How do you know whether the property you are buying is valued properly? In this section we will try to help you determine a 'correct' value for the property you laid your eyes on.
External value estimations
Often you will receive a free estimation of the value. These are often rather superficial estimations. On the other hand, you can check the value as registered in the land register, the "Valor catastral", but this value is merely used for taxes and does not represent the actual market value. Therefore it might be helpful to request an additional (neutral) value estimation made by a certified expert.
If you are making use of the services of an intermediary or realtor that represents you as the buyer, they most certainly will be able to help you out.
How can I estimate the value myself?
Even though you are not an expert, you want to have some basis to compare the listing price with. Let us give you some indications towards where you can find a good basis. We will make the distinction between the land (in case you want to build yourself), the property (land + building) and the transaction costs.
1. Value of land
The prices for land are increasing in Spain. To determine the price of land, you can check out a few sources. You can check out the land register to see at what prices pieces of land are sold for in the same area. You can also find an indication for each department on the website of The second home exposition.
It is important to keep in mind that there a lot of factors that can have a big impact on these prices. For example, if your piece of land has a stunning view or lays next to a forest, the price per square meter will be higher for your land. The price is also affected by the area or region it is in.
Another key factor to be aware of, is the intended use of land that neighbours the plot you want to buy. You might have a stunning view now, but maybe the farm land accross the road has been reassigned to be used for industry. Or maybe the owner of the plot downhill is planning to construct an enormous skyscraper that not only will block your view on the valley, it might cast a shadow on your plot to! This type of licenses and permits are typically checked by the notary during the sale. However, you can always do some research in advance by checking the "Plan General de Ordenación Urbana" or P.G.O.U at the town hall.
2. Value of the property
For properties as a whole (including the building), it never hurts to check out the neighbours. Try to find recently sold properties that are nearby similar to the one you want to buy. You can find information about the average price on the website of spainhouses. This site provides you with detailled information about the average price in every region of Spain and how these prices have progressed in recent years.
If you are looking towards other properties that are still on sale, keep in mind that they might eventually be sold for a much lower price. If a property has only been listed recently, prices might go down over time or after negotiations. For properties that have been on the market for a while, prices might be set too high too.
3. Transaction costs
In Spain real estate agency's fees are included most of the time. But it is possible that the real estate agency's fee is not included in the listing price, it is important to take these costs in consideration too. You have to know whether these costs are included or not, often referred to as "commission no incluido". This means that the listing price doesn't include the real estate agent's fee.
Realtors can choose their own fee so the costs can get rather high. Even though the Spanish federation of realtors advices to use a 3% commission, in some areas realtors charge 5% or even up to 10%.
If you look at the total transaction costs (including the notary fees and realtor's commission), you should take into account 12% to 25%, depending on the situation and region. You can find a break-down of this cost in the table below:
|Type of cost||Percentage|
|VAT (* if applicable)||10%|
|Registration rights, ITP (only when no VAT is due)||8% up to 10%|
|Stamp duty (only when VAT is due)||0,5% up to 2%|
|Additional cost for taking up a mortgage on the house||1,2%|
|Register costs (Registro de la Propiedad)||0,3% up to 0,7%|
|Notary costs||0,6% up to 1%|
|Real estate agent's fee||3% up to 10%|
(Source: tm benelux)