To buy or not to buy cash - Granada Property

I have a house in Granada province, in the Alpujarra (it's not for sale, by the way!). Around here many village houses remain on the market for years, without any reduction in price. This is because they are usually very basic, old-fashioned houses which have been inherited by Spaniards in the city who are not desperate to sell, or who won't do the work to make them attractive to modern buyers. Often the ownership is shared between several family members and they all have to agree, so if just one person refuses to lower the price, the rest of them can't do much about it. This was true before the financial crisis and hasn't changed. That's not to say the houses are expensive - they're not really, so if there were to be a reduction, it wouldn't be by much. On the other hand there are foreigners and some Spaniards around right now who have to sell because of the crisis and who will drop prices, but they are a minority in the countryside - it's not like the costas at all. So in short I would say for our part of Granada, if that's where you're looking, you won't benefit much by waiting, and you may actually lose out if things pick up a bit as everyone is hoping.

Mart,
Appreciate the info / reply.
The property I'm kind of looking into is owned by foreign people and is in good condition.

I think I will still hold off, due in part to the current climate and it seems to always be a buyers market.

Regards;
DSB.

Supply and Demand curves is down . there more unit outher then people so price are going down and will for some long time .
there a over build here in Spain . lots off unit empty and not selling . keep that in mind .
summer time when price are put up due to people looking , and this could be around 25,k are 30 k mark
real havnt look at the maket in late .
jurdy

>
summer time when price are put up due to people looking , and this could be around 25,k are 30 k mark
jurdy


Jurdy,
Valid pointer !
Thank you.

DSB.

Can I ask why you are looking to buy another property? Perhaps it would make sense to diversify your investments away from one asset class in one particular area of one country? (And FYI I am not a financial adviser!!).

The Spanish govt yesterday predicted unemployment in Spain will not start to recover until 2015, so with that in mind property prices will drop further.

Add to that many economists have started to doubt any real recover in 2010, in the UK who supply a lot of the money to Spains housing markets and the current horror stories of the 10,000 illegal properties currently owned by brits and under threat of demolition.

Its a pretty safe bet that the housing in Spain will drop, like a lead weight.

One thing is losing house prices, but when its reported there are large surplus of stock in a falling market with high unemployment and a global recession.

If you wait you`ll benifit more.Especially if you plan the property as an asset.

Personnally, if I was lookin to invest money in property, i`d be lookin towards developing med countries, Turkey,Bulgaria etc.

Minimise the risk is key in these times, you`ll be better investing a percentage of the total amount, only invest an amount you can afford to loose, you`d be supprised how many people stretch themselves, it should be commonsense, but.............

Spains market was over priced, way over priced, people where paying 250,000 for 55 sq meter apt, in Turkey first line of beech you could get a 100 sq meter apt for 40,000 Euros.

I know which I`d prefer.

Although the best thing to do right now is too sit on the money, insure its not all in one bank, as you`ll lose if they fail.

If its in a Spanish Caja, get it out, now, there reported to be in deep brown sludge and will probably not get bailed out by the Spanish govt.

> Can I ask why you are looking to buy another property? Perhaps it would make sense to diversify your investments away from one asset class in one particular area of one country? (And FYI I am not a financial adviser!!).


I will sell house #1 when I return back to Spain - it's renting long term at the moment.
House #1 isn't the sort of house I would live in, hence why I bought it with rental in mind.
It's a lovely detached little Villa.

I will buy house#2 if you like, next year, and sell house #1 when I return in 2012.

DSB.

>
Its a pretty safe bet that the housing in Spain will drop, like a lead weight.

If you wait you`ll benifit more.Especially if you plan the property as an asset.



Thanks for the information..
I will wait, as I'm sure the Christmas / New Year will bring a lot of bad situations to fruition.
People always spend the cash / cards around then..

We shall see ;)
DSB.

That makes sense, but would definitely wait. I am not a doom-monger, and am dripping money into the stock market each month to prove it (!), but this phase of the economic cycle has a lot further to go imho.

