No Broker Fee Apartments

At the moment there are more potential customers walking through the door wanting to buy a house for sale in Spain. There are also more people looking for straight rentals as well as option contracts for later dates when the banks are more open to lending after they see a better market and are able to get capital to fund buyers.

This week in Valencia one of the jobs has been phoning sellers to ask if they would consider  renting with an option to buy further down the line and the response has been surprising. More than half those questioned were interested after hearing what was involved. Thus if yur property could be rented out before selling here are the details as to how to do it.

The idea stems from the fact that someone likes your property but because o the prevailing situation they cannot currently proceed with a purchase whether that is because they need banks to start giving out money again, they need to prove income in Spain for a greater time period or they are waiting for their residency application to go through so as to get a better deal. If any of these apply, or maybe even a couple of them, then they might be interested in renting with an option.

The contract that is drawn up can have many variables but the base of it is that they pay an agreed rental for an agreed time and within that period of time they have an option to buy the property and the right to equal any offer that comes in on the property. Sometimes there is a guarantee on behalf of the owner to stop marketing the property for a set time so the person renting can settle, in one of our contracts they were guaranteed eight months in the property without any change of ownership. There is a greater level of comfort in a house because of this feeling of part ownership already.

The good point for a potential purchaser is that an agreed price is set now and they can buy at that price at any moment. If prices drop then they can renegotiate the price in the future if they wish. Positives include the fact that if prices go up then the tenant has a guarantee of purchase at a stated price. The owner has an obligation to sell at the stipulated price during the course of the contract if the tenant wants to buy. The owner therefore has a guarantee on the rental and that tenant is more likely to be careful with the property as they potentially hold a stake in it.

The contract is a bit more complicated than normal as it requires lots of negotiation on behalf of tenant and landlord but here we take care of that negotiation for you.

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Would it surprise you to hear that Spanish banks are making excessive profits at the moment. The Euribor rate which is the rate which most mortgages are tied to is at a historic low, 1.9% this week, as interest rates in general have plummeted. For those people closely working with banks and renegotiating people’s loans so that they get a respite from the payments which rocketed last year and will stay that way until the next revision, life is quite difficult to understand. Tracking mortgages don’t exist as such. The Spanish system means that the banks reset your rate every year on the same date according to the previous month’s Euribor. The whole of the following year it remains set. So in a situation like the current one, where the interest rates have plummeted so quickly the variation between the actual Euribor rate and actual rates being charged is huge and growing.

All banks in Spain generally lend money at a rate above Euribor, the European base rate. Banks used to lend at Euribor plus 1%. The lack of liquidity means that the banks are not oenly lending. The collapse of interbank lending due to a lack of confidence between banks is critical. The major source of funds coming into the market are government backed securities. Easy to follow? In order to sell them they are having to offer around 5%. They also get money in by offering higher savings rates such as 4-5%. Borrowing therefore is done at rates much higher than Euribor. If banks lend currently they are looking at Euribor +2% rather than the more traditional +1%.

This means what then? If you currently have a mortgage in Spain then make use of it if you are selling. Here, the mortgage is levered on the property as opposed to the person. If you are selling a house make a selling point of the property having a mortgage on it at a good rate because that is now a major difference compared with comparative houses. High interest rates and penalties on new mortgage lending means that without your current mortgage being available for a buyer it is much more difficult to sell. Will the bank finance even a solvent buyer though, even one with an excellent track record and good salary.

For lifestyle and long term options therefore houses for sale in Spain are good assets to hold. However make sure you have money rather than needing all of the money from the banks.

To make sure you get the best information about properties to buy in Spain make sure to look at this site for Valencia Property.