Since the Covid-19 pandemic began, there has been growing and consistent interest among American property hunters for second homes in Spain.
Data from Spain’s top property search engine Idealista revealed that from June to September of 2020, the highest foreign demand for Spanish properties on the coast came from the United States.
US nationals also topped annual property searches in many parts of Spain’s interior: first in terms of searches for Madrid, Salamanca, Ávila, Cuenca and Segovia, and second in others such as Guadalajara and Seville.
In 2021, Americans were the fifth foreign nationals with the most interest in buying a home in Spain according to Idealista search data, including a growing demand for luxury homes in Madrid and Barcelona.
Now that Covid-19 travel restrictions between the US and Spain have been relaxed somewhat, many US nationals will be looking to carry out the property deal they’ve been hoping for.
But what differences can they expect to encounter when looking and potentially buying a property in Spain?
It takes longer to buy a property in Spain
According to data collected by the US’s NAR (National Association of Realtors) and its Spanish equivalent SIRA (Spanish International Realty Alliance), the average time for a property transaction in the United States is three weeks.
The pandemic has influenced how long it takes on average in the US but prior to this, buying/selling an American property took five times less than the average transaction time for a property in Spain.
Negotiating a discount is a must in Spain
According to the NAR, 35 percent of US home sellers agree to sell at between 95 percent and 99 percent of the marked starting price.
In Spain, the margins are greater as prices are inflated and therefore the average discounts are well above 10 percent according to the experts, even when it’s a seller’s market.
Photo: JOSEP LAGO / AFP
Realtors in Spain aren’t necessarily qualified professionals
American realtors do need to have a licence obtained through university training or other specific courses, as well as having to update their accreditation with new qualifications to renew their licence.
They also have to work for two years as an employee for another more experienced professional before becoming independent and beginning their freelance career.
“In the US, only the owner himself or a licensed real estate agent can sell a home. In Spain, access to the activity is free and professional barriers are non-existent,” SIRA head Francis Fernández told Fotocasa, one of Spain’s other major property websites.
“Anyone – the doorman, a neighbour, a relative, etc. – can handle the operation, which in the US would be considered professional intrusion, ” said Francis Fernández.
Commission in the US can therefore be higher
In the US, the higher the specialisation of the realtor, the higher the commissions are, generally speaking.
“The North American real estate agent also needs to specialise in a certain area of work: residential, commercial, solar, etc. so that they can offer the client detailed knowledge in their area of expertise,” explains Fernández.
In the United States the usual commission in a buying and selling transaction is 6 percent while in Spain it ranges from 3 percent to 5 percent, something that contributes to making this activity more profitable for real estate agencies and the realtors themselves.
Property ads in Spain can be more embellished
In the United States, housing advertisements must be absolutely objective and accurate.
As a result, it is not possible to describe an American home as “wonderful” or “cosy” as that is subject to interpretation.
The opposite can happen in Spain, where the agent or the private seller is at liberty to speak wonders of the property even if it’s not accurate.
If a US realtor is aware of a defect or damage to the property, they are legally obliged to mention it in the ad or inform the potential buyer, as well as having to give them a document to sign confirming that they have been informed.
More regulation and legal guarantees in the US
In the United States there are protection funds for purchase or earnest deposit contracts (contrato de arras), in which it is mandatory to deposit and insure the amounts deposited by the buyer.
In Spain there are no obligations in this regard, even though there are other processes that have to take place.
A purchase deposit contract must be signed but there are situations where the buyer can lose their deposit or the vendor has to pay double back.
Similarly, a US realtor who is not a lawyer cannot modify a contract at all, and may also be accused of professional intrusion, while in Spain property consultants (Agente de la Propiedad Inmobiliaria, API) or the clients themselves can agree to modifications to the contract.
You can’t choose your favourite Spanish realtor to show you all the properties you like
In the US, realtors in any given area work together with a pool of properties which they all have access to (Multiple listing service, MLS), meaning that the agent that you trust or has been recommended to you can guide you every step of the way. Therefore the seller’s realtor and the buyer’s realtor usually split the commission 50-50.
In Spain however, private sellers advertise through their real estate agency of choice, meaning that the potential buyer has to stick to the assigned realtor, unless a deal can be reached with your favourite agent and the agency in question.
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