I am now a proud Madrid homeowner, post to tell what I think I know about buying a home in Spain (or in the capital, at least), and how the process compares to the equivalent in California.
At the outset, I caution once more about plunking potential life savings on the counsel of a lone blogger who may parse verbs in his BVDs. I offer one inexpert American’s personal experiences and impressions. That’s all.
FINDING A HOME
Spain may not have a U.S.-style M.L.S., but it does have Idealista, Fotocasa, Pisos, and other web sites listing homes for sale. (Even Wallapop!) Sellers are free to list on one, several or none.
A real estate professional told me that these sites wield varying levels of clout in different Spain cities. In Madrid, she confirmed my suspicion that Idealista is king. I can’t imagine the logic of trying to sell a home in the capital without an Idealista listing.
SHOPPING ONLINE
American home buyers can shop with the help of a professional ‘buyers’ agent,’ paid with a percentage of the seller’s commission.
I know of no similar arrangement in Spain. I shopped solo: called the phone numbers listed in Idealista, booked visits with the sellers, and wound up seeing twenty viviendas total, including the one I now own.
Ads may be placed by:
- well-established agencies (e.g., Tecnocasa, Redpiso, Gilmar, Engel & Völkers, Re/Max, others)
- by smaller agencies
- by ‘FSBO’ sellers unrepresented by agencies; and, occasionally
- by crooks
The adult farer-of-life’s-seas sizes up an ad and a seller, separates wheat from chaff.
I don’t remember ever seeing U.S. properties listed by more than one agency. Separate listings likely would appear on Redfin, say, and on Zillow, and on Realtor … but, bottom line: one professional marketing one property.
Not so in Spain. The seller may work exclusively with one agency, but also may sign up with multiple agencies, each of which may post a separate ad on Idealista. The agent who brings in the eventual buyer gets the commission.
Separate listings by two or three agencies for the same property are common. Unfortunately, some sellers may sign up with dozens of agencies, may clog Idealista with 20+ ads for the same home.
The shopper also will encounter ‘nuda propiedad‘ listings. These are for investors, won’t be transferred to the buyer until the current owner dies.
COMUNIDAD LIFE
Spain cities have grown vertically, as noted in a 2022 post. (Although the Madrid outskirts include auto-centric towns. Fire up StreetView in Google Maps, see for yourself.) Buyers thus generally shop for pisos (or smaller apartamentos) rather than single family homes, and so navigate an arena that may share characteristics with condominium life in the U.S.
The piso will be one of several or many in the building, and the building’s home owners will be organized in a comunidad. The comunidad can set rules, but also will be constrained in rule passing by the nationwide Ley de Propiedad Horizontal. The comunidad will have an elected presidente, and will work with a professional administrador who will manage some repairs, pay bills, deal with other exigencies.
The building likely will have one or more portero/as, or conserjes, who will work a daily shift, watch over the building, and handle some maintenance chores. Their compensation, that of the administrador and other expenses will be paid by comunidad members through a monthly assessed cuota de la comunidad, which may vary widely. Members also can be assessed for derramas, special repairs or improvements.
Some ‘for sale’ listings include a reserved parking space, or offer to include one for extra cost. The parking slot then belongs to the owner, who can rent or sell it separately.
A former comunidad presidente quickly confirmed my suspicion that long-unoccupied parking spaces likely will be ‘borrowed’ by opportunistic poachers.
VETTING THE PROPERTY
To start, a crucial point: in Spain, he who pays a single euro for a home with a million euros in debt may be on the hook for 1,000,001€. The debt can follow the property, not the owner. The debt can be legally cancelled during the purchase, but the cancellation must be done explicitly. Obligations may include debt other than mortgage, such as unpaid comunidad cuotas, or utility bills.
Nota Simple: This public document shows the property’s legal owner, easements and any charges against it (like that million euro mortgage). The agent can furnish a copy; if he won’t, you can order one for a nominal fee from Registradores.
ITE: Older Spain residential buildings must pass decennial inspections. If the building flunks, comunidad members may be assessed the costs of the related derrama.
At least in Madrid, ITE reports are public and online.
The seller is obligated to inform buyers of impending derramas that have been approved by the comunidad, but not of derramas that are merely potential or proposed.
