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PROPERTY

Property in Spain: How and when can you negotiate the price?

Two in three sellers in Spain are willing to drop the price of their properties to prospective buyers. So are there key signs and ways that you can use to haggle down the price?

negotiate property price spain
he seller tends to have the upper hand in cities whereas in rural areas or in dormitory towns where there’s less demand it’s the buyer who can haggle down prices more. Photo: Emilio Sánchez/Pexels

The average square metre price of property in Spain stood at €1,996/m2 in July 2023, which means that for an average 100 sqm two-bedroom apartment, property hunters can expect to pay around €200,000. That’s 7.2 percent more than in July 2022. 

This upward trend in Spain’s real estate market is no different from that seen across the globe, but it does mean that it’s harder to bag a bargain in España as many foreigners used to find. 

However, it’s still very much possible to get a price reduction. Fifty-five percent of property hunters in Spain do attempt to negotiate.

According to property portal Fotocasa, two in three sellers agree to drop the asking price by between 7 and 10 percent. 

This applies to second-hand homes, as with new builds the price tends to always be fixed.

When is it a good time to negotiate the price of a Spanish property?

“Although negotiation plays a relevant role, the closing price is really going to be determined by the demand for the particular house,” argues Francisco Sierra, general manager for the Spain and Portugal branch of property company Casavo.

Fewer people interested in buying a home in general due to an unideal property and financing climate tends to mean fewer people interested in a particular property.

So how do things stand in terms of negotiating powers for property buyers in Spain in 2023?

Price rises have slowed down due to lower demand caused by higher mortgage rates, with the rate of signed hipotecas (mortgages) dropping consistently throughout 2023 and by 18 percent in April to just 27,503, the lowest monthly sum since December 2020. 

That increases bargaining power for buyers as sellers don’t have as many people interested, although Spanish real estate isn’t as overvalued as the EU average, 9.8 percent compared to the eurozone average of 16.7 percent. 

All in all, Spanish property experts see that the negotiating power of buyers and sellers is evening out over the course of 2023, with property hunters gaining more of the upper hand.

Is the property bubble going to burst in 2023 as it did in 2008? Most see it as highly unlikely, but buying at a time of lower demand always gives more bargaining strength to the seller.

Tips on how to negotiate the price of a Spanish property

Study the market: Knowledge is king in this sense, and analysing the state of the overall real estate market and comparing the price of a particular property to that of similar homes in the same neighbourhood or street can give you a clearer picture of what you should be paying. At worst, the seller will have to justify why they are selling it above market value.

Location, location, location: According to property website Idealista, the seller tends to have the upper hand in cities whereas in rural areas or in dormitory towns where there’s less demand it’s the buyer who can haggle down prices more.

Build a rapport with the seller: If you can strike a chord with the person buying the property, they’re more likely to budge. Most property experts conclude that a property sale is a lot more emotional than one may expect, so for example instead of saying “the flat is old and I’m going to refurbish it”, say “I like the flat, but I can only pay X amount because I plan to refurbish it”.

Find out as much as possible about the seller: Try to ascertain their reasons for selling as this can give you useful information with which to negotiate, particularly if they have reasons to want to sell quickly.

Don’t make unreasonable offers: Don’t expect the seller to want to negotiate if you suggest a price well below the price of properties in the area. Nine percent is the average price drop negotiated in Spain. But keep in mind that some sellers do vastly overcharge. In cities such as Granada or Vitoria, most sales were closed at 21 and 22 percent below the initial asking price.

Use an expert to check the property for flaws: Enlisting the help of an architect to pick up on anything from structural problems, leaks or any other issue you may not notice so easily will strengthen your side on the negotiating table if there are flaws. You should also make sure you get a nota simple to check if the seller has any unpaid debts or legal charges regarding the property. 

Try to close the deal fast: You should aim to give the seller a deadline of no more than a few days for accepting your counteroffer, thus preventing other potential buyers from turning up. According to Fotocasa, six of every ten reduced price transactions are finalised within a month.

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PROPERTY

How to contest the cadastral value of your Spanish property

The cadastral value and cadastral reference of a property in Spain affect various factors including how much yearly property tax and inheritance tax you'll pay. Here's how to change the valuation Spanish authorities give your home.

How to contest the cadastral value of your Spanish property

When it comes to taxes, everyone wants to know if there are ways to pay less. While it’s not always possible, there are certain factors that affect particularly taxes associated with your Spanish property – namely the cadastral value and the cadastral reference. But, can they be changed or rectified?

What is the cadastral value?

The cadastral value is applied to all properties in Spain. It’s the value applied to your property by the Ministry of Finance or Hacienda and serves as a tax base to determine how much IBI tax or Impuesto sobre Bienes Inmuebles you pay for example. This is a yearly tax for all those who own property in Spain.

READ ALSO: What is Spain’s IBI tax and how do I pay it?

The value will depend on the size of your property, the condition it’s in, the year it was built and the cost of construction, among other factors.

It differs from the cadastral reference, which is an estimate of the market value of a property and is used as a reference for the real estate market. It is also used as a tax base for inheritance and property transfer tax.  

How is it determined?

At the beginning of each year, the cadastral value of homes is reviewed, and as a result, it can increase or decrease. This is why your IBI bill can increase or decrease too. As a general rule, the cadastral value is usually much lower than the market price, but this is not always the case.

How do I find out the cadastral value? 

To know the cadastral value of a property, you must first know the cadastral reference. Then you can find the value in the corresponding public records online. You can find this reference on your IBI bills, as well as on your property deeds.

Once you have this you can go to the electronic headquarters of the Cadastre, and click on ‘reference value’. There you will find all the information about the cadastral reference and the corresponding cadastral value.

Even if you’re not the owner of a property, but want to find out the cadastral value of a property you’re considering buying, you can find it out here.

Can I change the cadastral value of my home?

Yes, it is in fact possible to change the value. If you believe that the cadastral value of your property is too high with respect to the market price of your home, you can request that it be reduced.

You may want to do this in order to lower your IBI bill or if you want to sell your property at a lower price than the market value.

How do I lower the value?

If you believe that you have a case for changing it, you can make a claim to the General Directorate of Cadastre, overseen by the Ministry of Finance. There are two different claims you can make:

  • The procedure for correcting discrepancies
  • The procedure for rectification of material and arithmetic errors.

Procedure for correcting discrepancies

This option is typically used when there is a large difference between the market price and the cadastral value of a property, as well as when there are errors or false data about the characteristics of your home.

To do this, you must go to the Cadastre office in your municipality or apply online at the Cadastre Electronic Headquarters.

Procedure for rectification of material and arithmetic errors

The second option is used when there are errors or incorrect urban planning information, which affects your home. Again you can do this in person or online. In this case, it will have a retroactive effect. If you have paid too much IBI in the past, then it should be returned to you if the application goes in your favour.

Can I change the cadastral reference of my home?

If the reference value of your home is higher than the market value, then you may be wondering if you can change the reference in order to lower your tax base.

Unfortunately, you cannot request changing this in the same way as you can with the cadastral value. But, the good news is that there is a way to challenge it indirectly.

To do this you will need to request an appraisal from a company approved by the Bank of Spain. If the result of this turns out to be lower than the reference, you can try to rectify your self-assessment tax return, providing the appraisal as evidence that you should be on a lower tax base. As mentioned above, this will only affect certain taxes like inheritance or property transfer. 

In order to approve this, the tax office will need a report from the General Directorate of the Cadastre who may be able to rectify the reference and provide a report to settle the matter.

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