots of potential buyers from all over the world, not just of your own nationality. You should be making sure that your property is being offered to these potential foreign buyers via a good network of international agents. You will not have to physically deal with any of the other agents, because your main agent will do all of this for you. If your agent sells your property via one of their collaborators, they will have split their fees with them which does not cost you any more money, but is another reason why they will want full commission in order to make it attractive to their network of collaborators.
If your agent asks you to sign an agreement to allow them to sell, make sure that you know exactly what you are signing up for, and please get it checked out with your legal advisor before signing anything. You don’t want any surprises. We have dealt with many owners who had signed an agreement to sell their property without actually taking the time to carefully read the content of the agreement, and more surprisingly, not even knowing what they have signed up for, only to find themselves locked into an exclusive agreement for a long period of time that they can’t get out of, and even getting penalised if they sell it themselves.
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Getting the price right.
When you decide to sell your property, it is really important to get the price right before your agent starts to advertise it. For some people this is not an easy task. By all means, do your own research to see what other similar properties in your area are selling for. You should always get advice from your agent who will be able to give you an honest opinion about the current and realistic market value. It makes no difference what you paid for it. You might have bought at the peak of a market and are now selling in a trough, or you might have been lucky to buy when the prices were low and are now selling when the prices are high. Peaks and troughs in the market play a massive part in property prices but the current price of your property all depends on the market conditions when you come to sell it, and not how they were when you bought it.
A lot of owners believe that their property is worth more than it actually is because they have spent money on it renovating or decorating it to their preferred style. This means absolutely nothing to a potential buy who will most likely have completely different taste to you, and will therefore probably want to change things round to how they prefer them. Everything is down to personal choice at the end of the day.
Your property is only worth as much as a buyer is prepared to pay for it, so be realistic and listen to your agents advice. There is no point in putting it for sale at a price that no one would be willing to pay, you will be wasting the agents time as well as your own. Your agent should tell you if you are asking an unrealistic price and will help guide you towards a more realistic one.
If you do not agree with the agents advice, you can always get opinions from other agents to see what they say. If you are not happy with any of them, you can always pay for an official valuation which can cost around three to four hundred Euros or more, depending on the value of your property.
You do not want to put your property for sale at a high price and then have to start reducing it because you got it wrong, it doesn’t give a good impression to potential buyers who are closely watching the market. It might give them the impression that you are desperate to sell.
We find that most property owners ask for a higher price than they are actually willing to accept, and that buyers make offers lower than they are normally prepared to pay. This is normal practice, so please remember this when there is an offer on the table from a potential buyer, you should bear it in mind and take it into consideration. Very rarely will your property actually sell for the initial asking price so you need to be prepared for this. The important thing is that both buyer and seller are happy with the final price they agree on.
Use a professional legal advisor
A question we are often asked by people selling property is “do we need a legal advisor to help us when we are selling?”
The truth is, the seller does not necessarily need a legal advisor to look after them when they sell their property, but we would certainly recommend that they have one oversee the sale. It is the buyer who needs a legal advisor, and it is the buyer who has to pay for all of the costs involved in the purchase. So, if this is the case, why do we recommend that the seller uses one?
We recommend that the seller has a legal advisor so that they are properly looked after throughout the process. A good legal advisor will probably not charge you very much for overseeing the sale because there isn’t as much work involved as when they are representing a buyer, but they will guarantee that everything is done properly, and most of all, give you piece of mind that there are no loose ends left untied.
They will go over the private sales contract and make sure that it is fair for all parties involved, they will make sure that you are properly protected and make sure that your agent is doing their job right by looking after the interests of both buyer and seller, without being biased towards one or the other. If there are any difficulties in obtaining documents and last receipts, your legal advisor will be able to help you, especially if you have any outstanding debts with the local authorities or tax office.
All in all, for the sake of a relatively low fee compared to what you will be selling for, your legal advisor will look after you, making sure that your agent is doing a good job and that the buyers legal advisors do everything they are supposed to. They will probably even go with you to the notary on the day of signing.
Once the escritura has been signed, your legal advisor can double check that the buyers have paid your non-residents tax and plus valia if they have retained the funds from you, and make sure that you get proof of payments. They will also guide you regarding any possible capital gains taxes you may be liable for to the Spanish tax office, as well as making sure that all of the utilities and services have been transferred to the new owners’ name.
