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Hi, we are looking at buying in Mallorca and have started our search. Our question is when you see a property listed at a certain price – how much can one expect to pay? We have already seen one that we know we could probably get 20% off the listed price, is this normal? Welcome any experiences you can share. Thanks
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Hi Jakie
PRICE: It’s true that sometimes you can get a discount, but there is not a fixed rate for that (10 or 20%) . The reality it’s prices in Mallorca are raising up day by day and this don’t help when your try to get a discount.
My experience as a Real Estate Lawyer tells me the best way to get a discount it’s giving a real reason to the vendor to get the price down.
Sometimes because you are a cash buyer and vendor need the money to buy another property or some others because you find out something that really makes the price lower, let’s say some minor illegality on the property (yes they are a LOT of illegalities in Mallorca’s properties), or may be the surface on the property registry does not fit reality etc..
Sometimes you don’t need to do give any reason because vendor has set a price out of the market in order to be able to negotiate.
VALUATION: If you gonna ask for a mortgage, you will need a valuation of the property. If not, you may ask for it to know the price.
Does the valuation shows the real price? It will show the price for banking reasons because valuations use the bank parameter in order to prove the property will be warranty for the loan or mortgage.
Some clientes ask for it, but it has a cost and if you make a valuation of every property you want to know if price it’s real it’s gonna cost you a big bite.
If you need the contact of some valuators I can give it to you privately without any compromise.
Regards
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Hi Jackie,
I think that it is a question of supply and demand and in some cases that the owner for some reason is eager to sell fast. The value of a house or apartment in Palma is much more stable than prices for apartments and houses in other areas of Mallorca. Most people want sea view so you pay extra for having that. Easy access to the beach, to Palma, to the airport etc are other factors. Most people don’t want to start by renovating the property they buy. I used a lawyer to check everything before I purchased (apartment in a new house) and considering the amount of money involved I never even thought about not using a lawyer. My belief is that other types of valuations are useful more for finding problems in the house than for finding “the right price”.
Everything is developing extremely fast particularly in the Palma area. What wasn’t interesting just a few years ago (e.g., not central enough) is now exploited and sold for high prices.
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The only thing is to learn the local market, than you will know if the price is correct or not, for this period of time.
And you can never think, “I can get an discount of 15% from the asking price”..this does vary from property to property and perhaps also with the estate agents. In general there might be a small discount to get!
But not always. When you know YOUR market, you will know, if and when, there is a good and fair price for a certain property!
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As Ulf says, research the market. Where demand is strong and properties few, there will be little discount unless the property is overpriced. But sellers may wait for the market to rise to meet their expectations. Survey Spain have been analysing property prices, Asking v Actually Paid for the last 17 quarters and found the amount reducing quarter by quarter. surveyspain.com/blog/market-report-1st-quarter-2018. This is a general average and when it comes down to it, its eyeball to eyeball with the seller/buyer and who has the stronger ‘hand’.
One thing you can do is get a RICS building survey of the property. Then you have a report, not only of the physical defects, but also of the deficiencies in the legal, planning and tax description as hinted at by Toni M. With that you can go to the seller and point out that the price they are asking is for a good property, but theirs has the defects, etc listed in the report and thus the price should be lower. You can save many times the cost of the report and it means you know exactly what you are buying.
A market valuation can also be given and make sure that its NOT a banking valuation. Bank/mortgage valuations are nearly always below market, even if carried out competently, as they deduct the costs that the bank will incur should it have to take the property if the loan is not repaid, plus some other rules imposed by the Bank of Spain.
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