>
People always spend the cash / cards around then..

We shall see ;)
DSB.


Most retail companies, all sectors plan there budget and spend in the summer months, stocking up ready for xmas.

This year i`ve heard reports that companies are spending 20-50% less than last year on stock in time for xmas.

A friend of mine who has been unemployed in Spain, he`s a 55 yr old Spaniard who has been a waiter for the last 10 yrs had a job offer last week.

7 Euros he`s offered, great i said, when do you start.

I told them to stick it, why, was my reply, 7 Euros an hour is ok for these times.

No it was 7 Euro`s a day, in a chiringuito in Malaga city.

He currently recieves 50 Euros a month from the govt, his unemployment payments have stoped and he currently visits the red cross for food parcels.

Now if a waiter cannot get work at both xmas and summer time in Spains largest tourist/expat region, what hope is there that people will be spending at xmas, even if jobs returned on mass, i doubt people will be spending on goods as they did pre crisis.

If the recover started tommorrow, people will be cautious for years after.

They will save first, not spend.

> [quote author="bealerDSB" date="1246039288"]
No it was 7 Euro`s a day, in a chiringuito in Malaga city.



WoooooooooW !!

That is disgusting !!

I can't believe that amount PER DAY ! And having to visit the Red Cross for food provisions !
DAM.

You're both right though, 2010 ? Yea Right !
Along ways off for sure.

DSB.

Older properties that I look at for some of my clients, ie: ones in need of total reform, have been very much over-priced for a long time. A good example is a potential client who had paid ?85k (inc. taxes & fees) for a 2-3 bed village house in the north of Granada province in need of either major reform, or indeed, demolition.

In reality, the property was worth no more than the plot of land on which is sat. A little investigation around the village and I discovered that for the equivalent plot of land in the village, the going rate was no more than ?40k for the same size and situation of plot. These people had paid way over the odds, especially considering that based upon their requirements and plans, they were looking in the region of ?150k of reform work. It would actually have been cheaper to build a completely new house for around ?120k, including demolition of the former dwelling. The thing is, even if they had gone for a completely new build, their overall spend would have been circa ?200k for something that would actually be "worth" no more than ?150k resale value, judging by similar properties in the village.

Net result is they've had a few different constructors who've given them estimates and advice along the same lines as my own and eight months later, the property is still in the delapidated state it was before and untouched. They actually contacted me recently to see if I could suggest any agents who could sell the property for them.

So older properties, it's best to avoid unless you do a great deal of homework first, or you're looking to make a permanent home and you've no interest in resale or investment gains.

Newer properties, there are indeed bargains to be had. You don't need to look too hard either. There are plenty of new developments and properties which simply aren't selling, even in areas close to the city of Granada. I'm posative that if you were to approach developers, agents or promoters with offers, you could realise big discounts, as they want to get them off their hands sooner, rather than later. There's absolutely nothing wrong with haggling. If they're not prepared to drop to a price you're comfortable with or are willing to pay for a property, walk away, simple as that. There's certainly no shortage of other potential opportunities, given that a great many developers are struggling financially and are desperate to sell. If you're prepared to play hard-ball when negotiating, then I'm sure there's plenty of bargains to be had now, let alone in 2010, 2011, 2012, or whenever...

Ultimately I suppose it depends on your reason to purchase... is it for investment, or a home to live in?

If it's for investment, then personally I would keep my money in the bank earning a set rate of interest, just in case there's any further falls in property prices, as the market seems to indicate here.

If it's for a home to live in, then only you know the true value that you're willing to pay to obtain a property that ticks all your personal boxes.

>
Ultimately I suppose it depends on your reason to purchase...


Heath,
Thanks for your GREAT response, good copy on all counts mate !!

I'm looking for a long term buy, I will have no need to try and make money out of another property as my current alignments are taking care of my future. I really wan't to avoid the new build places, as I feel it takes something away from being "in Spain".

