Thursday, February 9, 2023

Pasos a seguir para comprar una casa

The most complicated challenges, even quitting smoking, become more manageable if there is information about it. This is how the author of that famous best-seller against the cigarette habit that helped so many people to give up such a toxic habit saw it, and this is how we understand it when writing this real estate information article.

Because buying a home is one of life's most important decisions, whether it is for an individual or family plans, and it cannot be made lightly. Nor looking for a paralyzing excellence, because, as the saying goes, "the perfect is the enemy of the good". That is to say, let's look for a good house, but let's assume that we will always have to make some renunciations, especially if our budget is limited.

Thus, if we choose a sought-after neighborhood, we may not find the penthouse of our dreams, and if we opt for an area farther from the center, we will have commodities but we will spend more time and money on transportation.

Aware of the vital importance of this decision, in the real estate agency "HousinGo by David de Gea", specialist in buying and selling and renting properties in Barrio de Salamanca of Madrid, we have prepared a simple guide with 10 very useful steps if you are thinking of buying a home, either for personal use or as an investment.

Researching the market

The first step that is recommended before buying a property is to study the market in terms of the location we are interested in acquiring the property and the associated factors. That is to say, if the neighborhood has sufficient services, good accesses by road and public transport, if the property will have parking on the premises or if on the contrary there is ease of parking, either with resident permits or without the need for them as there are no parking restrictions.

This market research will take into account the relationship between supply and demand, and the real estate tension that may exist, with the consequent overvaluation of prices, or on the contrary, prices below the usual value or in a good situation to acquire. Because prices continue to be a key factor for the final decision, especially in a situation of high inflation and general uncertainty due to the increase in the price of raw materials and the war in Europe that is altering the game board.

However, according to a report by the BBVA Real Estate Observatory, the price of housing has already reached a ceiling. The continuous rises of recent months, especially after the pandemic, are coming to an end, especially in some districts of Madrid, such as the Bariro de Salamanca, where very high levels have been reached.

Although in these cases, these prices would be assumed by those buyers willing to prioritize other elements such as space, the area, the value of the building that houses the property and the quality of the same.

Setting a budget

Once we have identified a house that attracts us because of its quality-price ratio, among other factors, we should realistically study our monetary resources in order to opt for one or another payment method.

We must at this stage analyze with a cool head if we will be able to afford the mortgage loan installments if we opt for this method of financing and also the expenses derived from the condition of owner and the possible renovations and investments that have to be faced.

Because the initial investment that supposes the entrance, not subject to installments, should not leave us without more resources to face those future expenses that, for sure, will arise and that we will not be able to claim to the landlord as it is natural in the case of the rents.

For that reason it is key to quantify with rigor the own funds and not to discard the figure of a guarantor (already be a friend or a relative) to facilitate the obtaining of a mortgage in a moment in which the departments of risks of the banks are more demanding than ever.

Thus it will be evaluated if it is more favorable to acquire the house in its totality or with a mortgage loan that can be greater or smaller depending on whether we contribute a greater or smaller amount at the moment of the purchase.

The ideal, in any case, is to conserve a part of the budget for possible unforeseen and future expenses and not to destine all our money to the purchase of the house, either in its totality, or with mortgage and corresponding entrance.

It is also necessary to take into account the rate increases, on the way to 4%, and their impact on the Euribor and the mortgages, a matter that should be fixed as clearly as possible with the agents of the bank that grants the loan, and to look for the best possible conditions.

Choosing the right home

Once we have opted for an area and we have evaluated our economic capacities to buy the property, comes the phase of prospecting or, in other words, reviewing the different real estate agencies, without renouncing to that first-hand information from the concierges, to find the apartment that convinces us to take the step.

It is not necessary to jump into the field at first, since the real estate portals offer us interesting first-hand information without leaving the Internet, but without ruling out other actions. Like going to local and specialized real estate agencies in the area, since they offer a detailed and updated advice on the real estate situation of a particular neighborhood, and have professionals specialized in the characteristics of the neighborhood and are willing to offer the most complete advice possible.

Visit and compare

Once you have contacted different agencies or individuals, now we will go to the field. It is time to see, listen, compare and, above all, keep calm and not rush or get carried away by hunches that can be treacherous.

The critical eye is crucial at this stage and should be sharpened by studying the type of housing offered, its characteristics and dimensions, as well as the use we are going to give it, the rooms needed, the type of kitchen and bathrooms required and, importantly, the outside light that enters and the degree of noise pollution that the house presents. (A bar open until late hours during the weekends can ruin what at first seemed the ideal purchase).