You could even give your legal advisor power of attorney to act on your behalf in the sale of your property which would mean that you would not even have to attend the signing. You would save yourself a lot of money by not having to pay for flights and accommodation. Just think of how much you would save by giving them power of attorney instead of having to fly over.
I have personally bought and sold many properties over the years since moving to Tenerife in 1985 and I would never dream of doing anything without having my legal advisor involved at all times. He has prevented me from making silly mistakes in the past, even though I have lots of experience in the property industry, he has saved me a lot of money over the years, far more than his legal fees have cost me.
If you want any personal recommendations for a professional legal advisor, please contact us and we will be glad to point you in the right direction in finding one that suits your personal needs.
What are the costs involved in selling?
When you sell a property there are various costs involved as you can imagine, and here is a quick look into what they are, and how much you can expect to pay. We are not financial advisors, so these figures are only meant to be guidelines and should not be taken as financial advice, they are correct at the time of writing and could be subject to changes. You will need to speak to your agent and legal advisor for an exact breakdown of costs at the time you decide to sell.
Your estate agents’ fees are an important factor when you come to sell your property. Their fees vary depending on the agent, and we have mentioned this in much more detail earlier in this guide, but just for now, let’s work on the figure of 5% plus *IGIC which is the Canary Islands’ equivalent to VAT in the United Kingdom or IVA in Mainland Spain. At the time of writing this guide, the rate of IGIC is 7%. Therefore, if your agents fee is 5,000€ the IGIC at 7% will be an additional 350€ which gives a total of 5,350€. Your agent must give you an official invoice for this which you can then give to your accountant to deduct from your possible capital gains tax.
*IGIC stands for Impuesto General Indirecto Canario
A law was introduced in 2013, stating that in order for you to sell or rent out a property, you have to have a valid energy performance certificate (certificado eficiencia energetica). Once done, the certificate lasts for ten years, but if you do not have one, you will need to get one done which can cost around 150€ depending on the size of your property. Your agent will be able to help you arrange this.
When you sell your property, you will have to pay a local tax to your local town hall which is called Plus Valía. In the past, there was some confusion about who had to pay it, but it is the obligation of the seller to pay for it and not the buyer as some people wrongly believe. This has nothing to do with your income tax or capital gains, it is something you must pay to the local town hall. Your legal advisor will be able to give you an in depth explanation about this but basically, the town hall will take the rateable value of the property when you bought it and then compare that to the new rateable value when you come to sell it, and apply a small tax based on the increased value. To get an exact figure of how much this is, you can go to your local town hall, tell them you are thinking of selling, and ask them how much the Plus Valía tax will be. They will be able to give you a simulation of the amount.
With regards to capital gains and income taxes, we cannot give you any advice on that because we are not financial or tax advisors and therefore not allowed to, you will have to talk to your tax advisor so they can advise you properly on this delicate issue. Anything we mention in this guide about taxes is only meant to be a general guideline. Please seek professional advice to make sure you get the correct information.
When you sell your property, you may have to pay capital gains tax depending on whether you have made a profit or not, this may vary if the property you are selling is your actual place of residence or a second home. If you are a resident in Spain, you must declare the sale of your property to the tax office when you submit your tax returns for that fiscal year. The current rate of capital gains tax at the time of writing is 19%. You should be able to offset many of the costs involved in buying and selling the property as well as any refurbishments you have made providing you have official invoices and proof of payment. Your tax advisor will inform you in more detail about this.
If you are a non-resident, it works differently. On the day you sell the property you will have to pay a non-residents tax of 3% based on the sale price. This is normally retained from you by the buyers on the day you sign the escritura. Their legal advisor will then pay this to the tax office on your behalf and give you proof of payment. This amount will then be deducted from any potential capital gains tax you may have to pay in the future. For example, if you sell your property for 100,000€, you will pay 3% on the day which is 3,000€. When your legal advisor submits your tax returns for the sale of the property, let’s just say for this example that your total capital gains tax bill is 5,000€ You would deduct the 3,000€ you have already paid and would therefore only have to pay another 2,000€.
Make sure that you speak to your financial or tax advisor regarding capital gains tax to make sure you get the correct and up to date information.
If you sell your property and want to move the funds back to your country of residence, your bank will most likely want to charge you for transferring the funds, and if you are exchanging your money from Euros to another currency, you will need to watch out for the constant fluctuation of the exchange rate.
