July 17, 2007 at 9:11 am #53028
I am looking for some advice as I am considering purchasing an apartment off-plan.
The building is still in the development phase but is almost complete. The seller however is not the developer but a private individual.
I guess in effect at this stage I would simply be buying the right to have my name changed on the contract is that correct? What is the procedure for this type of purchase as I am finding it difficult to find information regarding this type of purchase (off-plan purchase from individual) on the Internet.
It’s just a little unclear in my mind how I go about this the right away to avid any problems.
Many thanks in advance,
July 17, 2007 at 12:21 pm #73577MelosineParticipant
First thing you need to do is employ an independant lawyer or gestor to make sure all licences and BG’s are in place. Something that many of the off plan developments fail to have 👿
Otherwise vendor will have off loaded any problems on to you.
July 17, 2007 at 12:52 pm #73578
In addition to Melosine posting. Please be aware that most developer will charge for transfering typically €3000. Ensure that this not paid by you apart from that it is included in the your purchasing price agreed,
Further, I am sure that you know that you will have to pay the VAT and other completion cost along with the balance of the residue price of the original contract price.
July 17, 2007 at 2:07 pm #73580
Also bear in mind that the property probably only has a value of 70% or so of it’s original off plan price. Therefore you should be looking at the payment of NO MORE than (say) 70% of it’s original sale price less the 3,000€ transfer adjusted for what has been paid and a further deduction for the taxes and fees that will be paid on the drop in value – that total to be paid would be to the individual for buying the “option” and to the promoter for completing the contract, so ……….
IF the property WAS 200,000 and 100,000 has been paid already, the net owing to the promoter is 100,000. The value of the property is probably now 140,000 so the difference between value and owed is 40,000. The correct price to buy at would be that less the (estimated) 3,000 transfer fee less 10% of the drop in value (6,000) as you will have to pay IVA and notary fees etc on the TOTAL contracted price despite it’s value being less. That means 31,000 is the maximum that should be paid to buy the option in this example.
I do suggest you name the development so you can be guided by others on here with knowledge of developments with definate problems as it may well be you are ready to take on someone else’s problems!
As Melosine said, make sure you have an independant lawyer (and I add, preferably from at least 20 kms away from both the development and the developers office).
TAKE CARE – off plan buys are currently not a good option (especially ones for re-sale before completion) unless there is an extreme financial distress that is stopping the previous buyer from completing – there is so much reasonably priced property in the market that already exists, is complete and is fully and properly licenced and documented with completed community facilities which are all up and running!
July 17, 2007 at 3:14 pm #73582
Is that really true paulandlyn? Is an off plan property only now worth 70% of its original value?
A financial advisor friend has bought one for investment, and has recommended the development to several clients/friends.
July 17, 2007 at 3:48 pm #73583
Hi roburne, I think that PaulandLyn statement reference the value of not yet completed off plans is perhaps rather simplistic, to suggest that all off plans are worh only 70% of their original price is surely unfounded. Do a little research on the web and find out what prices are actually achieving on the chosen development.
July 17, 2007 at 6:21 pm #73587
OK – maybe it is a bit of a generalisation, but not too far off track. I did say “70% or so”, maybe that needs adjusting to 75% or even 80% but on the CDS it is a realistic guess. Bear in mind the original sale price probably included an agents commission of up to 12% so that is an immediate reduction in value of the property of that amount from it’s initial selling price.
You only need to take a look at a recent posting on this forum to see discounts from developers of up to 35%! http://spanishpropertyinsight.com/forums/viewtopic.php?t=2397
At the moment, very little is moving and certainly not “off plan unbuilt resales”.
Do not rely on the internet for sales prices, they are usually asking price with estate agents commission of up to 9% built in – you actually need to find other properties that have actually been been sold.
I will repeat what I said before BEWARE – tread very carefully!
July 17, 2007 at 6:38 pm #73588
The property is named Sol y Luna and is located in San Antonio, Ibiza.
The original price was 192,000 euros and the seller is now asking for 228,000. In order to secure the contract I need to pay 66,000:
228,000 – 192,000 = 36,000
Initial depsoit 30,000 = 66,000
I know the initial deposit is correct, so the bottom line is the seller is making 36,000 on the sale (in a little under 2 years).
I know the reason for the sale is genuine as I have known the individual for a little time but I just want to avoid any nasty suprises if possible (don’t we all!)
Any further thoughts as your feedback would be very much appreciated.
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