How to sell your property in Spain
If you are selling a property in Spain, you basically have two choices with regard to its marketing. Your first choice may be to return to the agent through whom you purchased it, assuming that you were satisfied with their service. Secondly, you may decide to advertise and sell it privately online or through printed media.
Selling a Property through an Estate Agent
If you decide to sell your property via an estate agent, you must decide whether to offer it via an exclusive sales agreement, or hand it to various agents in your area on a non-exclusive arrangement. Choosing the first option will most likely reduce the sales commission that the agent will charge. However, be aware of agents that provide you with a possibly inflated valuation of your property in order to gain the exclusive sales rights. It is tempting to accept their valuation and list your property with them. The truth is that some agents have no idea how to value a property and they will overvalue it to ensure they get your listing. The exclusive period will go by, you will not have sold your property, and you have to start again. Be aware of the period of time by which the agent has exclusivity to sell your property. A six-month period would be a prudent option to start with.
The second option allows you more freedom to choose various agents, thus amplifying the chances of selling sooner. In this case, you will only pay a sales commission to the actual agent who sells your property. When multi-listing your property with various agents, it is important that ALL agents offer the property at the SAME PRICE. To the contrary, this causes confusion for potential purchasers when viewing your property on different websites or portals. If you decide to change the sales price, it is also important to notify ALL agents.
Whichever option you choose, an experienced agent will also be able to advise you on all aspects of the sales procedure, and in many cases, handle the conveyancing too without the need to engage a lawyer. Titled estate agents in Spain such as A.P.I (Agente de la Propiedad Inmobiliaria), GIPE and any fully registered agent are legally entitled to represent you in the sale of your property in Spain.
Selling a Home Privately
The biggest attraction to selling your property privately is without doubt the savings in the sales commission that an agent will charge you. You may advertise it online via a host of websites that specialise in ‘for sale by owner‘, commonly known as FSBO. You could also advertise in the local press and magazines in your area, especially foreign language media that reach out to local residents.
The downside to selling privately is the conveyancing process. Unless you are an expert and speak the language, you will find it difficult to prepare all the documentation and searches that are required by law in order to satisfy the notary on completion of sale. The best way to alleviate this problem is to appoint a local lawyer to handle the sale for you. Their charges will obviously vary from one to another, but broadly speaking; will charge anything between 0.5% and 1% of the sale price. This point should be discussed and agreed before proceeding. In any case, you are still in front economically as you are saving anything between 2.5% and 5% if you were to sell via an estate agent. The lawyer can also handle payments and money transfers via their ‘clients’ banking account.
Another point to consider is that of viewings. If you live in the property for sale, this is not a problem. However, if you are abroad, you will need a key holder and someone you trust to show the property to potential buyers. You may be fortunate to have a family member close by, or a good friend or neighbour. In any case, a small remuneration may do the trick for any inconvenience caused.
Finally, once a sale, in principle, has been agreed, the purchaser will have to make a holding deposit to secure the property, subject to signing of the sales contract. Again, the lawyer option comes in handy again.
When finally deciding to sell your property, you need to have all documentation prepared in advance. The purchaser, or his lawyer or legal representative, will request this. You must have ready copies of your title deeds (escritura), all recent utility bills (paid), a certificate from the community residents association stating that you are fully paid up with your community charges (if applicable), a certificate from your local tax office (Patronato de recaudación provincial) to ensure you are fully up-to-date with your IBI (Council) tax, and copies of your passport and NIE number. If you are selling your property furnished, an inventory will be required to be included within the sales contract.
If the property you are selling has an outstanding mortgage, it may be transferred to the name of the purchaser, without cancellation. In Spain, existing mortgages on a property can subrogated meaning that the purchaser can accept the outstanding charge and continue with its payments (subject to the bank’s approval). If the mortgage is to be cancelled, a certificate from the bank will be required on the day of completion, and presented to the notary. The process of cancelling a mortgage in Spain is normally finalised simultaneously together with the completion of sale, thereafter informing the Land Registry of such changes. Costs of cancellation, normally 0.5%, are borne by the vendor.
All of the above documentation, including originals, will need to be presented before the Notary on the day of completion.