There are many ways of greatly reducing the costs of exchanging and transferring your money which we will discuss later on in this guide. Please feel free to contact us for more information regarding this matter.
What documents do you need?
In order to sell your property, you will need a series of documents and if you already have them ready, it will help to make the sales process run smoothly. You don’t need them all when you first put the property on the market, but it is a good idea for you to have them ready for when your agent sells it, because at this stage, they will need them in order to continue with the sale.
When you place your property for sale, your agent will want to see a copy of the escritura so that they can verify who the current owner or owners are. They will most likely want a copy of it for their files. They can take all the necessary details from the escritura in preparation for the future sale of your property. If you have a mortgage on the property, you should tell your agent, they might ask you for a copy of your last mortgage payment.
You will need to have copies of your passports or identity cards as well as NIE numbers especially when it comes to preparing the private sales agreement.
An up to date energy performance certificate will be required on the day of signing the escritura, so if you don’t have one, you should get one done straight away to help speed things up. Your agent can help you with this.
You should also prepare copies of recent utility bills like water, electricity, rubbish and sewage. Even though you don’t need them until the property is sold, you should have them at hand just in case the potential buyers ask for details of the running costs. Once the property is sold, your legal advisor and agent will need copies of the latest invoices in order to make sure you are up to date with payments and to be able to transfer the utility services over to the new owner.
If your property forms part of a complex and you pay community fees, you will have to make sure that you are up to date with all payments, including any sinking funds (derramas). On the day you sign over the property at the notary, you will have to provide an up to date community certificate signed by the administrator and/or president, stating that you don’t have any outstanding debts to the community. You will not be able to sign over the property until your clear your debts. If you do have a large community debt and cannot pay it prior to signing, it can be retained by the buyers’ lawyer and paid direct to the community on your behalf to cancel the debt. Your agent and legal advisor can help you with this matter.
Another important document you must have is proof of payment of IBI for the current year. This is payable once a year, usually in the summer but runs from the 1st January until the 31st of December. Some people are not sure who is liable for this, but it is very simple. Whoever owns the property on the 1st of January is responsible for paying the IBI for the entire year.
Your agent should give you a check list of all the necessary documents needed and will tell you where you need to go to get them. If you have them all ready from the beginning, it will make life a lot easier for everyone involved, as well as helping to speed up the sales process.
Preparing for the photo shoot.
As we mentioned earlier, making a great first impression to potential buyers is really important, so having professional looking photos taken of your property is an absolute must. They are normally the first thing a buyer will see of your property. A recent survey we carried out with potential buyers showed that good quality photographs were at the top of the list for them, they expected to see good quality photos and detailed descriptions, which they said would help them decide if they wanted to actually view the property or not. First impressions count and the first thing a potential buyer usually sees are the photos.
If your agents uses a mobile phone to take the photos, don't worry. Many of the best smartphones have better cameras than most stand alone cameras these days. Wait until you see the results before judging, you might be pleasantly surprised. In preparation for marketing your property, your agent should take lots of different photos and then choose the best ones to use in their marketing material. Potential buyers want to see good quality images and as much detail as possible, and remember what they say about first impressions.
In order to help the agent do their job properly, there are a few simple guidelines you should follow, most of which is common sense, but you would be surprised at the condition some owners leave their property in preparation for a photo shoot.
The agents photographer will be used to working around all sorts of conditions but please play your part in helping them, and don’t expect them to work miracles. If you have not cleaned and prepared your property to a good standard for the photo shoot, they might even refuse to take the photos and want to come back another day when the property is properly prepared.
All you have to do is simply have everything clean and tidy as if getting ready for important visitors. Do not leave things lying around that will make the property look untidy. Make sure that there are no dirty pots and pans in the kitchen sink. Do not leave clothes piled up ready for the ironing, make sure that the beds are made and that the bathrooms are clean and tidy with towels nicely hung up. It will also help if you set out your garden and terrace furniture as well.
The photographer will want to spend plenty of time taking photos and they will of course move any unwanted objects in order to help the photographs come out nice. If you decide to stay in while they work, just leave them to do their job. It is important that you stay out of the way of the camera so that you don’t end up in the photos, especially if they are using wide angles lenses. If you have children or pets, please keep an eye on them so that they don’t interrupt the photographer. We once saw a photograph on an agents’ website of a luxury villa they had for sale which showed a dog drinking from the swimming pool. It was quite funny at the time, but didn’t look very professional.
