If you decide to buy property privately without the help of a real estate agent, you need to understand how the process works. In this concise, but informative, buyer’s guide, we explain each step of the way to reaching your dream – to put you on the right track and hopefully make you realise that buying real estate privately is neither very different from using an agent, nor as complicated as it may seem.
Step 1: Work out the price bracket you can afford
This may sound obvious, but you would be surprised how many people actually overstretch their budget when buying a property, only to find it difficult to keep up with mortgage payments or realise that they have no money left over for any necessary property renovations.
Work out carefully the total amount that you can afford based on the cash you have in hand and on a proper mortgage evaluation from a couple of banks or lending institutions. By getting pre-approved for a loan, you will know where you stand and minimise the chance of being disappointed by your bank manager at a later stage.
Keep in mind that this total sum will have to cover the purchase price, transaction fees and taxes (see our legal Q&A for property buyers) and any immediate work you will have to do on the property before you can move in.
Step 2: Find out which areas you are interested in
Do some homework on the areas available. Browse the Internet for information on those areas that catch your interest. The websites of the Town Councils (Ayuntamiento) in the region you want are a good place to start. Also, use the Internet to make a quick search for property for sale online, to get an idea of what properties are available in your price bracket and where they are located.
Eventually, you’ll have to make the trip and visit the areas you are interested in for yourself. It’s best to hire a car, get a good map and drive around so that you can get a better feel of the areas and their surroundings. On your way, keep a lookout for services such as shops, schools, medical facilities etc. It is also a good idea to visit at different times of the day and on different days to get a better idea of traffic conditions, weather and so on.
Step 3: Search for properties in your areas of interest
The best – and most convenient – place to start searching for your property is the Internet of course. Search through our private property for sale database at buyprivateproperty.com from the comfort of your home, to get an instant list of properties for sale in the localities you want, with full information, photos and owner contact details – all absolutely free. You can also sign up for our free notification service and we will automatically send you an e-mail the very instant a new property meeting your criteria is added to our database.
If you don’t find what you are looking for online, you could check the classified adverts in local newspapers and magazines or even drive around the area looking out for ‘For Sale’ signs. Moreover, if you still cannot seem to find the right property for you on the private market, or if you would like to search concurrently among real estate agents in the Canary Islands, we recommend you look at our list of trusted real estate partners.
Step 4: Schedule viewing appointments with the property owners
Once you have identified one or more interesting properties, call the owners and get as much information about the property as possible over the phone. Choose the ones you want to visit and arrange a time with the owners for a viewing. Before your property inspection visit, you should come up with a checklist of points to look out for. This property inspection checklist we have prepared is a good place to start.
When you visit a property in the presence of its owner, it is common to feel like you are intruding into someone else’s life, especially if the property is being lived in. However, remember that as a buyer it is your job to inspect the property thoroughly and that the owner actually expects you to do this. Naturally, politeness and common courtesy will go along way in this situation.
Most importantly, don’t shy away from asking the owner any questions you may have. Be sure to find out:
- the age of the property
- how long the seller has owned it
- why the house is being put up for sale
- how much community fees are (if applicable)
- the statutes and laws of the home owner’s community (if applicable)
- the location of and distance to nearby services
- evidence of planning permission for any alterations/extensions, etc.
- which furniture or fittings will be sold with the house (though remember you are buying a house, so don’t be swayed by fancy extras)
Step 5: Get an independent evaluation of the property (optional)
Although this is really an optional step, it is highly recommended that once you are very interested in a property, you have it inspected by a qualified real estate surveyor. The surveyor will be able to give you an objective appraisal of the property, tell you if the property is overpriced, and even point out any important things you might have missed.
If you are going to ask for a mortgage, you might want to coordinate with the bank on the property inspection since they will send their own surveyor anyway (whose fees you will have to pay) prior to considering your mortgage application.
Step 6: Negotiate the price and terms of the sale
There is no reason to shy away from negotiating when you buy property. In fact, it is usually an integral part of the process.
How much you can negotiate price-wise will largely depend on three things:
- how long the property has been on the market
- how urgently the seller wants to sell
- and how much interest the property is attracting from prospective buyers
On the other hand, as a buyer, you must stick to your budget and discard a property if the seller is unwilling to drop the price to something that you can realistically afford.
Keep in mind that by selling privately, the seller is saving thousands of Euros in real estate agent fees, so, in a private sale, there is that much more leeway for negotiating a price below the actual market value of the property. The seller may also be more willing to drop the price a bit if they have demanding sales terms that you can accommodate (for example either a very short or more drawn out transaction period).
Once you have agreed upon a price and upon a date when the sale will take place, you will sign a Promise of Purchase and Sale Agreement with the seller before a notary, laying out all the terms of the sale, and pay the seller a deposit on the property. This will guarantee you the right to buy the property at the agreed price for a limited time (usually around 3 months) while your lawyer reviews the transaction and you make the necessary financial arrangements.
Step 7: Meet the seller at a notary to conclude the sale
Once your lawyer has made the necessary research about the property and gives the all clear for the sale to go ahead, you will fix an appointment with the seller to meet before a notary and sign the property transfer deed, thus concluding the sale. Your lawyer and a representative from your bank (if there is a mortgage involved) will also be present, together with the respective parties on behalf of the seller.
Step 8: Register the property with the Land Registry
Once you sign the Title Deed, it’s time to celebrate with a glass of bubbly. However there is another important thing you should do, which is to make sure that either the notary or your lawyer registers the transaction with the Land Registry. Although this is an optional step, registering the property in your name can avoid complications in the future.
Step 9: Transfer utilities to your name
Finally, you will also have to agree with the seller to visit the various utility companies to transfer the water supply, electricity and other services into your name.
At this point, if you are thinking of the possibility of buying property on the private market, you must be wondering about what this entails from a legal point of view. Read our Legal Q & A on buying property privately in the Canary Islands to find out.