Cash Buyers and Mortgages in Valencia

Sometimes we get an enquiry which states, "I'm a cash buyer so will I be able to get a discount?" (A fair question) Or at times "I'm a cash buyer so I'll be expecting a deep discount on any property I buy!" (An entitled person who doesn't understand how things work and wonders why they have so few friends) Can you guess which kind of client we prefer? The latter can go elsewhere because that's not the reality of the market currently. The former we can work with and hopefully get them a discount on the property for quick completion but there is a universal truth here which both are missing.

For the seller everyone is a cash buyer.

Whether your money comes from your own funds or from a combination of the bank giving you a mortgage and your own money, in the end the seller gets the same money in a bank draft in their hand at the notary.

There are a couple of cases where being a cash buyer is a major advantage but they are few and far between. However they may get you a discount and we will talk about that in this article before talking about how mortgages are done, how long they take and why you might not be able to get a mortgage that is suitable on a particular property. We also announce a new Valencia Property Service today for lower end properties and also look at another type of client who we had experience of this week.

When Can Cash Buyers Benefit?

If you are truly a cash buyer with no need for a mortgage, with all your ducks in a row and you find a place that you like then the fact you have cash may benefit you in the following cases:

  1. The owner needs to sell quickly
  2. The owner is one of the four horsemen (Read the article at the link)
  3. The property is not mortgagable
  4. The metres on the deed do not correspond to the metres of the property

We will look at each case here and then look more deeply into point four and how it works with Mezzanine floors.

In case one we are talking about an owner who has stated that they need to sell quickly for whatever reason. They may be highly motivated to sell and therefore open to offers especially from cash buyers who can complete quickly. However, you must prove you can complete quickly. This means having your NIE number in place, funds in place in a Spanish bank and having your legal representative doing their work quickly so a date can be set for completion.

In the second example there may be a need to sell because of one of death, disease, debt or divorce, "the 4 Ds" or the four horsemen as we know them. Similarly to case one you will need to prove you can complete quickly and therefore you may get a reduced offer accepted.

The third case is more for houses rather than apartments but there is one case where apartments can't be mortgaged too. With houses if the property is on rustic land many banks will not give a mortgage. This is especially true if there is a discrepancy in the property registry between the declared metres and the actual metres in the Catastro or in reality. (And believe me, more often than not with rustic properties there will be a discrepancy).

In the case of apartments sometimes you cannot get a mortgage because something called the Horizontal Division hasn't been completed (This is where a single property is divided into various units, e.g, an old Palace in the city might be just one property in the property registry rather than the individual units). In other cases, and this is especially true of ground floor "Apartments", the property is commercial but someone is trying to pass it off as residential.

And the fourth case is the one we are going to concentrate on today with the example in the main photo, when something you can see doesn't exist.

When Your Mezzanine Looks Great But Isn't Really There

This property is really superb but it has been on sale for a long time it seems. Why is that? Well, it has been taken off the market three times as a deposit or reserve had been left on it but then the purchase has fallen through and it has returned to the market. And the reason is facing you in the photo. That Mezzanine floor doesn't exist.

Now of course, the reality is that it does exist. You can see it, I can see it and when I visited it I was definitely not floating in mid air when I went up the steps to it, unfortunately I don't have that ability. However in the eyes of the bank and the valuation for the mortgage it's not there. The valuation only takes into account the lower floor because that mezzanine floor was added at a later date due to the height of the roof meaning it is not considered a permanent structure (It's definitely permanent) and for mortgage considerations therefore it's not included in the valuation. Instead of being the full 140m2 only around 100m2 is taken into consideration for valuing it.

This means that the valuation will be lower than the asking price but it doesn't mean that the owner will accept a lower price based on valuation because despite the lack of valuation and the fact that it doesn't exist for the bank, it does exist for you with the lifestyle benefits those extra metres can offer you, in this case an extra bedroom and a pool table and chill out area.

Now this is very common in top floor apartments in Valencia and Spain as a whole because the sloping roof allows you to add on extra space but in almost all cases the metres are not included in the deeds and therefore in the valuation. This means a cash buyer, or someone who only needs a small mortgage, can buy this, but a person requiring a typical mortgage won't be able to.

If you are a cash buyer than these extra metres might be very attractive compared to a middle floor property with normal height ceilings where there is no chance of adding a mezzanine floor. And now that this property is back on the market, the latest person to try and get an 80% mortgage has just pulled out, it may suit you for location, price and availability.

And if as the owner you are reading this... stop accepting offers from people needing a large mortgage!!! You should know by now that it won't go through.

