Steps to sell your house
Before completing the entire process and signing the purchase agreement for the proeprty, it is important to clarify certain procedures. While most of these are not mandatory, all of them are recommended to ensure that the deal is concluded correctly and to the satisfaction of all parties involved. We have reached one of the most crucial stages in the sale of your property.
Consider whether, at the right time, it would be beneficial to hire the services of a real estate agent, as they have more experience in negotiating the closing and can help you obtain everything you need.
Remember that delaying the sale of your property could result in a significant financial loss, so hiring a trusted real estate professional can easily offset this cost.
In any case, setting that minimum price and not letting yourself be guided by emotional pricing is crucial when starting the negotiation.
It is also important to consider whether you are willing to leave certain items in the house, such as some furniture, which could make the property more attractive to the buyer.
The behaviour of the real estate market in the province of Málaga confirms that the sector is in the midst of a full recovery, leaving behind the severe impact caused by the pandemic, with activity now approaching pre-COVID levels. The province is also a key driver of the real estate sector at the regional level in Andalusia, both in the sales market and in rentals, in a context where renting is losing ground to the option of owning a home.
Almost two years after the outbreak of the coronavirus, Málaga is approaching the figures it recorded in 2019. By August 2021, 32% of the population between the ages of 18 and 75 had participated in some way in a purchase, sale, or rental transaction.
You should determine whether the area where your house is located has more supply or demand. The best way to find out is by consulting with real estate agents who specialize in your area
If you are in a market where there is more supply than demand, you will need to adjust the price of your property to sell it as quickly as possible and minimize your financial loss, as the property incurs costs while it remains unsold. On the other hand, if you are in a market with more demand than supply, you are in the best position to sell your property. In this case, act quickly and determine the optimal price at which you can sell your home.
Mortgage interest rates are also an important factor to consider when deciding if the market is right, as lower rates will make it easier to sell your property. Currently, we are in a period of historically low interest rates, which makes it easier for potential buyers to obtain a mortgage at the best possible rate. It is crucial to consider and check the Euribor, as it directly affects mortgage interest rates.
In Spain, the time it takes to sell a property has been reduced to six months, but this can vary significantly depending on the city or province in which you live.
Once you understand the characteristics of your local market, you need to determine how much your house is worth to achieve the best price. This will be the price the buyer is willing to pay and you are willing to accept, so it is important to understand that it is not a single price, but rather a range between the minimum price and the maximum price.
To determine the value of your property, you can analyze similar homes in the area and extrapolate the average price per square meter to your home. You can also consult several online portals that offer tools to provide you with an estimated value of your property. For a more accurate figure, we recommend seeking advice from real estate agents in your area by contacting one or more of them. They are familiar with the area and the properties that have recently sold, as well as their sale prices, and can help you determine the best price. They will also show you the type of buyer who may be interested in your property and offer you an unbiased perspective on the price at which you should list your home to increase your chances of success.
Ultimately, the current market will place your property within a price range, with a maximum and minimum value determined by the prices of similar homes in the area. Therefore, if your house is in good condition, you can always offer it at a price close to the maximum. On the other hand, if the house needs renovations, the price should be set as close as possible to the minimum.
The help of a real estate expert will always be key when selling your home. Remember that once you put your house on the market, it will have to compete with other properties for sale in your area or neighborhood. Therefore, it is crucial to receive good advice to ensure your property stands out among the others.
In addition, the selling process is time-consuming, as you will have to manage numerous phone calls, emails, purchase offers, and more. At the same time, you will need to handle the marketing and promotion of your property (on social media, websites, signs, etc.), respond to messages, emails, calls, and information requests, and negotiate with buyers.
You will also need to stay up to date with relevant legislation, and when the time comes, you will be responsible for drafting the contracts to close the deal and, if applicable, the final sale.
Each visit from a potential buyer may take between 30 and 45 minutes (not including the travel time to the property), and you will need the ability to assess which clients are suitable to buy the property, as, although they may be interested, they might not have the financial means to secure a mortgage.
One of the main benefits of hiring a real estate expert is the significant time savings in the selling process.
The real estate agency knows the market prices and will help you assess your property to sell it as quickly as possible. They will also assist the buyer in securing financing, helping them find the most suitable loan or mortgage, which will also speed up the closing of the deal. Additionally, agencies have an extensive network of contacts with moving companies, renovation services, painters, and more, allowing them to offer you a comprehensive service and relieve you of any concerns.
When choosing a real estate agency, an important factor to consider is its online presence. This will help attract potential clients interested in your property, making it easier to sell it faster. Additionally, transparency, personal and attentive service from the agents, and good customer service are crucial. A real estate agency should always be willing to help and resolve any potential issues.
