June 2, 2019
Buying property in Spain as a foreigner is a very interesting experience to say the least. The functions of the professionals are very strange and definitely not what we are used to as Americans. It is a frustrating, but ultimately rewarding transaction. I will satisfy your curiosity and say yep! “we done did it”. Find out why we ultimately decided to plant some roots down in our beloved Valencia. To think it all started with a door slam.
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Deciding on buying Spanish property:
As our newsletter subscribers know, we absolutely loved our rental flat in Valencia. We had adequate space, a patio for the dogs, and it had been recently remodeled. We had signed a one year lease with our intent being to stay there until we moved away from Spain. We were also happy renting, not that there was really anything to fix (we did need to have the flat completely rewired) thanks to a leak from the upstairs neighbor.
Federico is very sensitive to noise and uses our Bose noise cancellation headphones (our Christmas gift to ourselves) a lot. Each floor has two apartments, the other one being a gestoria office (think accountants). One of the men that works in there had a nasty habit of slamming the door whenever he entered/left the office, which was very frequently. Bam! Bam! every single time, 20 times a day sometimes since he had several cigarette breaks, siesta, etc.etc..
Complaining to him only made it worse of course. The building administrator had a chat with him, as did the landlord several times. He would tow the line for about a week, then go right back to slamming. I think he has a very frustrating job/life, a very unhappy man.
We therefore decided we would move because he was never going to change. We started thinking about rental flats in Valencia. One day, l said perhaps we should consider buying instead of renting since we both loved the city. Boom… that started it.
Is it a good time to buy property in Spain?
For us it was a no-brainer. We have been living in Valencia over two years. Previously, we had been living in Seville, another place we really liked, and Malaga before that. Like Federico says, “in some place you gotta live”. We both know Valencia was a great fit for us and we could picture ourselves here for the long haul.
Thinking back to how much money over the years we have spent as renters, we still wouldn’t have done it differently. Buying an apartment in Spain before we were ready would have been a horrible mistake. We have met a lot of people who are saddled with property that have remained unsold for years.
The Spanish property market was in sharp decline for years after the world market crash. It is ever so slowly recovering and right now, it is still a buyers market in Spain as a whole, and even more so in the Valencia and Andalusia regions.
Once we made up our minds to buy, we had to figure out a way to pay for the apartment of course. Even with not having jobs in Spain, we might have qualified for financing through a Spanish bank with a 30% downpayment from what we learned.
We opted not to have a mortgage on the property because we now have an aversion to debt after being debt free for so long. Our solution was to sell our rental property in Houston and use the proceeds to buy the apartment. That way we have no more mortgage as the last remaining property which is a condo is owned outright.
Selling U.S. property from abroad:
Knowing fully well we are not planning on returning to live in the U.S., certainly not to Houston anyway, we had no reservation about selling that house. It was a relatively painless procedure because l followed my own past post on selling property while abroad to the letter.
The hardest part was finding someone to coordinate the remodeling work after the renters vacated the house. Thanks to a friend of a friend of a friend of my brother (you gotta love the Naija hookups :-) ) who oversaw the work done, the house was on the market less than a month later.
We got a full price offer the second day the house was on the market, and four more by the end of the week. We chose the best one (no contingencies ). A 30 day escrow followed and we closed by visiting a notary in Valencia and signing there. (we could have gone to the U.S. embassy in Valencia, but unfortunately they they had no open slots for weeks!).
We used TransferWise to move the proceeds over. It’s an online banking company where you can open accounts in different currencies. We had our money wired by the U.S escrow company into our USD TransferWise account. Once that was done, we simply converted that into our Euro account with them. We saved thousands this way instead of doing it though the traditional banks with their absolutely crappy conversion rates. Here are some hopefully helpful tips on buying Spanish property.
Things to know before buying property in Spain (Valencia):
- You might need a lawyer at a cost of approximately 1% of the property cost. Their function includes researching the property and basically act like the escrow company in the U.S.
- Notario, Gestoria and other fees will run you just under 1%
- In Valencia, it is customary for the buyer to pay the real estate commission. Most realtors won’t even show you the place unless you signing a form agreeing to it. That was hard to swallow. The fee is usually €3,000 flat fee if the house is under €100,000 and then a % if above (usually 4%).
- 10% of the property cost for transfer tax.
