Distressed and repossessed property sales explained

Over recent years the Costa del Sol, covering areas such as Marbella, Puerto Banus, Benahavís, La Quinta and The Golden Mile, has enjoyed a huge boom in the property sector. Fuelled by a constant flow of international prospectors the price of residential real estate increased by an average rate of 10% a year from the year 2000 to 2008.

As with most areas around the world, following the last economic downturn and the reluctance of most banks to lend (or at least make things more difficult to borrow) it means we presently have a situation in Marbella and all surrounding areas of the Costa del Sol where many apartments, townhouses, villas, fincas and plots of land have been repossessed by the original lending bank due to owners being unable to meet their mortgage repayments. These properties are called bank repossessions. We also have a number (although this number is getting fewer every year) of distressed properties for sale. This is where the owner has heavily reduced the sales price to get it sold. The property is sold as a resale but the loss is being swallowed by the owner and not a bank. We call these DISTRESSED SALES.

Distressed property sales

With a distressed sale there will normally be nothing wrong with the property itself and all the relevant legalities and searches will be carried out by your Lawyer so you have nothing to worry about – it is literally the urgency of the vendor to sell the property which makes them distressed.

There are occasions that vendors must sell their property quickly and well under market price. This could be for various reasons, but mainly this is due to second home owners not being able to meet their mortgage repayments or wanting to expend some of the equity out of the property that is still left if they don't have a mortgage on it. Either way it's the decision of the vendor to sell, not the bank and that's what makes it a distressed sale and not repossession. These sales normally have more flexibility in the negotiation process as you are dealing with a private vendor, where as the banks tend to be more methodical about their pricing, working it out per square meter and on debts owed. Buying a distressed property is a very straight forward way to purchase a home in the sun, and more than likely you will get a furnished property as the vendor is still involved. If you would like to search some of our distressed sales in Marbella, Benahavís, Puerto Banus or along the Costa del Sol please see our featured properties on our home page, or search through our "quick search" button on the side of the each page. Please be aware that we are now in a sellers market, so distressed sales are practically impossible to find, but of course we will do all we can to assist!

Bank Repossessed Properties

Under Spanish law, the banks themselves are unable to directly sell repossessed properties. As a member of the public, you cannot simply walk into a bank looking to buy a repossessed property and ask for a list of the properties on their books and purchase direct. High street banks are not in the business of selling properties, however they do need to recover the money owed to them as soon as they can, regardless of whether the property is sold for its true potential value.

The way the repossession process works is an order is sent to all branches from the Banks Central Office and an Officially registered Real Estate Agent is selected by the bank to act on the their behalf. If after a short period of time the Agent is unable to sell the property it will then go to auction. Sometimes the best time to buy a repossessed property is prior to the auction process as you may find the Bank is still open to a certain amount of negotiation.

Buying a repossessed Property is a great way of acquiring a property with high rental income potential or indeed as a home in the Sun. Most of the repossessions affinity Humberts have been involved with have been purchased for up to 40% of the market value.

The positives with buying a repossession are mainly the heavily reduced price, infact most of the repossessions we have are actually so cheap you couldn’t build them at today’s building costs for what we are now selling them at. For example a property that used to be 280,000€ and was built to that value and specification is now being sold by affinity Humberts at 100,000€. Yes, the property will need re painting and tidying up, but the specifications are still all there, the marble flooring, air conditioning and double glazing, and most importantly the location! There are of course some negatives that go alongside buying a bank repossessed property and they include availability, time delays and the huge amount of paperwork that is involved. affinity Humberts will organize all of the paperwork issues, and the time delays in terms of getting offers agreed, but we can’t help with regards to the availability. We are governed by what has been repossessed by what bank and we get what we are given, some great unbeatable buys and some not so great.

Here at affinity we focus on the current market and not the market that was 8 – 10 years ago. So we are more than happy to negotiate hard with the banks for our clients and get the absolute bottom line price. We have lots of very, very happy buyers who have amazing properties in Marbella and along the Costa del Sol for under build value prices. We have properties across the entire Costa del Sol but we focus on areas such as Marbella, Puerto Banus, Benahavís, La Duquesa, Casares and Mijas. Please read through our area guides to help you get an idea of where may suit your holiday home needs. We highly recommend the area of La Duquesa, where there is a beautiful Marina, blue flag beaches and plenty of gastronomic restaurants within easy walking distance. We have a selection of outstanding properties in the area that you can buy for well under half the original price. Please search our database of latest property listings in La Duquesa, Casares, Marbella, Mijas or along the entire Costa Del Sol!

70% to 100% financing!

We can also offer financing on all bank repossessed properties. As a non Spanish resident we can normally achieve up to 70% financing (70% of the bank valuation), but we also have a very limited number of properties available with up to 100% financing available. You can find current availability on the home page of our website (click here!) but please note that most bank repossessed properties will never be seen online, as availability will change every hour, so its likely that when you do finally come to Spain to view properties with affinity, you will be shown bank repossessions which have never been viewed before and may have only come to market a few hours prior to you entering the front door!

Affinity work directly with the top 5 banks in Spain, and have direct contracts to market and sell these properties. We are an official keyholder for each of these banks and are able to show properties that you will not find on any website or with any other agency located on the Costa del Sol.

If you are interested in a bank repossessed property and wish to take a Spanish Mortgage to make the purchase, we suggest that you speak to our customer services team now so we can start the pre authorisation process (in Spain we call this pre approval), which will involve you speaking directly with the bank and passing various financial documents to the bank, so they can ascertain what level of finance you are able to take - this will NOT affect your credit rating in your home country!