Should I Buy Repossessed Property in Spain?
Buying Repossessed Property in Spain: The Cons
Right now there is not shortage of cheap property for sale in Spain, much of it repossessed and bank owned, some of it on for a short sale to avoid this fate, and even more of it discounted direct from the developer in order to get a sale. For buyers this is both good news and bad news. Good news because Spanish property is affordable to the masses, and if we get our head screwed on right we can find some real bargains, bad news because many people let their search become only about price, and cheap property is not always a bargain -- especially in Spain.
Con 1: More Wheat than Chaff
When properties are repossessed, the best ones are offered first to the bank staff, then to a select group of favoured investors/funds possibly linked with the bank, and only the ones that are not bought during these offerings make it onto the open market.
Con 2: Time is of the Essence
When buying a Spanish repossessed property, like anywhere, you will need to do it fast. Unfortunately this is increasingly true the better the property you are looking at. Here we are, constantly being told to do extensive due-diligence and research, and here these vendors are telling us if we want it we need to make a snap decision.
To get around this, buyers simply need to choose an area and research it thoroughly, as well as researching local property law, that way when a property comes up all they need to do is have a quick survey done (or have it checked over by a builder friend), check the deeds and make an offer.
Con 3: Gulf Between Bargain Property in Spain and Cheap Property in Spain
Finding cheap property for sale in Spain is easy, but finding bargain property in Spain is a totally different kettle of fish. Not all cheap property is a bargain, and this is especially true when it comes to repossessed properties. Homeowners that are being repossessed don't tend to be in the best state, financially or mentally, and this can lead to properties being poorly maintained. If they are on the banks' books for a long time this can become even worse because the banks don't want to spend on keeping the property in good shape.
To avoid such scenarios many buyers are favouring properties discounted direct from the developer and from resort companies like Polaris World.
Buying Repossessed Property in Spain: The Pros
Discounts of up to 60%
Repossessed property in Spain is being sold at discounts of up to 60%, with discounts of 40% being commonplace. Thus, if you can find a property in a top resort, or an area that isn't overdeveloped, and find a property with sound legal footing then these are surely bargains too good to miss.
Strong buying Position for Cash Buyers
The Spanish mortgage market is yet to get back on its feet. While mortgages are scarce, cash buyers have an incredibly strong buying position, allowing the to negotiate even bigger discounts.
Excellent Rental Yields
When you get a property at such a huge discount as 40-60 percent, it gives way to potential for massive rental yields. Rents in Spain haven't fallen anywhere near as fast as prices, especially holiday rents. Spain is still a top holiday choice, and buyers of carefully chosen cheap property in Spain are doing incredibly well from the rentals.
Capital Growth Potential
Few people doubt that Spain will recover some day, and when it does buyers of the cheapest property in Spain for decades are all set to see soaring capital appreciation on their properties.