October 19, 2008 at 10:20 am #54423
Was interviewing a lawyer last week for some statistical research I’m putting together and he threw me with this information:
“The last 2 deals I’ve worked on have been most strange and it seems I’m not alone. They were both Spanish cash buyers who wouldn’t put deposits down, wouldn’t sign Opcion de Compras or Private Purchase Contract and just wanted to go straight to completion at the Notary in a month. We’ve agreed a price, say, of 1million€ and 2 days before completion the buyer comes back and says ‘no, I’m only paying 900k now, but I’m still prepared to go ahead. credit crunch and all that.’ So, the vendor jumps up and down, because in his mind he’s already sold and he’s had his property off the market for a month whilst the world falls around him. Vendor comes back and says ‘ok, you can have it for 900k but it’s 850k on the table and 50k in cash.’
Deal gets done. I have to turn a blind eye because I know how desperate my vendor is and I have to acknowledge he’s doing something illegal that I’m aware of but it’s in his best interests – what am I supposed to do?.”
Anyone else out there seeing this gazundering with associated illegal payments??
All and any comments gratefully received + any anonymous PMs regarding how much “cash” is/was being paid on any deals done in the last 10 years (region specific) would enable me to calculate the real price movements on Spanish property and forecast accordingly.
October 19, 2008 at 10:45 am #87104
One thing to watch out in those type of deals is that the 50,000 cash may not get paid and there is nothing anyone can do as its all signed up and legal at the notary.
October 19, 2008 at 12:35 pm #87107
Agree with Mario:
In, Rome you do what the Romans do. What is wrong or right is ones perception of the situation. The cash could be paid to the Agent before you go to the Notary office.
In the event that Agent intends to do the runner. The cash than be offset against his/her commission.
Of course all situations are not the same.
October 19, 2008 at 3:01 pm #87114
As I keep saying there’s a different breed of buyer out there at the moment – not the sheep of recent years.
If acting for buyer we rarely now enter into private contract and rarely even reservation deposits – rarely do deals these days involve estate agents.
If acting for seller we try to get reservation deposit to stop any last minute shenanigans on the steps of the notary.
But it’s a buyers market and there are Spanish (a few!) who have been put off because of high prices in recent years buying at the moment but they want bargains and they still want to do sizeable cash deals.
and there is no shortage of desperate sellers …..
October 19, 2008 at 4:03 pm #87115
There is no way I would accept large amounts of cash. Who would care to walk out of the notary with 50,000 cash on them 😯 You cannot put it into the bank..they want a paper trail and anything over 6000 euros requires a form to be filled in for the Bank of Spain. Suppose you wanted to pay it as part payment for another house and the seller wouldn’t accept the cash! I sold a car for cash here, took the money to Gibraltar, 3 banks refused to accept it, brought it back to Spain and had to pay it in in two amounts. So, it was stuck in the house for a while.
It is harder to underdeclare now as Hacienda has official values for most properties.
There were at least two robberies involving these transactions last year. One woman was robbed of 20,000 as she left the Notary and another their house was burgled and the money taken the same night. People talk, they know the money will be in the house.
October 19, 2008 at 4:55 pm #87116
Both times I’ve bought there have been cash sums involved. The last time, last year, the vendor was happy to walk around with 35k cash although, as we trusted one another, we actually did the cash bit in the bank itself after the notary. It’s mostly still a case of “no black money, no sale”…
I’m not sure what stance I’m going to take when I sell a house though!
October 19, 2008 at 5:40 pm #87119
“It is harder to under declare now as Hacienda has official values for most properties.”
Official values are meaningless.
October 19, 2008 at 6:38 pm #87124
Not to Hacienda!
October 19, 2008 at 8:19 pm #87127
so called “official values” tend to be around 50% below real sales values (and above rateable values) and can be obtained at the “oficina de liquidadora” before proceeding with a purchase – so they are of no use to anyone including the tax office –
as to mr sddogsons research – well, wake up to the real world of selling real estate in Spain dear – there is almost always a cash element – so they tell me !!
October 19, 2008 at 11:24 pm #87130
Its not an unexpected rise at all, just the normal practises going on and another reason why no one will ever really be able to tell true sales prices.
October 20, 2008 at 5:54 am #87131
“as to mr sddogsons research – well, wake up to the real world of selling real estate in Spain dear – there is almost always a cash element – so they tell me !!”
Yes I do accept this UBEDA, but not through my agency, thank you.
The post I made was relevant and a new topic because the lawyer had noticed a sharp decline in the amount of B money in transactions over the last 3 years in Marbella and Manilva and was shocked to see it rising again in Marbella (N.B. he hadn’t had any transactions in Manilva in over 6 months despite having over 200 in the preceeding 3 years. The unmentionable estate agency who’d been forwarding him the clients from certain unmentionable developments dumped him for being too independent – ha!).
The statistics gathering is an important piece of research to determine actual prices in Southern Spain, not government figures. I know sales involving B still go on, I’m simply trying to find out what percentage, on average, has it changed over the years and does it vary by region.
Please PM me with any hard facts of the “This year I sold a property in Malaga for 250k and received 25k in cash. Paid 180k for it in 2003 of which 50k was cash when purchased” variety. Thank you. This is going to be the only way to find out the truer picture.
p.s. I don’t work for Hacienda!!
October 20, 2008 at 2:55 pm #87151
There may be parts of Spain where the stated value of a house is “50 per cent too low” as stated earlier. It’s certainly not true in our part of the northern Costa Brava where I reluctantly paid some black money for our house. Two years later came the documentation frrom the liquiadora that showed the authorities are only too aware of the true value of houses around here. I paid the money in the knowledge that the seller was paying a far, far higher percentage of the under-valuation. And the Government demanded it in cash! I won’t get involved in black money again and if that means a sale falls through, so be it. It would benefit Spain if everybody did the same. I wonder where they think the money for hospital and schools actually comes from.
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