Pre-purchase Inspection: U.S. buyers often pay professionals to inspect candidate homes. (And can encounter some doozies.) Such checks are less common in Spain, but your notary may be able to recommend a technical architect who can complete the inspection. If not, one can find candidate providers online.
Vicios Ocultos: On one hand, sellers are legally obligated to admit and describe potential problems. On the other, I don’t know what fortune wronged buyers have in steering related legal proceedings through the courts.
Okupas (squatters): Squatters can much more easily take over properties in Spain than elsewhere in Europe. Targeted homeowners shouldn’t count on help from the police, unless they can report the break-in almost immediately. If the okupas have had time to change locks and move in, the police likely will leave resolution to the courts, which Spaniards describe as notoriously slow. The hapless proprietor who dares to cut utility service may be held liable if an okupa is injured by a slip in the dark.
Most Spaniards I know despise okupas, blame them bitterly for the cost of armored doors, alarms, security locks. Only two have offered a limited defense, when okupas have targeted long-vacant homes owned by international investment funds. However, I know of no evidence that okupas are so discriminating. They are opportunistic, pursue low-hanging fruit.
Homeowners victimized by okupas can contact private sector companies. The controversial Desokupa may be the best known.
BUYING PROCESS
Making an offer: An Idealista page charts the gap between ‘ask’ and ‘bid’ prices in different Spain regions. (Which may tell you nothing about what you should offer or how your offer will be received.)
A former Madrid real estate agent suggested that I track Idealista listings in a home-brewed spreadsheet, with columns for neighborhood, meters squared, number of bedrooms and other factors. I then could judge if a new listing at X€ per square meter was on the high or low side for a piso of that size in a given Madrid area.
Will you need a lawyer?: I had thought I would, as I hadn’t at first understood the cavernous gap between a notary public’s role in the U.S. and that of a notario/a in Spain. I wound up buying without one, and believe that most Spanish home buyers do so, too.
That said, some transactions will be prudently undertaken only with legal help. For instance:
- a recent inheritance. The new home-owning siblings might not agree on a price, or terms.
- a property co-owned by partners in a messy divorce
The internauta won’t struggle to find English language law firm web pages that warn of the perils of a Spain home buy without a lawyer. I’m not saying they’re wrong, especially for a tenderfoot expat. I’m telling you what I did.
Closing the deal: Either a reserva or an arras contract should take the property off the market and bind both seller and buyer to the transaction. The difference between the two:
An arras contract — almost always arras penitenciales, although there are other types — is recognized in Spain’s civil code, and generally requires an up-front deposit of 5% to 10% of the purchase price. If the seller backs out of arras penitenciales, she owes the buyer twice the deposit amount. If the buyer backs out, he loses the deposit.
A reserva contract usually includes a smaller deposit, of 1 to 5% of the total price, and may be used to reserve a property yet to be built. There’s no escape hatch; the buyer can’t walk away from the deal by sacrificing the deposit.
Who holds the deposit? Swallow hard, fellow U.S. expat: the seller. Without a special arrangement, the €€€ do not go into the equivalent of a neutral, U.S.-style escrow account. It can be done, but isn’t done commonly.
FINANCING
An arras contract usually allows the buyer two or three months to line up a mortgage. Said contracts can include a clause requiring a return of the deposit if financing isn’t arranged … but needn’t say any such thing. Read the fine print.
More than fifty percent of Spain home sales are now consummated without a mortgage, or at least without a conventional mortgage from a bank.
ENERGY CERTIFICATE
Shoppers will often see this certificado de eficiencia energética included in Idealista listings. If not, the seller will be obligated to provide it before the sale date.
HOME INSURANCE
I booked a policy that went into effect on the day of the sale.
THE BIG DAY AT THE NOTARY
The grand finale of the Spain home buy likely will be set in the office of the notario/a, who verifies documents, decrees the sale to be official and registers the deed in the Registro de la Propiedad.
If I were still in the U.S., I could call a mobile notary tonight to sign docs in my home at 3:00 a.m., like a night owl ordering a pizza delivery. Expect nothing similar in Spain. Notario/a may translate directly to “notary public,” but the office here is one of the country’s most prestigious, is held in night-and-day different regard. The Spain notario/a possesses all sorts of powers unimagined by that scooter-riding house call notary in the U.S.
