Checklist of things you need to do before apartment shopping in Madrid
Read this article to learn what you need to do before you start apartment shopping in Madrid and to see a checklist that will help you be fully prepared.
Moving2Madrid clients are always well prepared
We work with our clients to ensure they have well defined objectives. We manage their Madrid property purchases in three phases:
- Work with them to clarify the three most important criteria for their ideal Madrid property. We refine this criteria as we develop a short list of properties for them to see when they come to Madrid.
- Agree on the Viewing Date (the day you come and do your apartment shopping in Madrid).
- After they have seen the properties on their short list, use their stated criteria to objectively choose three properties to simultaneously negotiate upon.
In addition to the above, we work with our clients to make sure their paperwork is in order before they come to Madrid and start looking at apartments.
Do you need help clarifying your objectives for property shopping in Madrid? If so, contact us today to learn how we can help you find our ideal Madrid property.
Why you need to be prepared before apartment shopping in Madrid
Before coming to Madrid to view their shortlist of apartments, our clients often have the mentality: “I’ll come, and if I see something nice, I will negotiate. If they accept, I will get started on my paperwork.”
This couldn’t be further from the truth! The Madrid property market is fast moving, and the Spanish bureaucracy is more intricate than most people are accustomed to. Moreover, you are buying a property in a different country. Therefore, you need to get your paperwork in order before you come to Madrid and start seeing apartments. Here is a checklist to help you:
__ Open a Spanish bank account
Before you come to Madrid, you need to have a Spanish bank account. Moreover, you need to seed it with at least 3000€. This is because on average, 30% of the properties that we show to clients are sold within 48 hours after viewing. We only show our clients the best properties that are well priced. Properties like these are in high demand, so you need to be prepared to negotiate quickly if you see a property you like. For most cases, 1000-3000€ is needed to make a serious offer. If you are unsure which bank to use, we invite you to read: The best bank account for expats in Madrid. If you are a Moving2Madrid client, our Transaction Coordinator will help you open your account before you start apartment shopping in Madrid.
__ Sort your mortgage
First, you need to figure out if you need to get a mortgage. If so, you need to decide if you want to apply for one in your home country, or if you want to get a Spanish mortgage. Spanish mortgage rates are currently at an all time low, and it is easier than most people think to get a Spanish mortgage as a foreign buyer.
If you decide to get a mortgage, make sure it is approved before you start looking at apartments. Again, this will enable you to move quickly and efficiently when you find an apartment(s) you like.
__ Make an appointment to get a Spanish NIE
A NIE (Número de Identidad de Extranjero) is a Spanish Tax ID (equivalent to a US Social Security Number). They are easy to obtain, but you need to make an appointment to get one. As of this writing, it is difficult to get an appointment. This is likely due to Brexit, as there are tens of thousands of expat Brits in Madrid that are scrabbling to get their paperwork in order for Brexit. You need a NIE to purchase property, so we recommend making an appointment ASAP so you can get one when you come to do your property shopping in Madrid.
__ Ensure your passport is valid
This seems obvious, but is a detail some forget. Many airlines (particularly US carriers) won’t let you board if your passport expires within six months, so make sure yours is up to date and renew it if it is expiring soon.
__ Appoint a Power of Attorney (POA)
This is very important if you are purchasing Madrid property and live abroad. Aside from the physical distance, there is often a material difference in time zones. Appointing a Power of Attorney enables you to have documents signed and legal actions taken without you having to constantly travel back and forth between your home and Madrid, often at the last minute.
__ Hire a lawyer
There are legal aspects to the Madrid property market that are unfamiliar to most international buyers. For example, mortgage debt is attached to properties, rather than people. Therefore it is extremely important that your lawyer check that there is no debt linked to your transaction. This information is found in the escritura. If there is debt linked to the property (which there often is), a lawyer can ensure the proceeds used from the property sale are used to pay off the existing mortgage and clear the debt.
A lawyer can also make sure that the person who is selling the property actually owns the property, and that the size of the property is accurately represented and registered with the authorities. The last point is very important because your property tax is not based on the market value of the property, but on the size of the property.
These legal issues may seem tricky, but the reality is the process is very standardized. With proper legal representation, your property purchase will go smoothly and quickly.
Most Spanish lawyers charge 1% of the transaction price to help purchase a property. Moreover, they often charge extra for due diligence. Moving2Madrid’s legal partner follows a precise due diligence checklist for all Moving2Madrid clients. Moreover, they only charge our clients 750€ for legal representation.
__ Hire an architect
Moving2Madrid’s strategy is to find an apartment with an apparent flaw- a flaw that inexperienced buyers don’t want to, or don’t know how to, rectify. This enables us to maximize the return on your investment property.
Many of the “flaws” we find are architectural. Small rooms, out of date bathrooms and kitchens, lack of central heating and air, etc. Even if there are no clear flaws, there is still a large percentage of properties in Madrid that have not been refurbished. Our experience shows that every additional 1€ our clients spend on refurbishment adds an additional 1.5€ to the value of their apartment. Hiring an architect will ensure that your refurbishment is delivered on schedule and within your budget. Trying to manage your refurbishment by yourself rarely works. Not only will it give you a lot of new grey hairs, you will likely lose a lot more money than it would have cost to hire an architect.
Moving2Madrid works with a partner architect that can manage all aspects of your refurbishment.
__ Craft a negotiation strategy
Property negotiation in Madrid can be a delicate process, but it must be done to ensure you get the best possible deal when apartment shopping in Madrid.
As of fourth quarter 2019, all the interesting properties in Madrid were priced realistically, meaning there is little room for negotiation. Property prices reflect their true values. For the best properties in their price range, which are the only ones we are interested in, the Madrid property market is now a seller’s market. This needs to be kept in mind when negotiating properties.
Negotiation in Spain is not like buying something in a Middle Eastern souk. It can be an uncomfortable process as many sellers are not used to negotiating. Furthermore, sellers often become very emotional so cultural sensitivity is a must.
We recommend negotiating in increments, rather than all at once. If negotiated with finesse, you can usually get 5% of the initial list price, even in this fully valued market.
Moving2Madrid has negotiated hundreds of properties in Madrid over the past ten years. If you need help with your property negotiation, or any other aspect of your Madrid property search, arrange a FREE CONSULTATION TODAY to learn how we can be of assistance.