If you feel that your property has some special features that would help the presentation, please point them out to the photographer so that they can maybe include them in their photographs if they think they are necessary.
Once the photographer has finished, they will normally take upto 48 hours to edit and prepare the photos. At this stage, your property can then be added to your agent’s website as well as other advertising channels including other property portals. You may want to take a look at the finished advert before it goes live just to check that the information is correct and to make sure you are happy with it.
Do you need a for sale board?
A question we are often asked by people who are selling their property is whether or not they should have a for sale board outside their property.
Our answer to this question is very simple because from experience, we have found that properties sell much faster when they have a for sale board displayed on them. The reason for this is simple. Many people will drive around the area they are interested in buying and they will take note of any telephone numbers they see on the for sale boards. They will then call the advertising agent to organise a viewing. It is common sense really but it can have its drawbacks as well as advantages.
Unfortunately, some potential buyers do not respect or understand that the owner of the property wants people to deal with their agent, and would like people to contact the number on the for sale board instead of knocking on the door to see if they can have a quick look round. We have even written clearly on some for sale boards “Strictly by appointment” and some people still knock on the door to ask if they can see it there and then, which can be annoying to the people living there.
Many owners who do not live in the property full time do not want a for sale board up because they think that they could be targeted by squatters or burglars which is fully understandable. We sometimes get owners telling us they do not want a for sale board up because they don’t want their neighbours to know their property is for sale.
At the end of the day, it is a personal decision for the owner to make. We as agents obviously prefer the for sale board to be displayed because we get more enquiries and sell the property faster, as well as advertising our company name, but we also understand that the choice has to be made by the owner at the end of the day and they have to feel comfortable about having the sign up.
Being prepared for a viewing.
When your agent is dealing with a potential buyer, they will normally go through a questionnaire filtering system with them at their office before they show them any properties. There is no point in showing your property just for the sake of it without finding out if they are serious buyers. Ideally, they should be in a position to buy within a decent timescale and must have the funds available or mortgage approved in order to proceed. This filtering system cuts down on time wasters who just want to be nosey or pass a bit of time on a cloudy day.
If you are not staying in your property when the viewings are taking place, your agent will normally go around to your property before they take the clients round to prepare it and make sure that it looks its best.
If you are going to be at the property when the viewing takes place, it is probably best if you pop out for a while to give your agent and potential buyers the freedom and time to do the viewing. Some potential buyers feel awkward if the owner is there, and do not want to stay very long. They will probably rush around quickly and not take the necessary time to have a good look at your property. From our experience, when the owners are not there, they take much more time on the viewing. It is important that they feel comfortable and at home, and more importantly, not under any pressure.
If you do prefer to stay in while the viewing takes place, you should leave your agent to do their job and not get involved unless asked to do so. You would be surprised at how many buyers are put off by an interfering, over keen owner who thinks they are helping or just being friendly, when in fact, they are just getting in the way. The potential buyers are there to see your property, and not to hear about your personal life, pets and new grandchildren. It can make them feel awkward and want to leave without taking the time to see your property.
One very important thing is to never give out your contact details to a potential buyer, even if they ask you for them. Make sure that all communication is done strictly via your agent. This sometimes happens out of all innocence and can lead to all sorts of problems. A “clever” buyer might try to make friends with the owner for one simple reason, to try and deal directly with them and get a lower price. You might think that they are being friendly at the time, but this is normally far from the case. Your agent will be used to negotiating on behalf of owners in order to get the best price possible. They will look after you at all times throughout the sales process and make sure things get done in a professional manner as well as making sure that you are protected.
Get feedback from your agent.
You should always ask for honest feedback from your agent after each viewing so that you can evaluate what potential buyers are saying and hopefully learn from it. If you take note of the feedback and take action about what people are saying, it can often help the sales process. For example, if the majority of potential buyers say that the price is too expensive, you might want to consider lowering the price. If a lot of them are saying that the property looks a bit shabby, a lick of paint would probably help to brighten it up.
You should speak to your agent on a regular basis and maybe go over things like marketing reports, advertising, and general feedback from the people who have seen your property.