Having said that an old property restored to a modern and or sympathetic finish is what I feel it's all about.
Best of both eras..

As long as I hold onto my money for the mean time I should be ok.
Time and Tide wait for no man - they say ???


Cheers;
DSB :)

> [quote author="heath1974" date="1246135623"]
Ultimately I suppose it depends on your reason to purchase...


...

Having said that an old property restored to a modern and or sympathetic finish is what I feel it's all about.
Best of both eras..
[/quote]

In that case then, it's definately very important that when looking at older properties, with scope to modernise, you tread especially carefully. Obviously I have some experience working with older properties, reformed to both retain original charactaristics and charm, whilst also catering for modern requirements.

You may already have some experience with older properties, I don't know, but one of the biggest problems I encounter is that not enough people seek independant professional advice before they buy. It's always worth taking the time to weigh up the scale of any potential reform property purchase, as it's quite easy for something to become a money pit. It's also very common that most people I see have little or no experience of reforming or modernising a property in the UK, let alone here in Spain, with some of the shall we say, "unique" aspects of their construction. With that in mind, it's definately worth while calling in a professional to take a look at a property before making a decision to buy. Anyone worth their salt will advise what's possible and what's not, provide realistic estimates for any work you think you would do, plus advise what "permisso's" are required, such as if the work would be classed as "major" or "minor", with an idea of their costs too.

For example, there's many times that I've been asked to look at replacing a roof. Sometimes the construction beneath is structurally sound and will take a modern roof construction without much trouble. Other times we find that upper supporting walls aren't much else than pebbles and mud, with a little straw thrown in for good measure, fine for supporting a timber beam and chapa roof, but will clearly not support a concrete beam and pod roof construction. It's often the case when this is found, that the entire upper storey needs rebuilding, before a new roof can be built, or alternative roofing methods have to be designed.

Other times, there's houses which are structurally sound overall and will remain so for many more years, so long as they're not disturbed structurally and most of the work is simply modernising services and cosmetic finishing.

Overall I tend to suggest it's worth having an overall budget in mind that incorporates the purchase, all the fees and any reform work, then stick to it. Although there can obviously be some unforeseen problems when work is undertaken, anyone with experience should factor such things into any initial estimates they provide. I personally always try to estimate on a "worst case" scenario basis for any work on older properties. This means that in most cases, when work is finished, the costs are less than the "worst case" scenario, whilst also never more. I much prefer to take this approach than the "quote cheap to get the job, then hit the client with the extras" method I've come up against too many times.

As for older property prices, it tends to be a mixed bag. There are inevitably some bargains to be had buying from expats who need to sell quickly, have had all or most of the reform work done already, but will also listen to offers. I've been keeping an eye on a few properties on the internet and it's interesting to see how they've dropped in price over the last several months. Unfortunately for them, they might be making a loss on their overall outlay, but without sounding too synical, one person's loss is always usually another's gain.

I tend to find that as mentioned in this thread by a couple of others, the Spanish tend to stick to their guns a lot of the time for the asking price, though I once helped a neighbour in a village I lived in a couple of years ago, get the asking price down on a property from ?80k to ?55k. We basically took the vendor to the local bar, sat and had a good chat with them, got to know them, they the potential buyer and haggled. The vendor was prepared to negotiate, but only in very small "drops" in price at first. In the end we said that we were aware the property had been empty and for sale for "years" and offered ?55k "take it or leave it" as it was to be a cash purchase, no mortgage or finance involved. Empty house in need of work that's costing you money, or money in the bank?. They accepted the offer the following day, the deal was done and purchase completed within two weeks. So again, it is possible, without agents (do have a good bi-lingual abogado ready though!), if you're prepared to explore locations and make contact with the locals.