- All in all, you need approximately 16% of the cost of the property to cover everything, so definitely factor that in. If you’re contemplating moving to Spain, you can find more detailed information on the process using our Amazon affiliate link to purchase our latest ebook available on Amazon.
- Your closing is done at a notary office and it’s just one signature and you get like a three page document if even. We had about 13 signatures and over 50 pages of document with the U.S. house sale!
We found our Valencia property on idealista, my favorite portal for finding property in all of Spain. Our hopes of remaining in our then current neighborhood was dashed pretty quickly. It was out of our price range, and we were determined not to be squeezed into a small space or have to walk five flights up.
My love for real estate came into play. I enjoy looking up and researching flats for sale in Valencia. As soon as we set eyes on the flat, we both knew that was it. It was the 22nd place we looked at. It is a local barrio and is about a 25 minute walk to the center (as opposed to our previous 10-15 minute walk) so it is still central. We are literally a five minute walk from the City of Arts and Sciences, so lots of wide open spaces and greenery.
Tragedy strikes before closing:
After committing to buying our flat and commencing escrow, the owner died six days before closing. She was 86 years old though, so she hopefully had a great life. Our first reaction was to cuss, scream and feel sorry for ourselves before uttering our condolences.
We had to extend our lease a further two months, thank God our landlord was pretty cool and was willing to accommodate us for as long as it took. The two surviving children aged 58 and 60 inherited the property, then in turn sold it to us.
They had no interest in keeping any of the furniture except for a couple of recliners and some pictures of their parents. This is saving us several thousands of euros. The flat is completely furnished and they have really sturdy furniture. Dated yes, but we don’t care. We are bringing the 80’s back with the black lacquer furniture :-).
What we love about our Valencia flat:
- It is on the third floor on a wide avenue so there is no immediate blocking of our view by another building. I love looking down and seeing trees.
- It is big enough for us. 3 bedrooms and 1.5 baths and 1200 square feet.
- You can walk everywhere pretty much. Our favorite grocery store is two minute walk from us.
- Lots of cafes and bars around and very cheap too.
- Lots of older people, so the building is quiet.
- Did l mention free furniture? right down to the vacuum cleaner, everyday cutlery and fancy ones (we donated the everyday stuff and kept the fancy ones).
- The breeze! I had originally thought our first expense would be installing air conditioners but no need. Leaving the windows open just a tiny bit is enough.
- The price. It was an incredible find, not even including the furnishings. The same sized flat in the same neighborhood that were/are on sale since we started looking are minimum €10,000 pricier. Combination of good timing, the children wanting to dispose of the property quickly and our willingness to put up a deposit quickly cinched it.
- A small balcony. Yeah!!!!
Despite the fact that the price was fair, we offered €7,500 less than asking price. I basically just subtracted the real estate fees from the asking because it irked me to pay it, and for good measure another couple of thousand for wiggle room in case they came back with a counter offer. It took a full week before hearing back after we had paid the “reserva” fee. I’m sure they were still showing the flat as it continued being listed.
Most people buying are looking for empty flats, but having furnished many, many places before, we know it’s insanely expensive. Also, the fact that it’s a buyers market, people hesitate and wonder if there’s something better out there, and then it’s too late. When it’s priced right, it will sell quickly.
What we don’t like about our flat:
- The building is ugly as sin! :-). Federico does not agree with me. It looks like any one of the thousands of apartment buildings out there built in the seventies. Like housing projects. Bah! I pictured myself in a fancy stately building.
- No patio for the dogs. It does have a rear balcony though, and we are having the cement broken and piped so they can do their business in between walks. The front balcony is exclusively for us.
- No nearby metro stop, only buses, but plenty of them. The new metro stop will be up and running next year though so l am happy. Construction on line 10 has started.
- We might be freezing come winter time thanks to the breeze.. there are portable heaters though, so we hope that will be enough.
So, now that we have the property, we are doing some remodeling. The plan is to make this a 2 bedroom, 1.5 bath flat. The 3rd bedroom is basically useless and would have become just a storage room anyway l’m sure. A bigger living room is it then :-). We are also rewiring the whole flat. In the near future, I will do a new cost of living post to replace the old one from two years ago.
We are also painting the whole place one color. The salmon and green color scheme must go. We have found a contractor and on the next post, I will share the during construction phase with you. Wish us luck. It should be quite an adventure.
Have you bought and remodeled property? Was it a smooth experience or do you have horror stories to share?