If you are getting plenty of viewings and people are not even making offers, you need to do something about it. If you are not getting any viewings at all, something is wrong and probably needs changing. Maybe you keep getting offers lower than your asking price, and the offers all seem to be around the same price, it probably means that they represent the real asking price of your property and not what you think it is worth.
By talking with your agent on a regular basis, you will be able to come up with ideas to help you sell your property.
Dealing with offers and negotiating.
Once someone is interested in buying your property you will need to agree on a price that both you and the buyer are happy with. For many people, negotiating the right price can be quite stressful. Your agent will do this on your behalf and help you achieve the best price possible. They will be used to negotiating between buyers and sellers and know how to handle things in the right manner.
It is very rare that someone will offer you the full asking price for your property as we mentioned earlier, so you need to carefully consider any reasonable offer that are presented to you by your agent. If you have marketed your property at a fair price, the offer will normally be a reasonable one, and you will not be asked for a large reduction, unless of course you are dealing with someone that is hunting for a bargain.
There are a few things to take into consideration when faced with an offer. You should find out if the potential buyer already has the necessary funds in place to be able to proceed quickly or whether they need a mortgage, this can make a big difference to your decision. A buyer who has the funds in place will normally be of more interest to you because they should be able to complete quickly, whereas someone who needs to apply for a mortgage is not necessarily guaranteed to get the money they require, and it might take a few weeks for them to find this out. Some banks often tell people verbally that they will have no problem in getting the mortgage, and then turn round after a month and say no which can be very frustrating.
We would advise you not to take a deposit and sign a private sales agreement if the buyer needs a mortgage. If you do, you would have to take your property off the market while they apply for the mortgage, and if they do not get it, you would have to pay back the deposit and start to look for another buyer. It is easier to tell them to go and apply for their mortgage and come back when they have the funds in place.
Buyers will normally make offers lower than they are expecting to pay, and owners usually ask for more money than they would be happy to receive, so please bear this in mind when an offer is presented to you. If the offer is too low, you can always come back with a counter offer and finally agree on a figure you are both happy with. Do not be offended by a really low offer, some buyers will test you to see how low you are willing to go. It is nothing personal, it is just the way they like to work. It is important for you to realise that your agent is obliged to inform you of any offer they receive for your property, so if they come to you with a really low one, don’t be annoyed with them, they are only doing their job.
If you get a reasonable offer that you think is fair, you should carefully consider it. It is best not to be greedy and lose the sale instead of trying to hold out for an extra thousand Euros. You may end up losing the deal and regretting it later. Sometimes, the first offer you receive might be the last offer you get for a long while. Do you really want to wait a long time to sell?
Be reasonable and ask your agent for their honest opinion. A professional agent will guide you and give you honest feedback. If they think the offer is too low, they should tell you so that you can negotiate a higher price providing of course the buyer is willing to pay more money. Your agent will have a lot of experience regarding the current market conditions and will know if it is a reasonable offer that you should consider or not.
The sales contract and deposit
Once your agent has found a buyer for your property, it is normal procedure to ask them for a ten percent, non-refundable deposit in order to secure the sale. They will then proceed to prepare the private sales contract between you and the buyers. This has to be done in Spanish by law, so make sure that it is properly translated for you and that you understand the contents and know what you are agreeing to.
It will include the personal identification details for both buyers and sellers and will stipulate the agreed sale price as well as the timescale and terms and conditions of the sale. The time scale can vary and is an agreement between the buyer and seller, but the normal duration for a private sales contract can range anywhere between one and three months. This does not mean that it cannot be done quicker or slower, it is just an average.
The deposit will normally be held in your agent’s bank account. It can even be lodged with the notary in their bank account but there would be an additional charge for this service. It should always be a neutral party because there will be a clause in the contract that says if the buyer backs out of the sale, they lose the deposit and the money goes to the seller. If the seller backs out of the deal, the deposit will be paid back to the buyer and they can legally claim the equivalent amount as compensation from the seller. (For example. If they paid twenty thousand deposit, they will get that back and can then claim another twenty thousand as compensation from the seller)
It is normal practice to include a written or photographic inventory of the furniture and everything else that is staying in the property when you sell it. This would be an annex to the sales agreement and will be signed by both parties. It is also normal practice for the buyer to visit the property on the day of the signing to make sure everything is left as agreed.
