We’ve already talked about buying a property in Lanzarote, so let’s have a look at selling property.
The property market here is certainly showing signs of a recovery from the recession, but there are still lingering issues. There’s a lot of property for sale here, and the banks are aggressively marketing the houses and apartments they repossessed at the height of “El Crisis.” If you are looking to sell, you need to research the market thoroughly first to understand how many similar properties to yours are on the market, and secondly to see their selling prices. You don’t stand a chance of getting a buyer if the price you need is significantly higher than other, very similar places, and even if you can price match them, you need to try to find some unique aspect of yours that will make people look at it rather than all the others.
You should have two prices in mind before you contact agents. One is your preferred selling price, and the other is the lowest amount you are prepared to accept. I would advise having “trade offs” in mind as well. For example, you’ll take an offer of X, but that won’t include the furniture, or completion must be before a certain date.
It shouldn’t need saying, but prepare your property thoroughly, BEFORE you even start to move on to the next steps. It doesn’t mean you have to spend a fortune, but make it look as good as you can before talking to agents. At the very least it should be clean and tidy and get those walls painted!
Once the property is ready, and you’ve decided on what you feel is the correct selling price based on your research, it’s time to select some agents to work with you.
Agents here work differently to those in many other countries. They charge a relatively high rate of commission, and few seek “exclusive” terms. The norm here is that people put their properties on the books of many agents, hoping one will find them a buyer. Although the island is small, you will find that most agents specialise in particular areas – they will have properties everywhere, but their focus will generally be on one town, so spend some time working out which ones are the best for your area.
Selecting the ones to go with has to come down to “gut feel.” Like any business transaction, you’ll want to work with people you feel you can trust and rely on. But there are some questions which can help you to see which ones are going to proactively market your property and are most likely to be successful:
- How many properties have they sold recently?
- How many like yours?
- Will they put it in their shop window? And for how long?
- Will they contact their database to tell them about the property?
- Where, other than on their own website, will they advertise it?
- If they don’t succeed with the initial advertising what other strategies will they employ?
I would recommend coming straight out with your preferred selling price with the agent, but don’t tell them the low price you would accept, as a weak sales person will quickly resort to telling a buyer that price. You do need to take notice of what the agent tells you at this point. If several are insisting your price is too high for the market, they are probably right, and you may need to think again.
Once you’ve selected the ones you want to work with, get the property in tip top condition ready for them to photograph it. Most agents take poor photos with compact digital cameras, so if your budget allows for it, we’d highly recommend hiring a professional photographer to take the photos, and then passing them on to the agents. If not, don’t be afraid to look at the agent’s photos as they take them, and suggest better angles and subjects.
Follow up with the agents regularly to find out what’s happening. By doing so, you’ll be keeping your property in their minds – it’s too easy after the initial flurry of interest for them to forget about your place!
What You Can Do
As well as keeping your agents on their toes, there’s plenty you can do these days to generate interest and enquiries:
- Use your own social media profiles to let people know your property is for sale, using links to the agent’s website so they handle the enquiries for you
- Consider taking out your own adverts on websites and magazines to push it
- Keep it ready for short notice viewings, so it always looks as good as it can
- Get the agents to put their own For Sale sign up, or make one yourself
If an offer comes in below your asking price, but above your lowest price, you should accept it, but always look for something in return, so everybody wins. You can negotiate on fixtures and fittings, or perhaps on the time to completion, but always get some kind of concession back for reducing the price. If the offer is below your lowest price, reject it firmly and immediately, but go back with a price you will accept.
The agent will always tell you they will try to secure the best price, and they will point out that when the price goes down, so does their commission. But in real terms, even at 5% commission, they are only “giving away” €250 if the offer is €5000 below asking price, whereas you are giving away the other €4750!
Until the contract “Contrato de Compraventa” is signed, any sale is purely notional. So push to get this first stage done as fast as possible – its easy for the buyer to pull out until they have paid 10% and the contract is signed. Employ your own lawyer to act for you and oversee this process, do not rely on the agent.
Most contracts will include a clause that you will receive the full 10% deposit if the buyer pulls out, but often you will be required to pay double that amount if you then change your mind. So don’t sign the contract until you are sure you want to sell and are in a position to complete on the date agreed.
The seller will normally be liable for the Plus Valia tax, which is a tax on the increase in land value since they bought the property.
Capital Gains Tax
The seller will also have to pay capital gains tax on any profit made on the property during the time of ownership. Mitigation is allowed for lawyer’s fees, land registry and notary fees etc.
For non- residents, their lawyer will be required to retain 3% of the selling price until the seller completes a tax return and their tax liability is calculated. If the tax liability is lower than the amount retained, the difference will be refunded.
Completion here takes place at the notary and your lawyer will arrange everything for you, paying off your existing mortgage if applicable, and giving you a draft for the difference. At the notary, you’ll be expected to provide receipts showing all your bills and community fees are paid up to date, and you will hand the keys over to the new owners, so make sure the property is empty and ready for them on the big day.
After completion, your lawyer will make sure the property has been registered to the new owners in the land registry, and that the bills are transferred out of your name.