BEWARE: The ‘reserve’ does not reserve the flat for you. It does not take the flat off the market, and it does not bind the seller in any way. The reserve is incorrectly titled and very confusing.
Why a reserve? Real estate agents want to see your offer in writing to be sure you’re serious about buying. On it, you write your offer and pay a deposit of app. 1% of the purchase price. The seller has about seven days to accept or reject the offer. If they accept you proceed with the purchase and the deposit should go towards the purchase price. If they reject, they should return your deposit. All this is controlled by the language in the reserve. Be sure to read it carefully before signing.
Careful! Agent’s Fee. In Spain, the seller pays the agent, however, some (Tecnocasa) also charge the buyer. So if the seller rejects your offer, the agent might keep your deposit as their fee. Their fee is NOT in the listed price. So before you sign the reserve, read it to be sure or propose a clause: “The Agent is not charging the Buyer anything in this transaction.” The seller is already paying the agent 3% to 7% of the purchase price.
Block the property? No, the seller/agent does not have to block the property for you. They may continue showing the property and even use your offer to get a higher bid. It’s legal. To block the property, you must put a clause that says: “Upon signing this reserve, the Seller will take the property off the market and reserve it in the Buyer’s name.”
Buyer’s Obligation: If the Seller accepts your offer you must buy the property or lose the deposit. They normally want a 10% non-refundable deposit within 7-10 days. Thus, you must have your money and mortgage ready before you sign the reserve. Mortgage approvals take time. If you don’t pay the 10% deposit on time, you could lose your reserve. You have to negotiate clauses into the reserve in case your money or mortgage is not ready.
Right of First Refusal. These generally don’t exist in Spain, but you can ask: “The Agent or Seller can’t sell the property during the reserve period without offering it to me first”. You might have to pay a higher deposit and they might say no.
Give yourself time. As stated, the seller will want your 10% deposit soon after signing the reserve. But you can’t pay it until (1) you’re sure the property is safe to buy (due diligence) and (2) your mortgage bank does an assessment. This takes time. So write in the reserve: “The Buyer is granted up to ____ days to conduct due diligence and get a bank assessment before they pay the 10% deposit.”
Paying the Reserve. It’s usually paid to the agent. Before you pay:
- Ask for the agent’s license to sell property called an API license.
- Ask to see their written authorization from the seller to collect the money.
- Ask if they’re charging you a fee and write it in the reserve.
- Get a detailed, signed receipt back; you’ll need it when you sign the deed.
If the agent refuses these requests, be careful. Google them to see what you can find out. There are hundreds of people selling property in Barcelona. No license is required. For questions regarding these and other issues, call or email: Mark Carr at 664 665 365 or [email protected]