The fees of real estate agents will largely depend on the market (geographical area, type of property, etc.) and the sale value of your home. Normally, real estate agencies charge a percentage of the final sale price.
Fees should not be a big concern, because by hiring professional agents, you will not have to dedicate your time to the sale and you will also be able to sell your house sooner, so you can even avoid possible money losses. Think that if the market goes down, a day you go without selling will translate into money you lose over time.
When hiring an agency, it’s important to ensure that the cost is justified by the services they offer. Therefore, you should ask the following questions:
- How do they operate?
- What are they doing to sell your house?
- What services will they offer: professional photos, videos, 3D or 360º videos, etc.?
- How will they promote the property: social media, specialized real estate portals, magazines, direct mail, etc.?
- How will the viewings be managed?
- Will they visit on weekends, at what hours, or how do they manage the keys?
- What follow-up will they provide regarding clients who have shown interest in the property?
- Will the agency accompany you throughout the process, including the signing of contracts?
- Do they have financial or legal services to support you?
Once you have chosen the agency, you will need to sign a brokerage agreement and a service contract with them. Some agencies may offer to sign exclusive contracts for a specific period with special conditions. This is something you will need to evaluate and decide. Many times, we think that exclusivity has more downsides than benefits, but that is not always the case.
If you believe that the chosen agency is trustworthy, signing an exclusive contract with them will make them more committed to selling your house, as they will have exclusive sales rights. Additionally, the fact that your house is not advertised by other agencies in the area will make it more attractive to potential buyers.
Selling a property on your own, without an agency, the first thing you should consider is how much time you’re willing to dedicate. People often say that time is money, and selling a house is no easy task as it can be very time-consuming, which translates into a significant financial investment. Additionally, small mistakes due to lack of sales experience can lead to a failed negotiation during the process.
You must keep in mind that you will need to carry out the following tasks:
- Create your listing on online real estate portals.
- Take high-quality photos and create videos of the property.
- Respond quickly to all emails and phone calls (buyers often don’t know if you’re working or busy with other tasks).
- Be present at the property to show it to potential buyers.
- Organize the viewings (each visit will generally require you to be present for about 30 to 45 minutes, plus travel time).
- Negotiate the final price with the clients.
- Keep the legal status of the property updated.
- Stay up to date with current legislation and prepare the necessary contracts to complete the sale.
- Make sure you are informed about the financial situation of the buyers throughout the process to avoid mistakes and selecting the wrong client.
You should pay close attention to the volume and size of the property. We recommend doing a thorough cleaning of the house and removing any furniture that takes up too much space. Additionally, you should consider whether the property needs a fresh coat of paint to present it better. During all visits, the house should be clean and free of bad odors, as these details can cause a buyer to lose interest.
It is important to fix anything that is damaged, such as lights, doors that don’t open or close properly, leaking faucets, or blinds that don’t work well. If you don’t address these issues, it could leave a bad impression on those who visit the house.
The temperature during the visit is also important for buyers, as they should not feel too cold or too hot, as this could affect their perception of how they would live in the house in the future.
When taking photos of the property, it’s crucial to do so when the weather is good and there is adequate lighting to make the photos look their best. Additionally, if you’re not an experienced photographer, we recommend using the services of a real estate professional who typically handles this or hiring a professional photographer.
It is also important to inform potential buyers about nearby services to add more value to the property’s location.
It is crucial to highlight high-value areas, such as nearby services, transportation, etc. When organizing viewings, keep in mind that, just like online listings, the first few minutes of any visit to your home will significantly impact the closing process. For this reason, we recommend preparing the house in advance, having all the necessary documents ready, and presenting them at the right time. If you are selling homes with real estate agents, you should inform them about any defects in the property so they can respond positively to buyers’ questions and explain the reasons behind the issues and possible solutions.
When we decide to buy a property, it is necessary to allocate an additional amount of money for a series of expenses generated by the formalization of the property transfer: notary fees, registration, administrative agency fees, and taxes.
Notary
The notary charges fees for drafting the deed of sale, as well as for copies of the deed. These fees are regulated and range between 0.2% and 0.5% of the property’s value.
Property Registry
The property registrar charges fees for registering the transfer. These regulated costs usually range between 0.1% and 0.25% of the property’s price.
Administrative Agency
If you hire an administrative agency to manage the registration of the property deed, you will need to pay an average fee of around 300 euros.
Taxes for the buyers
The purchase of a property also generates taxes, which can vary depending on the use of the property. Here’s an overview of the different tax rates based on how the property is used:
4.1. Impuestos para Compradores de Propiedades Nuevas:
For new properties: IVA + IAJD (Stamp Duty)
If you buy a new property, you will need to pay the Value Added Tax (VAT), which is 10% of the property’s value (4% for official protected housing). However, if you live in the Canary Islands, you will pay the Canary Islands Indirect General Tax (IGIC), which is 6.5%.