Because a house, unless it is bought in a deep forest, is not isolated, hence in addition to analyzing its qualities and appearance, we must take into account the environment. If there is or not delinquency, if there are hotels, terraces, discotheques and other generators of noise nuisance, as well as the situation of the main and adjacent streets.

With respect to the property itself, make sure that it has passed the Technical Inspection of Buildings (ITE), find out about the current fees that the new owners would assume and whether there is an elevator or approved plans for its installation (and how this would affect the new owner).

Knowing the exterior and interior condition of the buildings is relevant in historic areas with heritage of great value, but also antiquity, such as Barrio de Salamanca.

In any case, it is important to be advised by professionals also at the time of the visit to be able to compare opinions and gather as much information as possible, and then share it also with other people and forge a more complete judgment.

Analyze the specific offer

Once we have decided on a specific property, it is time for negotiation. A delicate phase in which it is not convenient to fall into an excessive 'haggling' with the real estate agency, especially if the property meets our expectations and is at market price.

Otherwise, if the purchase commitment has not yet been formalized, paying what is known as a deposit or leaving a down payment, it is possible that we may lose our opportunity in the event that there is a high demand of buyers.

Technical data

In point 4, regarding the visit and valuation, we have already advanced questions related to the charges that the building may have, in a technical information that is never superfluous. Thus, it is recommended to know the IBI, and if there are problems with the community expenses in relation to non-payments for pending payments and general situation of defaults.

Therefore, before signing the purchase, it is essential to review the documentation and request more documentation if necessary, without fear of consulting doubts to professionals in the sector, especially in the case of buildings with special characteristics such as those that can be found in Madrid in areas such as the Barrio de Salamanca.

Signing of the deposit

Once we have all the information, the doubts have been dispelled and we are sure to give the real estate "Yes I want", there are still some last details such as the purchase and sale costs with the real estate agency for their services and the signing of the earnest money contract, of which there are three types:

  • Confirmatory Deposits:

They are not regulated by the Civil Code so they are somewhat more 'risky' in case of breach of the agreed conditions.

  • Penalty Deposits:

To avoid, as in the previous case, that the claims that may arise are attended, this type of deposit is used, with a higher degree of commitment.

  • Penitential Deposits:

This is a type of contract that allows to withdraw from the contract, but according to what is stipulated in the Civil Code. This means that in case of withdrawal, the buyer must pay the agreed amount and, in order for the seller to be released and 'recover' the property, the seller must pay double the agreed amount, provided that the buyer accepts.

However, always make sure you check and understand what the clauses of the contract imply.

Signing at the notary's office

Already in the notary's office the hour of the truth arrives, with the signature of the property deeds that will make us already owners in a legal way of the acquired housing. Although there is still another step, as we will see below.

A visit to the notary that also supposes an expense, although there are real estate agencies that run with these expenses or banks that include it inside the mortgage, reason why it is good to be informed before who will run with this penultimate item.

Otherwise, it is important to file a simple copy of the deed in a safe place, wear formal attire to the signing and enjoy the decision taken. Once we have the keys, we will value them as a symbol, since it is always a good idea, for security reasons, to change the lock and have new keys.

Registration in the Property Registration

This is the last bureaucratic step, but without the pressure of last minute changes, with the deeds signed and with the keys in our possession to make use of the property if we so wish. Although it can be processed in person, the signature at the Registry is usually done through a notary's office, which speeds up the process and can be included in the package of services that will be prorated in the mortgage.

And, last but not least, in case of sale on our part we will have to assume the cost of the capital gain if we have sold for a higher price than we bought, and, if we are the buyers, the payment of the transfer tax or ITP that in cities like Madrid is 6% of the value of the property. If the property cost one hundred thousand euros, six thousand euros will have to be paid.

Starting up the house

We are already owners, which does not mean that the house is, as it is popularly said, ready to "move in". If not, we are in an important phase that should be done with time, the best professionals and with another budget well adjusted to avoid falling into the dangers of "cheap is expensive".

A well done renovation will avoid problems (and future expenses), so it should be seen not as an expense but as an investment. Also in the sense that a good renovation will revalue the house for a possible sale. There are renovations that, if well directed, can increase the sale price considerably.

Extra: housewarming party

Once the renovation work has been completed, if necessary, and the move has been undertaken, a housewarming party, or crémaillère, as they say in France, is a great idea.

We will invite friends, relatives and interesting contacts and, if we wish, those real estate consultants who have made the transaction possible. They will be able to admire the final result and, if it is an investment transaction, to study possible scenarios for the future.

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