Bank Repossessions and the Spanish Property Market

The first step for buyers is to understand a little about the current housing market crisis in Spain and the Roman legal system that governs the Spanish banks. Understanding this provides opportunity for our Company to help you to take advantage of the current financial crisis.

It’s a matter of conjecture, but most experts are of the opinion that the Spanish property market peaked in June 2007. However, it didn’t become clear until the beginning of 2008 (or even later) that there was indeed a huge problem. The World banking crisis soon followed which exacerbated Spain’s already existing problem of over-supply that had created a national wave of non performing loans.

As with all property cycles, 2009 presented the first opportunities for investors to take advantage of the crash and since that time shrewd purchases of prime location properties at drastically reduced prices have been made. The reality of today is that the more mature property markets have now stabilized and it is only in countries such as Spain where you see these huge discounts on offer.

There is a misleading statistic where the press quotes a large Spanish housing stock unsold. Any unsold stock is mostly of a type that people would prefer not to buy given the choice. In mature suburbs house stocks are small and discounts far less than quoted in international press. (source: DM Property Report 2010)

In this recession the Spanish banks initiated a new strategy of creating their own real estate company, which was to set up to clear their own real estate assets. Unfortunately they misjudged the level of skill required for international marketing and are now more open to other routes of selling stock.

For a number of reasons, both political and economic banks have tried to secure 100% of their debt. However things are changing and with strict guidelines from the Bank of Spain the banks are finally coming to terms with the fact that they will have to write off some debt when selling a property.

So, finally, as we go into the second half of 2011 there are some wonderful opportunities for those wanting to buy Spanish bank repossessions – especially those who are cash buyers!

What types of Spanish Bank Repossessions are there?

There are in real terms three types of bank repossessions with the first two types being for cash buyers only.

Subasta
Firstly, a Spanish bank repossession presented at the judicial auction (known as Subasta in Spain) which is still in the name of the original owner defaulting. This is where you can buy at some of the best prices by purchasing the loan, but the system involves an auction or bidding process in a court. As the property is still owned by the defaulter, property generally cannot be viewed. Unlike the UK and other major western economies it is fraught with danger for those who do not understand what they are doing and you have to deposit a large percentage of the proposed purchase price in the Auctioneers bank account prior to being allowed to bid for a property. For this reason alone most properties are sold to local people. This is obviously very complex which we would be happy to explain to you in greater detail in our consultancy meetings, while you are here in Spain.

The 21-day rule
The second type is where you can buy at the best opportunity without the risks of buying at auction.  This is the 21 days immediately after the property has gone to auction but no one has met the reserve price set by the bank. The bank has 21 days in which to pay all the taxes and put the property in their name. This is when the bank is at its most negotiable point as they would prefer to avoid those extra costs. In some cases the bank will consider refinancing on the new price.

Repossession
The final type is where the bank has fully repossessed the property, paid property taxes and notary fees to officially place the property in their name.  They then offer these properties for sale. Generally this provides an availability of properties with excellent mortgages of up to 90% directly from the bank that is keen to move the property on and get it off their books. Our Company has lists of these properties, as we are registered specialists who manage this for a number of banks.

So, What Represents the Best Opportunity for Cash Buyers?

Without doubt, the best opportunity for our clients in Spain is where the property has been through the first judicial auction and hasn’t sold. The bank has 21 days to complete the sale to a buyer before having to buy the property and pay all the property transfer taxes associated with the process and this is without doubt where the best deals are done. However a buyer will only see the financial information prior to the auction – photographs and property visits are only possible once the auction has finished. Therefore, our clients need a professional organization that has an existing agreement with the banks to allow viewing and then complete the transaction within the 21-day period. It goes without saying that there needs to be a lot of preparatory work done and that our clients are decision makers who can act immediately.

Selected real estate from these portfolios can be found in good locations and fully occupied buildings. The emphasis of these properties is not on a failed project, but an unfortunate individual. This category of real estate is far more suitable for immediate selling.

So, how do you prepare to take advantage of the 21-day Window of Opportunity?

Very importantly you must have the following in place

• Your NIE number as without it you cannot buy a property in Spain
• Your Spanish bank account and funds ready to complete the property purchase
• A chosen lawyer in place and an exact understanding of how you wish to buy the property
• Proof of financial resources to complete the purchase to provide to the bank

There are other smaller points but the above checklists are a must and you will need to work with a professional agent to make sure you can complete the transaction in the stated timescale.

Why use Spanish Hot Properties?

When placing your investment in such complex matters it is important to deal with a company that you can completely trust in their capacity to execute such a process.
The following are some of the reasons why you should use Spanish Hot Properties.

• Day-to-day experience of working with Spanish banks for many years.
• Unrivalled expertise in all areas of Spanish bank repossessions
• Established contacts and relationships with all the major banks in Spain and judicial lawyers.
• Exclusive property from select banks
• Access to the best deals before they come available to the general market
• Access to our internationally recognized Architecture department and construction company services for any renovations
• The best level of financial service for mortgages anywhere in Spain
• The ability to then sell your property and free your profit

If you would like to know more about what makes Spanish Hot Properties different to the rest then please call us and we would be only too delighted to explain the reasons to you.

To take advantage of the best Spanish bank repossessions available, please contact Spanish Hot Properties today!