I arrived with issued-by-a-Spanish-bank cashier’s checks for the co-owners, and instructions to make an ‘OMF transfer‘ to cancel the property’s outstanding mortgage debt. Such transfers are pre-arranged at one’s Spain bank branch, often include hefty commissions and require a day-of-the-transaction phone call from the notary’s office.
TAXES
ITP & IVA/AJD: Homes are dunned for an ITP if second-hand and a combination IVA/AJD if new. Expect to pay different rates in different parts of Spain. I bought second hand in Madrid, so paid the one time Madrid 6% ITP tax through the notary a few days after closing the sale.
IBI: This yearly tax also differs from region to region, and is calculated on the property’s valor catastral. The listing agent should be able to give you an idea of your IBI obligation.
IF I HAD IT TO DO OVER AGAIN
(♦) I’m glad that I bought from a well-established agency.
Any listing agent’s first loyalty will be to the seller, as the seller pays the commission. If you offer €€€ and the agent knows the seller would accept €€€ minus thousands, don’t expect a tip sotto voce; expect a smile and a handshake. Some listing agents also may turn a blind eye to some corner-cutting by the seller.
In general, though — or so I like to think — the vetted, established agency should have professional standards to uphold, and also should know the biz well enough to protect itself and buyers from scams, frauds, gotchas.
An experienced agent lamented that the bar to entry to his profession is low in Spain, that any unqualified fulano del tal can hang out a shingle as a real estate vendor. I managed my home buy solo, but do not know Spanish or Spain as well as a native. I realized as the transaction progressed — from the arras contract to payment particulars to other details — that an unethical or clueless agent could have found any number of ways to get me in trouble. Such scams don’t appeal to an established agency. That’s not how they earn money.
(♦) I neglected to ask that the arras contract stipulate a right to visit the property the day before the final sale. The agency readily granted this visit anyway, but I should have asked that the right be included in the contract.
IS THIS AN OPTION FOR OTHER EXPATS?
If shopping solo, only with an advanced Spanish level.
My accent may be wince-making, but I now spend much more time in Spanish conversation than in English, and no longer fear Spanish chat on the phone. Even so, I occasionally feigned full understanding in situations in which such feigning likely wasn’t prudent. Expect lots and lots of specialized vocabulary never mentioned in Spanish classes. I wouldn’t have attempted the home buy solo even two years ago.
If not buying solo, you can work with a professional middleman, who will take a cut and may try to subtly steer you in ways you’d prefer not to be steered. Depends on the middleman.
ARE HOME BUYERS LIKE ME GOOD FOR SPAIN?
More Americans are moving to Europe. If Trump wins this November, the trickle could turn to a flood. Some in the flood will arrive with enough €$€$€$ to bid up the market.
Said diaspora could be an unqualified win-win if these Americans can be attracted to la España vaciada. The peninsula includes plenty of affordable, appealing areas that have lost population only for economic reasons, that could be developed into attractive expat havens without impinging on the lives of the native born.
De Mario peces – Trabajo propio, CC BY-SA 4.0
If Americans aren’t interested in moving where Spaniards don’t live now, an influx could yield winners and losers.
WINNERS: Existing property owners. True, the piso that doubles in value won’t trade laterally for anything ritzier in the same market, as the other pisos will have appreciated, too. But the home owner can cash out for much more, if she chooses. Consider an example from California.
WINNERS: Real estate brokers, and anyone involved in the home improvement trades.
But, unfortunately and truthfully:
LOSERS: Young renters who hope to buy in their home towns.
For now, at least, airBNB and other short-term tourist rentals must represent a vastly larger adversary for these young renters than expat Spain home buyers. More Americans are buying in Spain, but I assume that far, far more tourists pile into vacation rentals than buy permanent Spain homes.
OTHER INFORMATION SOURCES
In case you don’t trust me to tell you everything and/or get everything right. (And you shouldn’t!)
Idealista has a link to many online guides.
I am grateful to have read two books, both self-published:
Acierta al comprar Vivienda, by former agent Alejandro Limón
Guía fácil para tener éxito en la compra de tu casa, by Carlos Martín