Additionally, the purchase of a new property generates the Tax on Documented Legal Acts (IAJD), the cost of which depends on each autonomous community:
| Autonomous Community | IAJD Rate |
|---|---|
| Andalucía | 1,20% |
| Aragón | 1,50% |
| Asturias | 1,20% |
| Baleares | 1,50% |
| Canarias | 0,40% |
| Cantabria | 1,50% |
| Castilla y León | 1,50% |
| Castilla-La Mancha | 1,50% |
| Cataluña | 1,50% |
| Comunidad Valenciana | 1,50% |
| Extremadura | 1,50% |
| Galicia | 1,50% |
| Madrid | 0,75% |
| Murcia | 1,50% |
| Navarra | 0,50% |
| País Vasco | 0,50% |
| La Rioja | 1,00% |
| Ceuta | 0,50% |
| Melilla | 0,50% |
4.2. Impuestos para Compradores de Propiedades de Segunda Mano:
For second-hand properties: ITP (Property Transfer Tax)
When purchasing a second-hand property, you will have to pay the Property Transfer Tax (ITP). Its cost depends on each autonomous community:
| Autonomous Community | ITP Rate |
|---|---|
| Andalucía | 7% |
| Aragón | 8% |
| Asturias | 8% |
| Baleares | 8% |
| Canarias | 6,50% |
| Cantabria | 10% |
| Castilla y León | 8% |
| Castilla-La Mancha | 9% |
| Cataluña | 10% |
| Comunidad Valenciana | 10% |
| Extremadura | 8% |
| Galicia | 10% |
| Madrid | 6% |
| Murcia | 8% |
| Navarra | 6% |
| País Vasco | 4% |
| La Rioja | 7% |
| Ceuta | 6% |
| Melilla | 6% |
In some autonomous communities, discounts are applied to the IAJD or ITP if the buyer is young, part of a large family, or has a disability. It is recommended to inquire about the discounts you may be eligible for if you belong to any of these groups.
4.3. Impuestos para el Vendedor al Vender una Propiedad
The seller must pay the following taxes when selling a property:
Income Tax for Individuals (IRPF) on the Sale of a Property
This tax is only paid if you make a capital gain. Typically, the capital gains tax rate is:
- 19% for gains up to 6,000 EUR
- 21% for gains up to 6.000 EUR – 50.000 EUR.
- 23% for gains up to 50.000 EUR.
However, you may be exempt from paying the IRPF if the proceeds are reinvested in the purchase of another primary residence or its renovation. Additionally, if you are over 65 years old and the property is your primary residence, you will be exempt from this tax. People with severe or high dependency are also exempt from this tax.
Tax on the Increase in the Value of Urban Land
This municipal tax is applied to the increase in the value of urban land. It is calculated based on the cadastral value and measures the increase in land value during the years you have owned the property. The tax must be paid within 30 calendar days after the signing of the deed with the local municipality.
Non-resident property owners tax in Spain
If you sell your property as a non-resident in Spain, you will need to pay 3% of the transaction value to cover the tax charged by the Spanish government.
To get more accurate information about the sale of your property, you can always contact a real estate agency. These agencies typically offer legal and financial services to help you determine and calculate the exact taxes.
The cost of purchasing expenses usually ranges between 10% and 12% of the property’s value, although this depends on the purchase price and the autonomous community where the transaction is formalized.
For example, if you wish to purchase a property worth 150,000 euros in the city of Barcelona, you will need to pay the notary and registry fees associated with the transaction, as well as the administrative agency fees and applicable taxes. We break down the costs for each of these items:
| CONCEPT | NEW PROPERTY | SECOND HAND PROPERTY |
|---|---|---|
| Notary fees | 750 € | 750 € |
| Registry fees | 365 € | 365 € |
| Administrative fees | 300 € | 300 € |
| VAT + Stamp Duty (IAJD) | 17,250 € | – |
| Property Transfer Tax (ITP) | – | 15,000 € |
| Total | 18,675 € | 16,425 € |
To cover these purchase expenses, it will be necessary to make a provision of funds before signing the deed. This means that you must deposit the money into an account and reserve it for the administrative agency, which will use it to pay the corresponding bills. If there is any remaining amount, it will be refunded to your account, while if there is a shortfall, you will be asked to provide additional funds.
Most mortgage expenses (notary, registry, administrative agency, and IAJD) must legally be covered by the bank. However, the client is responsible for covering the cost of the property appraisal, which averages around 400 euros. Additionally, the client will need to pay for a copy of the mortgage deed and any potential loan origination fees.
