We hope you will find the information contained in this pack useful. Do not hesitate to contact us with any further questions you may have, we will be happy to help.
When you decide to put your property on the market with us the first thing we will do is make a mutually convenient appointment to see the property. On the first visit we will write down all details and features of the property as well as taking photographs in order to prepare a marketing dossier.
No doubt you will have a very good idea of the price you would like to receive for your property, however we are obliged to inform you as to the real value based on current price of land, cost of construction per square metre, comparable past sales of similar property in your area and current market prices.
Once we have agreed on the sales price we will add to this our company commission which varies from 5% for non exclusive to 3% for exclusivity (which usually lasts six months). The commission is paid on the day of completion at the signing of the Escritura.
It is important from the vendor’s point of view that in the case of a property being marketed by more than one agent the selling price is the same for everybody. Otherwise it will generate confusion in the minds of potential clients as well as their being a lack of incentive for the agent to market a property at a fluctuating price.
Whether a property is given in exclusivity or not, a commission agreement will have to be signed by both parties and a copy held by both. The commission agreement is a simple but very important document, it should not be restrictive nor have too many complicated clauses. Although it must be written in Spanish a reputable agent should provide you with a translation in English.
If in any doubt about the commission agreement do not sign until you have consulted with your legal adviser. We enclose our standard commission agreement document for your perusal.
Finally before we can start marketing your property and in order to comply with recent legislation we will require copies of the following documents:
1. Escritura or Nota Simple of the property.
2. Last payment of I.B.I. i.e. rates.
3. Last payment of community fees (if applicable.
4. Last electricity, water and refuse collection bills.
Please note that in order to be able to legally sell your property a ‘First Occupation License’ is required and unfortunately not many properties built in the countryside in the past thirty years
have such licenses and in order to regularise these anomalies the Regional Government has decreed that in the absence of ‘First Occupation Licence’ the owners must apply to the Local Council for a ‘Certificate of Habitation Outside Normal Circumstances’. In Spanish this is an ‘Assimilado Fuera de Ordenacion’, AFO for short.
In order to obtain an AFO individual owners have to employ a Technical Architect to draw up technical plans and calculate the current cost of building such property. He or she will ensure that all the main services are legally connected and in good order of maintenance. A lot of emphasis is placed on the sewer systems, which in the countryside is usually ‘septic tanks’, which have to comply with EU standards. This means that unless your septic tank is an approved fibre glass one with multiple chambers it will not pass the inspection and it has to be replaced.
Marketing Your Property
Once you have entrusted your property to us for sale we will endeavour to sell it as quick as possible using our web page, personal contacts in Northern Europe as well as contacting our Spanish Collaborators.
In the present financial situation advertising in the media is not proving very successful and of course it is very expensive so only properties which are an absolute bargain will be advertised. If you have given us sole agency i.e. exclusivity, it would be a good idea to allow us to place a ‘for sale’ sign outside your property especially if it is situated where a lot of people walk or drive by it.
Most of our work is done on the telephone and internet as well as visiting other agents, lawyer firms, banks and other professionals who are usually the first to know when a client of theirs is looking to buy or invest. Past clients are also a very good source of referrals as they know through their own experience that we are reliable professionals who will take care of their friends and relatives.
Viewing Tips
Viewing times by potential buyers will have to be mutually agreed, obviously it will help us if the vendor is flexible but there may be particular days or times when it is not possible to show the property in which case let us know, this will avoid misunderstanding.
Whenever possible we will give you twenty four hour’s notice however there will be exceptions and we appreciate your cooperation and understanding in this matter. If you do not live in the property or you are planning to be away for long periods of time it would help if you could provide us with keys or entrust them to a friend or neighbour who could be available at a day’s notice. If you decide to let us have keys to your property we will always ring you before and after taking a client to visit your property.
It is important that the property looks at its best when we bring potential buyers, so we tend to give you sound and straight forward advice on how to do this, it is not criticism on anyone’s life style and is simple meant to help the sale in which we all have a vested interest.
When we bring a potential buyer to your property this may be the result of many weeks of correspondence and telephone conversations between us and them therefore it is important that the vendors if present during the visit take a step back and let the agent do his/her job.
Many sales have fallen through because the vendors have taken over during a visit and either over sold the product or simple put their foot in it.
The Sale
When a buyer decides to buy your property he will be asked to pay a holding deposit of 6.000€ which will take the property off the market for an agreed period of time between two or four weeks. This will allow the buyer’s lawyers to carry out their searches as to the status of the property.
The deposit will be kept by the buyer’s lawyer or the agent and it is fully refundable if the searches reveal illegalities in the paperwork in the paperwork, important defects in the construction or boundary disputes. If it is the case that the buyer simply changes their mind, the deposit is not refundable.
Once the searches have been carried out successfully, the lawyers will prepare a Sales Contract incorporating all the details of the property, the price to be paid and the date for signing the deeds (Escritura) in front of a Notary. At this stage 10% of the selling price is paid by the buyers to the vendors inclusive of the original holding deposit.
The Sales Contract will stipulate who is responsible for paying the costs once the deeds are signed. Usually the buyers pay all the Notary cost, land register and transfer tax whilst the vendor is responsible for paying Plus Valia.
Plus Valia is a local council tax on the increasing value of the property. The amount due is calculated taking into consideration the rateable value (Catastro) and the number of years since the property was last sold.
The formula varies from council to council however it is possible to check with the local authorities how much it will be by providing them with a hypothetical date of sale. If a property is bought and sold within one year it is exempt from this Plus Valia.
Our representative will be present at the Notary with an official bill made out to the vendor and the agency commission plus V.A.T. will be paid in full.
A HAPPY DAY FOR EVERYONE CONCERNED!
Tax Liabilities
Once a property has been sold the vendors are obliged to pay Capital Gains Tax to the Spanish government. If the vendors are Non Resident the C.G.T due is 18% of the profits i.e. the difference between the purchase price and the selling price declared on the Escritura.
Capital Gain Tax is not due immediately, in fact in some cases a full tax year must pass before it has to be paid. Capital Gains Tax is levied on the property and its owners, therefore in order to avoid situations where a non resident leaves the country without paying their taxes the law allows the lawyers of the buyer to make a retention of 3% of the total declared selling price from the amount paid to the vendor.
This amount is paid to the tax department as a provisional payment, at the end of the tax year the actual amount due is calculated and there will either be a refund or an extra amount due.
Example:
Sale price declared 400.000
Purchase price 300.000
Profit 100.000
18% Capital Gain due 18.000
Retention 3% of Sales Price 12.000
Amount due to tax by vendor 6.000
If the vendor is resident in Spain the Capital Gains Tax is 18% of the profits i.e. the difference between the declared selling price and the declared purchase price on the Escritura.
The tax is due once the vendor has compiled his yearly tax return, however, if within this time the vendor has reinvested the profit and bought another property his/their tax liability is nil.
For Spanish residents there are other ways of reducing their tax liabilities, for example if they have carried out structural or improvement work on the property and are able to produce an official V.A.T. receipt this can be offset against tax due, however in this case it is better to ask the advice of specialist tax accountants or gestures.
Whether the vendors are residents or not, if they have owned their property since before 1985 they are not liable for Capital Gain taxes. The advice given above on tax related matters, are as far as we know accurate, however legislation does change quite frequently, therefore we recommend that you consult with your lawyer or gestor when selling your property.
