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Buy a House in Spain

Property Price Negotiation and the Spanish Psyche

When you are negotiating the price and other aspects of a Spanish property purchase you need to understand the seller psychologically. If we are to assume that the seller is Spanish, as the majority of sellers are away from the Costas, then it is necessary to understand how their mind works.

In order to do this we need to realize what the Spanish mind thinks, obviously this is a broad generalization but by generalizing you can get an idea of what you need to understand in order to be successful in any property purchase.

We have to go back in time though and understand that, despite the Euro, when Spanish people are thinking about major purchases or sales they think in pesetas still. This is why the prices you see on properties are usually multiples of 6000. The reason is that one million pesetas is equal to 6000 Euros (The figure is actually 6012 Euros but don’t worry about that) People always used to price their property in pesetas of course so the price was 18 million pesetas, 108000 euros, 25 million pesetas, 150000 euros or especially 30 million pesetas 180000 euros. (You see a lot of properties at that price.)

Spanish Property Price Negotiation

Spanish Property Price Negotiation

Yesterday I was taking photographs of a place and asked the owner his asking price and he said 30 million pesetas, when I said “so 180000 euros” he said he doesn’t understand Euros, he wants 30 million.

He is a businessman who exports oranges to the rest of the European Union! Therefore just think that older Spanish sellers do not understand Euros either.

So let’s assume a selling price of 180000 euros. Remember this is 30 million pesetas. You may want to offer 160000 euros. To many Spanish sellers this makes no sense. 160000 is equivalent to 26.66 million pesetas. Much more logical is 26.5 or 27 million ie 159 or 162000 euros.

Now we bring in basic psychology. 162 is much more appetizing and tempting than 159 as the second number starts with a 6 as opposed to a 5 but more importantly 27 million is just 10% off whereas 26.5 million is a lot more (even though it isn’t really)

Usually you would get a much better response to 27 million and probably a lower final price than if you originally offer 26.5. Counterintuitive but true.

The reason is that the owner may well think you are taking the Mickey with an offer at 26.5 but will seriously consider 27. Therefore they are more well disposed to accept it or at least negotiate to a greater extent meaning you are likely to get it for 27.5 or 28 million (165000 or 168000) go figure.

The main reason for this is Spanish pride and not losing face. It is not the done thing to accept losing money even if this means getting a family out of a financial hole. This pride, as I have written about before, means that by the time they realize the predicament they are in regarding the possibility of repossession it is too late as the debts are out of control. The psychology of that decision also plays for offers and negotiation.

Understanding this mental process along with the seven levers of Spanish property negotiation (which you can see at the link) will make sure you get the best possible deal on your Spanish property purchase.

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When Have We Posted

November 2011
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