SOLD NAKED AGENT THE VENDIDO. Your Mini-Guide to Selling your Property in Spain. By Shaman Chellaram. Sponsored by.

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1 THE NAKED AGENT Your Mini-Guide to Selling your Property in Spain By Shaman Chellaram Sponsored by SOLD VENDIDO The Naked Agent Copyright 2008 by Shaman Chellaram 1

2 The Naked Agent Your Mini-Guide to Selling Your Property in Spain Selling your property in Spain is by no means an easy task. The current market conditions probably make it more of a buyerʼs market than a sellerʼs market. Nevertheless, if you do get the buyer through the door, you really want to maximise your chances of selling, rather than leaving it to chance. It is common knowledge that most buyers make up their mind whether or not they like a place within the first 30 seconds of entering. Therefore it is essential that as a seller you captivate the buyerʼs imagination as soon as they walk through the door. Many sellers fail to present their house in itʼs best light, and as a result lose the buyer as soon as the buyer enters the property. The key is to play to all the buyerʼs senses vision, touch, taste, smell, and sound. In winter, itʼs amazing what the warmth of a lit fireplace and the smell of something baking in the oven can conjure up in the buyerʼs mind. In summer, the taste of a cold beer or a glass of iced-water on the terrace overlooking the views and swimming pool can really help to sway a buyerʼs decision. Remember, as a seller, not only are you selling your house, but you are selling the type of lifestyle someone can enjoy by owning your house! Anyway, enough of the fancy talk, and letʼs get down to business. The Naked Agent Copyright 2008 by Shaman Chellaram 2

3 The Naked Agentʼs mini-guide to selling your property in Spain is designed to give you an overview of the entire sales process. This guide gives you some essential tips and covers the basics from pricing and preparing your property for viewing, right through to accepting a deposit and receiving your cheques on completion at the Notary. THE KEY LESSONS 1) UNDERSTAND THE COSTS INVOLVED IN SELLING 2) DE-CLUTTER, DE-PERSONALISE AND CLEAN YOUR PROPERTY 3) ENSURE YOU SHOW-OFF YOUR PROPERTY IN ITS BEST LIGHT FOR VIEWING 4) PRICE YOUR PROPERTY REALISTICALLY & COMPETITIVELY OVER SIMILAR PROPERTIES IN YOUR AREA 5) ENSURE YOU HAVE ALL THE CORRECT DOCUMENTATION IN PLACE TO SELL YOUR PROPERTY Letʼs cover a few of the selling basics and the sales process: The Selling Basics The Costs involved in Selling When it comes to selling your property you must take the following costs into account, otherwise you will end up with far less ʻin your handʼ than you expected: i) Capital Gains Tax: CGT is set at 18% of your profits. However, if you are non-resident, on completion 3% of your final sales price will be retained as a partial retention for your CGT liability. Please note, it is the buyers responsibility to retain this 3% and pay it to the tax authorities on your behalf. The Naked Agent Copyright 2008 by Shaman Chellaram 3

4 If your profit is lower than this amount you can claim back the difference. If it is higher, you should pay the balance to the Spanish taxman within 2 to 3 months after the sale. ii) Plus Valia: The Plus Valia is a tax based on the incremental value of the land which your property occupies over the amount of time you have owned it. Typically for small apartments this can be as low as 50 Euros per year of ownership, whereas for villas it will be significantly higher. The Plus Valia must be paid within 30 days of the the completion of your sale. iii) Mortgage Cancelation Fees (if applicable): If you have an existing mortgage on your property you will need to pay about 1000 Euros to ensure the mortgage is officially cancelled at the Notary and Registy Office. Often this amount is retained by the buyer for them to ensure the fees are correctly administered. You may also have some cancellation charges from the bank so make sure you check. iv) Legal Fees: If you choose to use a lawyer to help you when you sell, the conveyancing fees will be about 1% plus IVA/VAT v) Ensure all your community fees,, IBI (rates) and utility bills are up to date. If any of these bills are not up-to-date the buyer may insist on retaining any outstanding amounts due from the sales price vi) Real Estate Agents Fees: If you have sold your property through an agent, ensure you take their fees into account. Typically these fees will be about 5% plus IVA. Always consult your lawyer or tax advisor before selling your property, so you know exactly where you stand tax-wise, The Naked Agent Copyright 2008 by Shaman Chellaram 4

5 The Sales Process Get your property ready for sale Step 1: Ensure You Have Correct Documentation Check all the paperwork you have for your property Ensure you or lawyer has the Original Escritura (Title Deed) Ensure you have an up-to-date Nota Simple to confirm the property is correctly registered in your name Keep a copy of the IBI, community fees & utility bills. Ensure you have a copy of the necessary Licences If you plan not to be around, leave a Power of Attorney with your lawyer to sign any documentation on your behalf Step 2: Set your Price If you are eager to sell, price your house competitively. Compare your property to others on the market: Ask a few agents and check online. Do not let your emotions take over when pricing. Be realistic, and your property will probably sell. Be greedy, and you may be waiting a while! The secret is always to leave a little bit of profit in it for the next man. Ensure you take into account all the costs mentioned above so have a good idea of what you will walk away with ʻin your handʼ after paying all your fees and taxes. The Naked Agent Copyright 2008 by Shaman Chellaram 5