The costs of selling or buying a property are proportioned legally between both parties. The following fees and taxes are payable by the Seller:
Capital Gains Tax (CGT): As from 1st January 2016 for EU-residents, the capital gains tax is 19% calculated upon the difference between the purchase price and previous sale price, less a reducing coefficient based on the number of years transpired. However, in practice the buyer will retain just 3%, payable to the tax authorities. If the taxes are less than this amount, a refund is due. If the taxes are higher, the tax authorities can claim the difference. However, if the vendor has returned to his home country, this is unlikely. There are various mitigating circumstances that can also affect this tax; based on the age of the property, the tax status of the vendor (resident or otherwise), and rollover possibilities if re-investing proceeds of the sale back into a property in Spain (within 2 years). Here, an expert lawyer or tax consultant in Spain should be consulted.
In the case of a resident, the sale of the property must be declared in the person’s annual IRPF (income tax) tax declaration.
Plus-Valia Tax: This is a local town hall tax and is payable by the seller, and is calculated by way of a formula that calculates the land value of the property (including apartment buildings and multi-storey constructions) between the former and current sale date. The formula is different at each town hall but is not usually a high amount. You may consult the amount due, in advance, at your local town hall.
Energy Performance Certificate (EPC): Since April 2013, these are now required by law to enable the sale of your property. Any local, authorised firm, can provide one for you, not normally much more than 200 Euros.
Agents Commission (if applicable): If selling through an estate agent, the commission should be agreed prior to placing the property on the market. It can vary from one agent to another. In the case of an exclusive agreement, the commission may be lower. In the case of multi-listing, anything up to 5%. Practises vary on how, and to whom the commission is charged, depending on the location of the property in Spain. Some agents will build-in the commission within the advertised sale price. Others will add the commission to the vendor’s net sale price to achieve the final market price. Whilst others, in some parts of Spain, will divide the agreed amount of commission and charge evenly between the seller and buyer.
Lawyer’s Fees: This depends entirely as to whether you use one. As mentioned previously, some agents will provide this service for you, often included within their sales commission. If selling privately, the best advice is to engage one. In either case, the fee will be between 0.5% and 1% of the sale price, subject to negotiation.
Power of Attorney: You may not be able to assist the final sale of the property before a notary and wish to engage the services of a lawyer to represent you. You may appoint a lawyer in Spain or abroad. The POA document will have to be notarised in the country of origin, and if abroad, will have to be officially translated and apostilled by the Foreign Office in that country. The cost of this service can be discussed and agreed in advance with your lawyer. You may also engage anyone else to represent you in Spain, even if not a lawyer, as long as you provide the above documentation.
All other costs related to the purchase of the property will be levied onto the purchaser, in much the same way as when purchasing originally in Spain.
Repatriation of Funds
Upon completion of sale, funds can be freely repatriated from your Spanish bank account to that of one abroad. Properties can also be sold in currencies other than the Euro. For example, a UK citizen could sell to another UK buyer, in pounds sterling. You may also wish to consider transferring currency via an International Currency broker.
Time Scale for Completion
Although many things in Spain tend to take time, selling a property is not one of them! In reality, a sale may take several weeks or even a couple of months to complete. The buyer may need to arrange a mortgage; funds may have to be released from a savings or deposit account, or POA’s and other documentation be prepared. In actual fact, a sale can be wound up within just one week if both parties are ready and present, all documentation has been checked and verified, and funds are fully available. In normal cases though, a suitable date is agreed in advance between both parties and inserted into the purchase/sale contract, to be signed between vendor and purchaser at the time of placing the holding deposit. Final completion is then carried out before a notary in the presence of the vendor, the purchaser, or their legal representatives.
And finally, to ensure that you get the best possible price for your property, ensure that it is properly presented to prospective buyers.
Home staging is now recognised as an excercise definately worth carrying out when preparing your property for sale, for when the agent arrives to photograph it, and most importantly, when prospective purchasers come to view it.
Statistics show that potential buyers make up their mind within the first 60 seconds of entering a property. They need to imagine themselves living in the house that they visit. Read more about preparing your home for sale.
Guide prepared by:
LPG (Leading Property Group)
(NOTE. This guide, although accurate, has been kept as brief as possible. Please do not hesitate to enquire further on any point. Please note also that the guide is not a substitute for proper legal advice. The contents herein are correct at the time of publication. LPG cannot be held responsible for any changes in the law or legislative practices in Spain.)
(Page updated: 30th September 2016.)