An Interview with M2M’s Ben

From a foreigner’s perspective, buying property in Spain can be intimidating so much so that many foreigners looking to invest can easily become discouraged.  In our experience, we find that many questions arise as to what is different for foreigners and what should be expected.  In this interview, Ben, our seasoned home hunting expert answers our website’s most popular questions:

What are examples of things that expats need to do that Spanish nationals do not need to do for the buying process here in Madrid?

Ben: The NIE (Numero Identificación Extranjero or Foreigners Fiscal ID Number) is similar to the American Social Security Card. You must get this if you are buying property.  You need to pay taxes if you own property therefore you will need the NIE.  It is a very quick document you can get in a few simple steps by yourself if you speak Spanish.  The whole process costs up to 20 euros if you do it yourself, or you can hire a specialist and pay more (we recommend spainwide.com if you need assistance).  If you are not in a hurry, you can also get it at your local Spanish Embassy in your country of origin.  This can take 2-3 weeks and you just have to tell them that you are buying property in Spain. (For instructions on how to solicit this number visit: https://moving2madrid.com/nie-2/)

I also strongly suggest the use of a lawyer because there are a lot of unexpected surprises that can come up, and you really need a lawyer to control the due diligence as well as all the small things that no one would ever tell you about.  For example, we had a case in which we bought a property from a seller who had inherited a house from her deceased aunt, and the house was not transferred into her name until the day we were buying it.  Basically the house was still in the name of the deceased and this is something that they needed to do before.  Now, Spanish law allows you to buy a property as is and then you can amend it later however leaving a gap of uncertainty in case these changes are not made.  All these processes require money and that is why people leave it to the last minute.  

Also, the lawyer makes sure the seller prepares all the documents on time so that you don’t waste time going to the notary to find out that there is something missing.  Prices for lawyers can be between 600-2000 euros.   This can be less than 0.5% of the total price of the property, which is not much when you consider it is also what you can risk on buying something that is completely illegal.  

What are some myths that foreigners have about the Spanish Market?

Ben:  After 2008 when the real estate crisis hit spain you could buy a property negotiating maybe 20% or more.  Nowadays, the Spanish market is much more realistic so the prices are not so artificially inflated for you to get a fake discount.  It is widely assumed that you must get a little discount here, however the latest deals that we have bought were at full price.  Do not come to Spain to buy a great property with the notion that you will get 10-20% off but rather, have a good grasp on what the real prices of properties are in general, and be prepared to buy at full price without a discount.  Once you are an informed buyer you will be able to define if that is above or below the average market price.  Another concept is the hidden gem.  Many foreigners think that because of the crisis sellers have huge debts and are willing to sell with a 50% discount.  That’s not the reality.  The market always aligns itself.  There is always 5% of properties with interesting prices,  90% with average market prices, and 5% that are overpriced and in time will level out.  Do not go out and think that there is that marvelous, charming property with character that is 10-20% below market price and you just haven’t found it yet.  If you’ve searched a lot and haven’t found it, ask yourself some questions.

What are things that discourage potential investors from buying in Spain?

Ben: Many times when we approach our buyers they have an idea that Spain is the worst scamming place on earth (laughs).  The reality is that if you work with professionals – if you hire a good lawyer, and you have someone that can assist you with prices and negotiation then you have nothing to be afraid of.  It’s very linear and the whole process can take up to 20 days time and now it’s absolutely a buyer’s’ market and it’s the time to buy.  They say that 2016 is one of the last good years to buy in Madrid.  It’s really not that complicated as long as you have some local professionals guiding you on whatever dangers exists.

Tell me about getting mortgage financing as a foreigner.  We’ve established already that Spanish Nationals get financed up to 90%, while foreigners get between 40-60%.  Can you confirm that and tell me what banks foreigners should go to?

Ben: First, always consult with your local bank in your country.  They may be willing to give you better rates just because they know you as a client, you have operated with them for a long time, and you are using your local assets as a guarantee.  You can also get a quote and compare it to a local spanish bank.  You can easily get a mortgage if you have a good cash flow and do not have too many debts and mortgages in your country.  Finance for foreigners can be up to 80% (in some cases) or 70% including taxes.  Out of the 200 major banks in Spain, only 15 give mortgages to foreigners.  Out of that 15, we know that around 6 of them give interesting rates and are competitive.  We work mainly with Sabadell. You can absolutely contact us for a full list banks that we use.  

To schedule a free consultation on buying property in Madrid, go to: https://calendly.com/brian_mosbeux/consultation

Posted on 5 April, 2016 by Pierre-Alban Waters in Invest - How to invest - How to buy - Buy, New? Start Here