Dealing With Distressed Sellers With Good Property Bargains
Spain is a distressed property market with thousands of motivated sellers looking for selling their property
. Not long time ago (for example from2004 to 2007) we were talking about a sellers market were prices were increasing to its pick and difficult negotiation process of prices were undertaken. I would say that sellers were too spoilt at the time. Now the market has changed and sellers ambitious too.
I have recently read a post with a case scenario back to 2007 about how tough are twisted is the mind of a Spanish seller. But the times are different (absolutely opposite just 5 years on) and even the most difficult seller has a really need to sale.
Every week we deal with dozens of motivated and distressed Spanish sellers who contact me on the phone, via my Spanish websites and via email. I am a native Spanish based in London since 2001. I am a property investor; I have worked in UK for UK corporates and also in Spain.
I can say with confidence that the brain of a Spanish seller is complex but simple at the same time if you understand case by case. But generally, the economic situation is driving the only one motivation for motivated sellers: to get cash.
Having constantly clear that never underestimate a seller neither a buyer, But if the seller has a property bargain the most important thing is to speak with him, to understand his needs and set a win-win deal that really seal a property bargain for the buyer.
From my perspective, the best property bargains are not Bank repossessions but just particular sellers properties. Especially in 2013 with the social pressure against evictions and Banks flexibility, the treasures of a melting property market are in the hands of private vendors.
There are different case scenarios to deal with a private vendor according to the profile:
1) Those who need a good cash, their property is not a big burden, they put the property in the market months ago and started realizing that they must decrease the asking prices to find a vendor within a reasonable period of time. They have no money to loose but just to gain cash for other projects and move on their plans. This is the case of the classical vendor with lovely house that went on the market for 350k, went down to 330k after 3 months and after 8 more months they are not at 275k. According to their situation, case by case, even a 230k would be a win deal for this case. With the right approach, a good deal can be sealed.
2) Other sellers with a property quite above the market price just cannot go below a figure because their asking price means for the breakeven and walk away from their mortgage. This is the case of the owner with a huge amount of financial pressure, with a mortgage debt of 210k and a property with a current market value of 180k. Very difficult situation. I just say that I cannot help them with the orthodox one-to-one buying process.
3) Those who want to get rid of the property to avoid the pressure of the mortgage and get a bit of extra cash. Another classical case of a
property in Spain with a mortgage of 45k, the owner wants to make 60k extra. The asking price is 105k and the market value of the property is 120k. There is already a 15% BMV that could be even better and still a win-win deal.
4) Those who have a second house that they do not use. They do not struggle economically and put the house in the market to try. Generally, they start with a high asking price and hold the price there.
5) Heritage. This is a case that has come very often in the last months. 2-3 particulars share a property and want to sell and share the money. This is a very good scenario since with a quick buyer in place will be able to negotiate a good discount.
At the moment, given the economic situation and the need of selling, the seller is reasonable if you take him in the right way. Tend to set a minimum figure that they want to sell. That figure generally is enough for them to sell a happy deal and no more ambitions. After searching the market and assessing the property they want to sell, I always explain to them that the figure in mind should be reasonable according to the market if their figure is above the market.
by: Daniel Talavera
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