6 Step 3: Market Your Property Select two to four real estate agents to market your property Ensure the price is the same across the board Ensure the agents get the correct property documentation Ideally donʼt put it on exclusively with one agent, unless there is good reason to do so Donʼt try to bargain the agentʼs fees up front. Ultimately, you want them to sell your house, but if youʼre asking for a discount even before they have brought you a client then what hope do you have of really getting them to focus on your property as opposed to your competitorsʼ Market your property online (either directly or through agents) Take good photos to show off the property in its best light As it is your property, write a good description which best captivates the essence of your place. Confirm whether the property is sold unfurnished or furnished Step 4: Property Viewings Ensure your property is clean, uncluttered & depersonalised Draw back the curtains, open some windows and switch on the lights so the property looks bright and airy. You want to show off the property in its best light Light some candles or have some nice cooking aroma, so you conjure up a homely feeling so the buyer immediately thinks to himself/herself: I can picture myself living here When the buyers arrive, give them a quick overview of the property. Walk them through the main door and show them around. You or the agent can do this. If you feel a good vibe from the potential buyers, let them have a wander around themselves to give them a sense of whether they can picture themselves owning it. If they come back for a second viewing, give them more time to look around themselves and answer any questions. The Naked Agent Copyright 2008 by Shaman Chellaram 6

7 Step 5: Negotiating, Getting a Deposit and Signing the Reservation / Private Contracts! The buyers may be keen to talk numbers, but if they really like your property they first need to conduct the necessary property checks, and consult their bank/broker if they need a mortgage. Their lawyer or the agent will get in touch with you or your lawyer to get the necessary documents. The buyer may make an initial offer through the agent Once the property checks and mortgage approval are sorted, the buyer will make a formal offer. How low you go and what final price you are willing to accept is entirely up to you and your personal circumstances (but always take in account the fees, selling costs and taxes mentioned above). Many sellers fail to do that, and as result have ended up with far less in their hands than they expected after the sale has completed. If you agree a price, they may wish to pay an initial holding deposit subject to all the checks being in place. This deposit may be paid to your agent or to your lawyer, but always make sure there is something binding in writing, with you both yours and the buyerʼs signature, so you both know exactly where you stand. Ideally, as an owner you want a non-refundable deposit Typical deposit amount is about 10% of the price, payable in 2 stages: an initial holding deposit and the balance on signing the private contract. 15 to 30 days later. However, the terms of the deposit are negotiable. Agree all the terms and conditions. Stipulate a maximum completion date. Agree the status and amount of the deposit. You may also be liable to give double back if you pull out. That way both buyer and seller are equally protected. Alternatively, the buyer can sign an ʻoption to purchaseʼ contract. Discuss which type of contract is best with your lawyer. Once all the Ts and Cs are agreed, sign the private contract and receive your money The Naked Agent Copyright 2008 by Shaman Chellaram 7

8 Step 6: Get Ready For Completion Make sure all your documentation is in place. Agree a formal Notary completion date & time with the buyer If you are unable to sign in person, grant power of attorney to your lawyer to sign on your behalf. If you have a mortgage, speak to you bank to ask for a Certificate (Certificado de Deuda) confirming how much mortgage you will owe on the completion date. Ensure your bank will present on completion to cancel your mortgage. Prepare the breakdown of how you would like the buyer to pay the balance of the sales price on completion Once verified, send that through to the buyer / buyerʼs lawyer so that they can have the necessary Bankers Drafts drawn up to be handed over on completion Ensure all your bills are up to date. Get a copy of the latest paid IBI receipt, and a certificate from your community administrator stating your fees are up to date Ensure the Notary gets a copy of the documentation for completion at least 3 days before the completion date Step 7: The Completion Day! Arrive at the Notary with all your correct documentation. Non-residents will need their original NIE Certificate, passport and the escritura; Residents will need their DNI, or their passport and the EU Certificate of Spanish Residency and the escritura Check over the purchase title deeds (Escritura de Compraventa) prepared by the notary and confirm all the details The deeds will be reprinted on formal Notary paper. Then you, the buyer and the Notary will sign them. At the same time make sure you have received your cheques for the balance of the sale from the buyer. Always check the amounts and name carefully Hand over your keys and associated documents to the buyer. Deposit your cheques in your Spanish bank. Tip: Tell your bank not to charge you too much for depositing the cheque! The Naked Agent Copyright 2008 by Shaman Chellaram 8

9 Step 8: Post Completion Make sure you pay off your Plus Valia Tax within 30 days of completion If you are non-resident, the buyer should pay your 3% retention straight to the taxman. Make sure you or lawyer get a copy of the stamped payment (modelo 211) once it has been done Inform your lawyer or tax advisor post-completion so you know when you will need to pay off the rest of your Capital Gains Tax If you require any more information on the sales process and want some straight-forward advice contact: Hamilton Homes Tel: info@hamilton-homes.com Good Luck selling your home the Naked Agent Way! Planning on selling your property to trade up or down? Then read: The Naked Agent Your Stripped-Down Guide to Buying a Property and Getting a Mortgage in Spain The Naked Agent Copyright 2008 by Shaman Chellaram 9