I was asked to comment on another forum about how to sell a distressed property here in Spain. I am not sure it is very different to any other country but one thing to remember here (as compared to, say, Thailand) is the tax situation. The purchaser has to make at least 12% profit just to break even, pay taxes and disbursments.
I have access to almost unlimited money form investment funds’ war chests for residential property but people STILL are not being realistic about prices and are STILL losing their houses when the banks lose patience and repossess.
If you need to sell for whatever reason as a distressed sale there are some basic rules which clearly go against the rules of a rising market.
1) Say to yourself, “I will accept the first person who offers x thousand in cleared funds.”
2) When you get an offer at that price be prepared to accept it … and fast.
3) Ensure that it is a genuine offer and not simply a vulture hoping to pick up a bargain by gazundering you or not having the funds readily available. Demand proof of the purchaser’s ability to proceed.
a) If it is an investment fund or similar, they will have no qualms about showing their intent and ability to pay. They will want to move as fast as you …or faster.
b) If it is a private purchaser, you need to be ruthless with him/her and yourself. “I will sell at 120,000 on the strict understanding that ……” and state your terms very clearly. This would include a deposit and a fast payment. Hearing, “Subject to me getting a mortgage” or “When I sell my house in Watford” is simply not good enough for a vendor who needs to sell in a hurry.
4) Equally, you need to be fair to the purchaser. All too often what happens is that a purchaser with an eye for a quick deal moves in and makes a low offer. The vendor says “Yes”. However, he/she is really saying “Maybe” as in “Wow, I have an offer. Maybe the market is picking up and so maybe I will hang on and maybe I will get more than I thought was possible. Mmm. maybe” The purchaser loses interest so x months later the bank repossess and the vendor loses everything. A complete lose-lose for everybody. Sad. As a rule of thumb, once you have the price you had decided to drop to, accept it and fast. “A bird in the hand is worth any number in the bush”
If you are selling to a private purchaser who just wants a keen price, there may be some flexibility on fixtures and fittings that you could not have had if you had sold at a “top of the market” price. If the cavernous 3 piece suite was a wedding gift, the investor may well be prepared for you to take it or at least allow you to put a replacement suite in. He’s never going to sit on it and, in any case, his plan might be to completely gut the house and make three tiny apartments so your furniture would be useless anyway. Negotiate on this and then stick to the agreement. That may ease your pain.
5) Remember in a distressed sale, the purchaser may NOT fall in love with your house. He may not even move into your house and never mind live in it. His interest will not be in the charming conservatory or the table-tennis room but whether he feels that he can sell at a profit in a time scale that suits him. If it is immediate (aka as “flipping”) he will be far more interested in what similar properties in your area have sold for and whether the additional flights to the local airport will bring in more cash-rich Scandinavians or affluent Brits delighted that there is now a daily Ryanair flight from an airport 15 minutes from their UK home. If it is for a longer-term investment, he will be looking for things like the marina or golf-course (finally) being finished, the completion of a hospital with a likely long-term demand for low-cost smaller properties for staff etc etc
6) Buying and selling a house is at best a traumatic event. If you are selling to a professional who buys on a daily/weekly basis it might be less emotional as things should move less slowly but you may have to come to terms with the fact that you have lost x,000 euros (either literally or notionally). However your distress sale goes, I wish you luck.
Remember in a distress sale the law of “Location, location, location” is probably more true than ever.”
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