Mark Carr is an attorney from California, a long-term resident of Barcelona and the owner of Spain Advisors. He helps non-Spaniards locate and purchase property in and near Barcelona.
Below are three basic rules and how a typical purchase works.
1) The seller, and their agent, are in control. They set the price and solely possess information about calls, other offers, the property’s condition and most of the property’s documentation.
2) If the agent knows you want the property, they probably won’t negotiate price or anything else.
3) With few exceptions, you buy the property “as is”.
A Typical Purchase
My phone rings. It’s Ed from the UK. He and his wife, Sue, have been looking for a flat for ten months.
“Mark, we just saw the flat we want. It’s in Gracia. It’s perfect. The agent says a lot of buyers are interested. We want to make an offer to get first in line.”
“Where are you?” I ask.
“In the agent’s office. Can you come now? It’s on calle San Luis.”
“I’ll be right there. Meanwhile, please don’t talk price or say anything to the agent. Play the reluctant buyer; if it’s not too late.” (Sometimes it is).
Fifteen minutes later I’m in the agent’s office: “Hi, I’m Mark, the buyer’s agent. Encantado.”
“Hola, soy Ana la agente inmobiliaria, encantada”. The agent introduces herself. Some don’t speak very much English, but they seem to understand. Ed, Sue and I go into a private room.
“OK, tell me about the property,” I say.
“It’s on a quiet street with two bedrooms, a large living room, and a small patio. We love it.” Ed gushes.
Sue adds, “It’s perfect: it’s near our daughter’s school, spacious, classic design. Can you help us close? We’re tired of looking and our rent just went up. We want to get this done.”
“Did you say any of this to the agent?” I ask.
“Well, a little bit,” They respond. “We said we liked it.”
“What’s the price?”
I explain that with the 10% sales tax, legal and closing fees, it will cost a total of about 335,000€.
“Yes, we know. A little more than we wanted to pay, but with a mortgage we can do it,” Sue says.
“What would you like to offer?” I ask.
“We think 275,000€ is fair.”
“If another buyer offers more, you will lose it,” I warn.
“Then ask the agent to call us if someone else offers more?” Ed asks. “Then we’ll offer more.”
“There are no guarantees. The agent might call you, they might not. But remember, if someone offers 300,000€. It’s sold. Your offer is rejected.”
“Then ask the agent to call us if someone offers 300,000€, so we can match it. Since we offered first, we should get the flat, right?” Asks Sue.
“A right of first refusal,” I say.
“It doesn’t exist in Barcelona. The first person to offer 300,000€ gets the flat. The only way to eliminate this risk is to offer 300,000€ yourself. Then it’s yours. The agent knows this. So if the agent knows you really want the flat, you’ve been looking a long time, it’s near the school, etc., they might not negotiate”.
“Can you find out?” Asks Ed.
“OK. I prefer to see the flat first, but let me see where there are.”
Now I’m talking to the agent: “Would the owner be interested in an offer of 275,000€?”
“No, that’s too low.”
“We’re not going to negotiate at this point. The flat is new on the market. Another buyer saw it this morning and I’m almost sure they’ll offer 300,000€. They really want it. I’m expecting their call.”
“May I see the property’s legal documents before my clients make an offer?”
“No, we don’t give any documentation until we have a signed offer with a deposit.”
“How much is the deposit?”
“What if the seller rejects my clients’ offer?”
“Then we’ll return the deposit.”
“What if the seller accepts the offer?”
“Then we must sign the binding pre-sales (arras) contract within seven days. And the buyers must pay an additional, non-refundable, deposit of 28,000€ when we sign it.”
“So if the seller accepts my clients’ offer, I have seven days to investigate the property and documentation, before my clients sign a binding contract and pay a nonrefundable 28,000€ deposit?”
“Yes, but don’t worry. There are no problems.”
“What if my clients, for good reason, decide not to sign the binding contract?”
“It depends on the ‘good reason’. But we can’t foresee any, so they will most likely lose the 3,000€ deposit.”
“Let me talk to my clients.”
I tell them that the agent is ‘almost sure’ another buyer will offer 300,000€ and the other terms.
“Is it true? Is there really another buyer willing to pay 300,000€?”
“I don’t know and we have no way of knowing.”
“What about the legal condition of the property? Is it safe to buy?”
“I can get some documents online, but the agent has the rest and won’t release them until you make an offer and pay a 3,000€ deposit.”
“So we pay 3,000€ with the offer. That’s not so bad,” says Ed.
“Yes, but if they accept your offer, you have seven days to sign a binding contract and pay another deposit of 28,000€. This deposit is not refundable. If they reject your offer, they’ll return your deposit.”
“So what should we do?” Asks Sue desperately pacing the floor. “We really want the place. We’re tired of looking.”
Ed adds, “Maybe no one will top our offer, maybe they’ll drop the price, maybe ….”
I quickly compare this flat’s price with the prices of similar flats that my clients have bought, and other methods we’ve developed. If it comes close to 300,000€, I advise my clients to buy or risk losing it.
If my clients are the first to offer 300,000€, and pay 3,000€, the flat is reserved in their name and off the market. If they offer less than 300,000€, it is NOT reserved and stays on the market. As soon as they make an offer, I start my due diligence, collect documents, etc. I might need the assistance of an architect. If something serious turns up, the owner will have to return the 3,000€ and the deal is off, but it has to be really serious. In general, you buy as is. How does the story end? Every purchase is different.