The contract will also state each parties’ liabilities and commitments regarding the purchase. Make sure that you fully understand the content of the contract and that you know what you are signing. Your agent or legal advisor will gladly go over everything with you to explain things and answer any questions you might have.
Cancelling your mortgage
If you have a mortgage on your property, it will need cancelling before you can sell the property. This is normally done at the notary on the same day you sign over the property and is a straightforward process that your agent or legal advisor will help you with. Once you know the exact signing day, you will need to ask your bank for a mortgage cancelation certificate which basically tells you how much you owe them on the date of the signing, it will include any early cancelation fees. If the signing date changes for any reason you will have to get another certificate.
On the day of the signing, the buyer will bring a banker’s draft for the amount you owe made out to the name of your bank. One of the banks representatives will be there to sign the mortgage cancellation documents and collect the bankers draft. This will mean that you have paid off your mortgage and both you and the bank are happy, but this is not the end of it. The mortgage cancelation has to be registered at the land registry
It is in the new owners’ interest that the mortgage cancellation gets registered straight away, and in most cases, their legal advisor will make sure this is done on your behalf. There is a small charge for doing this which you will have to pay for. The normal procedure is that the buyer retains a sum of money from the proceeds of the sale and their legal advisor will make sure the mortgage cancelation gets registered. They will then give you proof of it being registered as well as any left-over money from the money they retained from you.
Your agent and legal advisor will be glad to help and oversee this and answer any questions regarding this matter.
Using a power of attorney.
It is common practice for buyer and seller to be present at the signing of the escritura, but in many cases the sale can take place using a power of attorney. This can make things more convenient for everyone involved as well as save you a lot of time and money due to the fact you would not need to buy flights and accommodation and come over for the signing.
We would not recommend giving your agent the power of attorney. You are better off giving it to your legal advisor who is totally neutral and unbiased in the whole transaction.
If you live overseas and cannot come over to sign the power of attorney, your legal advisor can prepare it for you and send it via email to a notary public office near to where you live so that you can sign it there and post it over to your legal advisor once it has been officially stamped.
Using a power of attorney is a personal choice and can be a very convenient way of doing things but please make sure you think it over properly and give it to a neutral party and not to your agent. It is a simple process and does not cost very much. Your agent and legal advisor can help you with preparing it.
Signing the escritura.
On the day you sign the escritura, you will sign your property over to the buyers and you get paid. The signing takes place before a Notary Public who will witness the transaction. You will have to take your original NIE and passport or ID card to show the Notary at the time of signing.
Your agent and legal advisor should be present at the signing to look after you and they will have made sure that all the necessary documents are in place and have been checked over. We have already mentioned which documents you need for the signing in a previous section of this guide.
Your agent and legal advisor will have submitted all the details to the notariy office prior to the signing date so that the draft of the escritura can be prepared prior to your appointment, but having said that, you will need to patient, you will probably be there for a long time as the notary office is usually a very busy place and they do not rush.
You will be shown the draft of the escritura which will be in Spanish, and it should be translated to you if you do not speak the language so that you fully understand what you are signing. You should have already gone over the breakdown of figures with your agent or legal advisor so that you know how much money you are going to receive on the day, and how you will receive it. Double check these figures and make sure that you are happy with everything.
The escritura will also be translated to the buyer if they do not understand Spanish and when all parties are happy, the original escritura will be printed out on numbered, official paper ready for you all to sign.
If you have a mortgage that is being cancelled on the day, the bank representative will also be there to sign the mortgage cancelation and collect the cheque to pay off the outstanding balance.
The Notary and translator will be present as well as buyers and sellers. The Notary will go over the details in the escritura and check that the information is correct and that everyone understands what they are signing for, they will verify all the NIE numbers and passports or ID cards and will ask all parties to sign, including the translator if one has been used. Once everyone has signed, the Notary will then be the last person to sign after having witnessed the event. Their signatures are usually very unique, so watch how they do it, you will be impressed. Their signatures have to be special and unique to avoid being forged.
You will then be handed the bankers draft or copy of the bank transfer and you will hand over the keys to your property. At this point everyone sighs a sigh of relief because the sale has finally been completed.
The new owners of the property will normally have to stay behind with their legal advisor so that they can sign all the transfer papers and standing orders for things like utility bills, community payments, so don’t be surprised if you are kindly asked to leave the room while they do so.