Fortunately, the "econimic crisis" has had one posative effect... many of the cowboys are gone. Still, always get plenty of references, see examples of previous projects, before contracting anyone. If dealing with agents, always use your own abogado and tradesmen, rather than ones they might recommend. There's still this thing for back-hand deals going on. I had an agent contact me recently who suggested they would be more than happy to recommend his clients to me in return for a 20% cut of all the work. I told him I wasn't interested, as our business likes to remain independant and impartial, with the exception of any suppliers or sub-contractors we use and can highly recommend. What he wanted me to do was basically lie to people he was trying to sell properties to, that everything was "fine" and only minimal work was required. No thanks!

There's also a few people here in this forum who've had both posative, mixed, or negative experiences when it comes to buying older houses, having considerable work done on their properties. I'm sure they'll all be happy to share their thoughts.

Understood - Cheers..
I may even wait further into next year - let things hit even lower.

I know it's different face to face with someone and striking a deal - but the net prices haven't come down hardly at all in my opinion.
Another 6-12 months may sway the lazy agents to update their website for once..

DSB.

> Understood - Cheers..
I may even wait further into next year - let things hit even lower.

I know it's different face to face with someone and striking a deal - but the net prices haven't come down hardly at all in my opinion.
Another 6-12 months may sway the lazy agents to update their website for once..

DSB.


I believe a lot of property is hanging on due to hope that improvement in the economy will arrive next year.

Although if I was a seller, i`d snap up any reasonable offer, even if it meant loosing some money.

Many Spanish properties were very very cheap when originally purchased.

Some friends of ours only managed to buy there new town house because the boom increased the price of the apt they bought 20 yrs ago from 22,000 Euros (Today exchange rate from peseta) to over 210,000 Euros when they sold.

I guess the ones who bought it arn`t selling anytime soon.Unless the bank gets funny about the negative equity.

The first sign of an issue tends to be an increase in property auctions, might be worth watching out for, but i would be sceptical of using an auction to buy in Spain.

I will wait - it's all good.
I had looked at direct-auctions.com as they were featured on an ITV Show recently. Didn't see much online that made it feel like "auction prices" though.

Shall see..
DSB.

> Understood - Cheers..
I may even wait further into next year - let things hit even lower.

I know it's different face to face with someone and striking a deal - but the net prices haven't come down hardly at all in my opinion.
Another 6-12 months may sway the lazy agents to update their website for once..

DSB.


I had a laugh when i spotted that programme.

The amount of people in the auction room was funny, you didn`t have to be an expert to spot that guy wasn`t goin to sell that day.

In Spain the commision charged by the agent is huge, paying someone 20,000 Euros on a 200,000 property is criminal, no wounder some estate agents only need to sell less than 10 properties a year to make good money.

If you add all the equations up, its a mess in Spain and anybody who didn`t realise it was an idiot, there are still many idiots in Spain.

Real investers are placing there money in property in areas such as Morroco, Bulgaria, Turkey etc etc.

Spanish property will eventually fall, then climb slightly and level, although as an investment Spanish property is probably dead or at least 20 yrs away from any return value.

I think the only gains will be achieved by rentals in certain areas.

well price are going down , and seen this programme , lot do get cought out . last year my boss looked at a property there was 60.000 euros in the price with english and spanish agent in same town , funny tv show ....

jurdy

There's a lot of those websites that are still active, but the agents don't even exist or trade any more. They will only be gone when their web host subscriptions expire. This can pose a problem for anyone trying to gauge average property prices, or for anyone enquiring about properties.

Ultimately there's no substitute for looking around an area in person.

I hear what you're saying about some of the prices though. Seems like many people are keeping their asking prices the same and holding out for the moment, but then that's just me going from what I see browsing estate agent websites. On the ground it's different and when I talk to agents and vendors, there is plenty of scope for movement.

Either way, it's always best to be cautious and maintain an eye on the market for signs of movement in either direction-

Agreed - On all counts :)
Will be in Spain in March - I'm sure that'll have some change on a lot of things..

Thanks;
DSB.