Valencia Property and Lower Price Properties

Over the last few months the number of properties in the lower price ranges has reduced rapidly due to them being sold and prices in general of new listings being higher. Agents have become more picky at lower prices and often are refusing to collaborate on those properties meaning that when we get clients with lower budgets we often cannot help them avoid the scams, get the viewings and negotiate the deals whilst protecting them from making a huge mistake due to their lack of background knowledge and the fact that the agents listing these properties are working for the seller rather than you, the buyer. Therefore we have come up with a new service for clients who contact us for properties under 180K This is totally voluntary and we are not insisting on people doing this but if someone wants the service here it is.

Properties do exist in the price range of up to 200k but they go really really quickly and as we said in the article a couple of weeks ago, 200k is the new 150k. If you get in touch with us about these properties and share your favourites on idealista with us like we recommend, then you'll probably see that they disappear really quickly as they get sold fast. However, agents will no longer collaborate with us or anyone at that price range because they assume, rightly in many cases, that they will sell them pretty quickly themselves. We want to do something for those clients in this situation which is similar to our rental service where we take an upfront fee and work with ALL of the agents and owners in Valencia to get you into as many properties as possible when you actually visit.

We are going to trial this service for clients getting in touch for the city for properties under 180k where we will hold your hand through the process of organising all of the visits, accompany you on the visits, give our feedback on them, organise the legal representation and help with the bank accounts, transfers and more for a flat fee of 2500 Euros paid on start of the work.

Remember that if you choose this service you will also be paying the agency offering the property on purchase so bear that in mind. Also remember though we will be concentrating on you and your requirements. This is simply a service is to take advantage of Valencia Property's network of expertise, local knowledge and contacts while getting access to every property on the market that is available when you make your visit as we want to be able to help everyone who gets in touch with us and not have to turn people away. We don't like saying to people we can't get into that one because the agent won't collaborate.

If you choose not to want this service then no worries, just go ahead and start reserving your own visits, contacting every agent advertising properties, trying to organise things all over the city and outside and we all remain friends. Maybe we will still be recommending lawyers, builders and more to you before and after your purchase to make sure you don't get scammed.

On reserving your Valencia Property Sherlock Service place (We need a funky name for this service. Any ideas? Do you like this one?) we will allocate one of our highly experienced team who will work with you from the beginning until you find your ideal property. If during this time we find you a property that we have directly from the owner or a property on which collaboration is possible (Where you won't have to pay the selling agent) then the 2500 Euros will be deducted from our normal commission fee. Sounds fair?

As stated this is a trial to see if anyone wants this service. We will be limiting it to four clients per month initially. We think it will be a useful service for property investors as well as clients looking at the lower end of the market.

Leveraging our knowledge and expertise to help everyone not just higher end clients is what we want to do but we can't offer such expertise for nothing. As an example, last week somebody asked us for advice on what to buy after they had been out with loads of agents in Valencia and they sent us their favourites list in Idealista which had over 70 properties on it!!! (most of which were absolute rubbish) Going through that and making comments, advising, making calls, having consultations, visits etc... takes a long time and we cannot do it for free as we are so busy with our own clients using our services and this would take away from their experience with us. It's at this point we started thinking about how we could offer our services to people like this. And now we have it.

Property of the Week

How often do we get clients asking us to find them an apartment in Valencia with sea views? No, no, no, we patronisingly explain, for while Valencia is on the sea, it is flat as a pancake, and so short of camping on the actual sand, sea views are almost impossible.

In fact, it might be limited to one street, and then only the exterior apartments on that street. In all the tens of thousands of apartments in the city, it really might be as small as only fifty or sixty can say they have a proper sea view. That's without breaking your neck while leaning dangerously off a balcony to catch a glimpse of water, at least.

This apartment is on that street, facing directly onto the marina, you can watch the superyachts come and go as you sip your morning coffee or evening craft beer. And the buildings down here are not too shabby to look at either. Inside the apartment has been recently renovated, 4 bedrooms, a shower room and a bathroom. A large living space and separate kitchen, and the building itself is in perfect condition.

The tram stop is at the end of the street, and you could walk to the beach in less than 10 minutes. Of course if its just a quick dip you want, there is now a beach area in the marina, only a few steps from the front door. If you want to wake up to the morning sun, the gentle call of seagulls and the sight of outrageously expensive demonstrations of superwealth bobbing gently in the water, this apartment is quite possibly the best one for you.

There's a Certain Type of Client...

And for that type of client we are thinking of introducing an upfront fee, there's usually a clue in their initial mail. They always know better. They are generally extremely rude. I really should let it lie but it's just so tempting to respond in kind. (We are not potential Pigeons" is a French term meaning "we weren't born yesterday".)

Is it just me who reads that last line as a big huge "Go F*ck yourself" or am I getting tetchy in my old age? Can't wait to sell the property and then send them news that it is now sold as a very personal "We wish you good luck" too. And the "know it all and know it better" has got a name and has been placed in our Which Type of Client Are You post.

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