Before completing the entire process and entering into a home purchase and sale contract, it is worth clarifying some formalities. Most of them are not mandatory, but all are recommended to close the deal properly and to the satisfaction of all parties. We have reached one of the most important stages of selling your home.
Consider whether when the time comes it would be good to have the services of a real estate agent since they have greater experience in negotiating the closing and ease in obtaining everything necessary.
Remember that delaying the sale of your home can mean a great financial loss, so hiring a trusted real estate professional can more than compensate you.
In any case, establishing that minimum price and not getting carried away by your emotional price is the most important thing when starting the negotiation.
It is also important to consider whether you are willing to leave certain items in the home as well as some furniture, which can also make the purchase of the home more attractive for the buyer.
A deposit contract is an optional contract governed by the civil code, in which the two parties agree to sell the property within a specific period. It is normal for the buyer to deliver an agreed amount, which usually does not exceed 10% of the total price. It is used to specify the terms and details of the sale (spread of expenses, signing date, penalties for non-compliance, etc.). This contract can be signed at the real estate agent’s office or even before a notary to ensure that the contract is reviewed and drafted correctly. A deposit contract is a prior agreement to buy and sell a home, which establishes all the terms between the buyer and seller. It is important to keep in mind that there are no fixed clauses for each contract, but rather they are agreed upon by both parties.
The function of a reservation contract is the same as that of a deposit contract, but it is not regulated in the civil code or in jurisprudence. It is a private terms and conditions contract and cannot be terminated unless specified. This reservation contract often leads to confusion precisely because it is not a regulated contract. When you sign it with a real estate agency, in many cases you are signing a promise of sale and therefore it is important that the conditions in the contract are written and read correctly.
A sales contract is the deed document for the sale of your home. I can have different formats and it can come from a previous deposit contract.
Documentation that may be requested from you for the contract at the notary
- Your valid ID or residence card.
- The receipt of the last IBI payment.
- The occupancy certificate is mandatory.
- The deed of the property or acceptance of the inheritance (if applicable).
- Energy certificate.
- The ITE certificate if necessary.
- The earnest money contract.
- The latest utility bills.
- Certificate of being up to date with the neighborhood community.
- Certificate of outstanding debt if you still have a mortgage.
- And the keys to the house.
The buyer chooses in which notary office he wants to carry out the procedures since he is the one who will normally assume almost all the expenses generated by the notary office.
Renting with an option to buy can be a good option if you want to sell your house.
This contract is complex, which, without specific legal regulation, has two interrelated legal businesses (purchase and lease options).
As we all know, renting consists of giving possession or use of a property in exchange for a price and the purchase option is a matter of preparation for the object of the sale, that is, the purchase option is the part of the condition. which reflects the agreement by which the property grants the buyer the power to purchase the property under certain previously agreed conditions and deadlines. It is normally accompanied by the payment of an option premium by the opter. The combination of the two is what we call the rental contract with the option to purchase.
In this case, it is highly recommended that it be drafted by a lawyer specializing in real estate law who knows how to reflect in the contract the true intention of both parties and will be composed of the following points of special importance:
- In the rental part:
- Description of the property and its use or destination.
- Rental term respecting the law in force at the time of signing.
- Rental effective date
- Price or rent, its update and the method of payment thereof.
- Bail amount
- Compensation to the owner in case of withdrawal from the rental by the tenant.
- Obligations regarding the payment of supplies and repercussions to the tenant during the term of the rental.
- In the purchase option part:
- The granting to the buyer of the right to decide or not to purchase the property on which the rental has been agreed.
- The specific period during which the applicant can exercise his right, which may not be longer than the rental period, although it may be shorter.
- The specific price agreed for the future acquisition.
- The payment of an option premium (it is like a purchase and sale signal by which the exclusive purchasing power is granted to the lessee)
- Percentages or installments of the income that will be applied to the agreed purchase price and their progressivity depending on the date on which the purchase option is exercised.
- Distribution of expenses and taxes of the future sale. The usual thing is that all of them are borne by the buyer except the municipal capital gain, which must be borne by the seller.
- Regarding the linking of the lease and the option to purchase:
- It is important to establish whether the purchase option will be extinguished if there is default by the lessee.
- It will also be necessary to foresee who bears the expenses in case the contract is registered in the Property Registry.
Finally, it is advisable to exercise the option in the manner planned and agreed upon by the parties by means of a burofax or notarial deed, thus terminating the lease contract and processing the purchase and sale contract.
Now that you have finally completed the process of selling your home, you cannot forget that you need to pay the following taxes:
You must contact the provincial tax collection board office in your city to pay the tax within 30 days of executing the deed.
You will only have to pay this tax if with the closing of the operation you have obtained a capital gain. In the case of a contract, you will have to pay tax on the benefit obtained by making it effective by submitting the personal income tax return for the year following the sale.