Don't forget to bring your haggling hat! ;)

Being in a very similar position to DSB, This seems to be an interesting thread in the making. Will the brave agents to throw in comments about not waiting till it's too late etc!! I notice a few are stating this on the web sites etc....

We have just toured the north of Spain and getting to see a house through an agent was, to put it politely "A Pain". it was just before Christmas though so we hope for more luck on our return In January.
If I was a serious seller though I'd be taking a long hard look at how some agents are trying to market their properties , one Northern agent told us: we don't submit offers less than 10% of the asking price!!! We just sold our ocean front CA home at a 34% discount.

It's been a surprise to us that not many of the homes owned by foreigners are on the market personally/privately .. makes things difficult, the FSBO (for sale by owner) system used in many countries seems to work extremely well.
Over the years we have sold our three foreign homes using the FSBO and all went fine, our last one in the USA is with an agent (due to us having left) it's been on the market over a year with a 30% drop in the price,

For the past six months we have been in contact with many agencies and some have been very helpful.. others not so..with lots of name calling and "we are the only professionals etc!)

As far as properties go in the North it seems they did not get quite so bloated as those in Mallorca and on the Costa's etc.
We intend to return North for a rental period to get a good feel for the areas.. as a previous poster stated the locals just let property stand and are not too interested in haggling..nothing wrong with that and that's their prerogative of course.

On our way North we intend to have a look around the Granada Area where DSB is looking , our main aim being to find a place with a little land for gardening, and a property that has had the reform done but where we can improve or expand possibly installing a pool , our intention is for a retirement home that will hold it's own as far as future pricing goes, skiing is one of our favorite pastimes so we hope the higher elevations prove to have good growing conditions with a little decrease in the Summer temps?

Here in Mallorca the market seems to be "Treading water" with some building going on but overall, the stories we hear are pretty grim for most, with many companies on the verge of closing down and folks having to look at renting out as next to no buyers are out looking. Many say prices here did get blown out of all proportion ,only time will tell.
Our opinion is, the real crisis has yet to arrive... with all that new currency just made out of" thin air" the banks must be tottering?
will we ever learn the lessons of boom and bust?? I hope things end at sensible levels for a few years..

so for now thanks for all the advice, especially from heath 1974, and looking forward to hearing more advice and stories..

>
On our way North we intend to have a look around the Granada Area where DSB is looking , our main aim being to find a place with a little land for gardening, and a property that has had the reform done but where we can improve or expand possibly installing a pool , our intention is for a retirement home that will hold it's own as far as future pricing goes. We hope the higher elevations prove to have good growing conditions with a little decrease in the Summer temps?



Granada province can be very diverse in itself. Temperatures in summer can be very hot in any of inland Andalucian provinces, often averaging high 30?s and low 40?s.

It sounds like you're looking for a property, perhaps with some character, which is either in a rural or edge of village setting. There are quite a few around at the moment for sale, some over-priced still, some seem bargains. Certainly worth having a look around to see what suits your needs and your budget, whilst getting a feel for the market locally.

direct-auctions are a no fuss auction house/site selling properties below market value. They are there to help sellers and buyers alike.
They do not hide the fact that their price guideline is below market value. I guess from a sellers point of view you could say they are there if you are in financial difficulty and need to sell now and for whatever you can get (NB*the reserve price is set by the owner and is only known to auctioneer and owner). Some people are on the point of being repossessed and this is the only way to get something back and not loose everything. Likewise, some property owners need their cash back now. The Today programme was not really biased. Auctions are like anything. On the day it depends who has the money to put down/pay up. They continually advertise your property until it is sold and it will go into another auction if it does not happen to sell on the first entry.
Their business practice is open, fair and honest. They will even make sure the property being offered for sale is 100% legal! and also give a free 20year protection insurance to the purchaser, 'should' anything unsuspected arise.

I can wholeheartedly recommind them and say 'It does what it says on the tin'.



ps - the vendor just pays a 'one off' insertion fee to list their property. Plus a much lower commission on a sale than anywhere you will find. So outlay is minimal.