It is important that you ask for a copy, or “copia simple” of the escritura that you have just signed. It may take about fifteen minutes for the Notaries official to do this. You can also ask your agent or legal advisor to send you a PDF version by email. You might even be asked by your bank to provide a copy of this when you go to pay in your bankers draft, in order to prove where the funds have come from. You will also need it for things like cancelling insurance and for your accountant or financial advisor.
Things to consider after the sale
Once the sale of your property has been completed, there are a few things that you should take into consideration. The majority of these will normally be taken care of by your agent or legal advisor but please take note so that you can tie up any loose ends.
Cancelling your utilities and bank account
The new owners’ legal advisor will normally take care of changing over the utility services into the new owners’ name including standing orders. These will include water, electricity, rubbish, sewage, community fees, local rates etc.
It can normally take about a month to six weeks to do all of these things, and they should give you proof once they have been done. Because of the billing cycles here, you will have been paying your utilities in arrears so there will be certain bills that correspond to you and will probably be taken from your bank after the date of the signing, this is normal but only for a very short period of time until they are changed over to the new owners names.
If you have been sensible and involved a legal advisor, they will let you know once everything has been transferred over to the buyers so that you can then close your Spanish bank account if you want to. Please make sure that you check with your legal advisor before doing so. You don’t want to close it too early and miss paying something that corresponds to you.
Dealing with your bank after the sale.
Some Spanish banks will probably try and charge you excessive fees when paying in your bankers draft from the sale, as well as when making large transfers from your account. These fees are something you should negotiate with your bank in order to vastly reduce or waiver completely. Each bank is different and will have different fees and policies, but please make sure you talk to the director and be firm about this matter.
We have heard of cases where the client has told the bank they will be receiving a large amount of money from the sale of their property and then thinking of transferring the whole amount abroad and then closing their account. The bank in this case then applied the maximum fees possible as if they didn’t care, maybe because they were losing the client. It may be legal for them to do this, but we believe that this is completely unfair and wish to warn people about it.
In other cases, when people have told the bank they wanted to wait until the cheque clears and then discuss the possibilities and options of investing their money with the bank, they seem to be willing to waiver or reduce the fees. We will leave these two cases here for you to consider, and hopefully help you decide how to deal with your bank.
With regards to making large transfers from your account, you should talk to your bank and ask them how much you can transfer at a time to avoid transfer charges. There is normally a limit of let’s say fifty thousand Euros where the transfers are free, but if you transfer more than that limit, they will charge you to make the transfer. It makes more sense to make a few smaller transfers in order to reduce or eliminate these unnecessary charges.
Please take the time to speak to your bank and agree on what they are going to charge you and maybe reconsider telling them if you are planning to clear out your account and close it.
Paying your taxes.
We have mentioned capital gains tax in an earlier section but would like to point out once again that you should get proper financial advice about it so that you fully understand what your obligations are. You must declare the sale of your property and pay any taxes that are due.
If you are selling in Euros and then need to move your funds to another country which is outside of the Eurozone, you will have to take into consideration the constantly changing exchange rate. This can make a big difference in the money you receive and we recommend using a professional foreign exchange company who are experts in this field. They will guide and help you get a far better rate of exchange than the banks, and can save you a lot of money in the process.
For many years, we have worked with a professional foreign exchange company who are based in England who are great to work with and very friendly. You can contact us regarding this and we will gladly introduce you to one of their personal account managers who will explain how their services work and how you can save money.
We hope you have enjoyed reading this sellers’ guide as much as we enjoyed creating it for you. Hopefully it has given you some useful information and new knowledge which will help you make better quality decisions and help you sell your property in the right manner.
We would be grateful for your honest feedback regarding this sellers guide as well as hearing about your own experiences with the sale of your property, even if you have sold it with another agent or decided to sell it on your own. You can email us on firstname.lastname@example.org We would love to hear from you.
If you would like more information with regards to what you have read about in this guide, or would like help and advice about selling your property, please contact us using the details below. Better still, if you are in the area, then please call into our office to meet us and have a chat. We will be glad to meet you and more than happy to assist you.
Astliz Estate Agents
Avenida Quinto Centenario 48
Puerto de Santiago
38683 – Santiago del Teide
S/C de Tenerife
Tel – +34 922 867000
Website – www.astliz.com
Email – email@example.com