Are you thinking about buying a property in Ibiza? Buying a property is very exciting, and it can be one of the biggest financial transactions many people will ever make in their entire lives. Luckily, RE/MAX Isla Blanca and its qualified sales associates are on hand to make it very easy for you.
Owning a property rather than long term rental can improve your quality of life, provide stability and give you a sense of control. You have a place to live when you rent, but buying gives you something to call your own, a home. Perhaps equally important is the financial benefit that comes with buying a property. With a cash purchase you are making what has been proven over the last decades to be a stable investment, but it some cases it can also be very lucrative, for example in rising markets like Ibiza, where not only does the real estate appreciate well but also offers great return on investment by means of (holiday) rental. Should you require a mortgage to complete the purchase you are creating equity with each payment, rather than giving it away to your landlord.
The Ibiza real estate market is diverse and unique in many ways and buying on Ibiza is very straightforward, however for those not familiar with the Spanish laws and taxes it can be somewhat different than the process you are used to. Therefore, it is important you are confident with your broker or real estate agent in Ibiza and he or she will provide you with the most accurate market information and guidance throughout the entire purchasing process. The agent should also be attentive to your needs and desires and help you to make suitable decisions.
Whether you are looking to purchase your first, second or simply an extra investment property, a RE/MAX Isla Blanca sales associate can help you through the entire process of buying a property. Whether your purchase will become your (vacation) property or an investment property, we can assist you in either case and ensure a smooth transition into your newly purchased real estate in Ibiza.
So, you’ve decided to buy a property in Ibiza. Where do you start? Here’s what you can expect as a buyer during a property purchase in Ibiza:
Contact a Real Estate Agent
The fact that you are reading this means you are off to a great start! One of our highly trained and motivated Sales Associates can help you through the entire process of buying a property, from your initial search, to applying for a mortgage if you require one and continuing right through to the closing at the notary office, and beyond. We have a large network of professionals including lawyers, tax and fiscal advisors, architects, contractors, vacation rental and property managers ready at your service.
Explore the island and test the market!
Before looking for the property which fits your taste and budget, it’s important to get a good feel for the different neighbourhoods on Ibiza. In the end, it’s not just the property you’re buying; you’re also buying into a larger community and what happens outside your property can have great impact on the value of your property. This makes a huge difference, especially if you decide to sell in the future.
Right here on www.ibiza-realestate.es, you can find properties that meet your criteria as well as neighbourhood information. Select properties that seem to fit you, take an afternoon and go and explore Ibiza and its beautiful countryside and beaches. Don’t forget to discover the magic of Ibiza Old Town or the charming small villages!
With your agent, begin seriously looking at properties your agent can add to the list of properties you’ve already identified, including ones which have recently come on the market or are listed with other agencies we happily work with. Look at properties with a critical eye; does the layout work for you, is the property in good condition or does it need renovation, would it be right for your lifestyle and desires? In short, can you imagine yourself and your family living in that property? Please make sure to take notes at each property you visit. Once you narrow down your choices; you may opt to re-visit properties which you are interested in, for example at different times of the day.
Buyers make a purchase offer.
This is it! You’ve found the property of your dreams on Ibiza! When you’ve identified the property you want to buy, be ready to help your agent prepare a written offer quickly after you’ve looked over disclosure documents. Your agent will be familiar with market values and will help you arrive at a price that gives your offer the best chance of being accepted by the sellers. Now, the sellers may accept your first offer, but usually return a counteroffer. In fact, additional negotiations are common, and your agent will help you through this stressful yet exciting stage.
The sellers accept.
When everyone is happy with the terms, the parties reach what is known as mutual acceptance and enter into a purchase and sale agreement, but before you sign anything make sure you take the correct steps and check all the relevant documents.
Before signing a purchase agreement.
Even though the purchase process in Ibiza is quite straightforward, there are certain documents which need to be in place and checked before proceeding with the actual signing of an agreement. At this stage it is essential to obtain a Spanish lawyer or if you are familiar and confident with the process you can contact your Gestor. We can recommend local lawyers who are experienced with the purchase and sale of real estate and speak English, Spanish and often German or another third language. The lawyer will check all the documents related to the property, including previous deeds, outstanding bill, permits and much more.
In addition to obtaining a lawyer who will in fact do most of the paperwork, you must also apply for a Numero de Identificacion de Extranjeros or NIE before you proceed with signing a purchase agreement. The NIE is the identification number in Spain for everyone who is not a Spanish citizen. The NIE is required for the purchase or sale of any real estate, vehicle, or boat within Spain but also to open a bank account, apply for utilities and many other purposes. A Gestor, Gestoria or in fact the lawyer you work with will assist you in applying for a NIE.
In the event that you require a mortgage for the purchase of your new Ibiza property, this would be the time to contact a bank to arrange financing. It’s best to have approval before signing any purchase agreement!
Signing a purchase agreement
Once you’ve agreed on all the terms, arranged financing or your funds and contacted a lawyer you can proceed in two steps:
- You can either sign a Reservation Agreement first and later proceed with an Option or Private agreement;
- You go directly to an Option or Private agreement.
The differences are explained below:
Reservation Agreement (Documento de reserve).
This agreement is typically used to block the property for a certain time, which allows more time to consider the purchase or to complete the formal Option or Private Agreement. Signing of a Reservation Agreement is accompanied with a small reservation fee (between 1000€ – and 5000€). This agreement is sometimes made before lawyers come into the picture when buyers want to ensure the property is taken off the market for them. Buyers may opt out of the Reservation Agreement at any time but in doing so will usually lose the reservation fee.
Option purchase agreement (Contrato de opción de compra).
The Option agreement is a binding agreement which is established by your lawyer after they ensure the property documents are correct. Once you sign this document it is normal to pay a deposit around 10% of the agreed sales price, usually deposited with the Gestoria in order to reserve the property for an agreed period of time. This contract is binding for both parties and penalties are applied if either of the parties forfeits. This contract does allow for special conditions such as a mortgage clause, allowing the buyer to withdraw if the bank doesn’t approve the mortgage application, thus returning the deposit amount to the buyer.
Private purchase agreement (contrato privado de compraventa).
This agreement is drawn up in the same way as the Option purchase agreement, but has the significant difference in the fact that both parties cannot decide to opt out of the agreement by losing the deposit or paying double the deposit amount in case of the seller. Should the buyer not finalise on the purchase, the seller may sue for completion.
Meanwhile, the seller cannot back out either if he or she has found another buyer willing to pay significantly more.
In practice the Option agreement is the preferred choice for most cases as it’s slightly less definitive but still covers all the important aspects. However, should it be a cash purchase with a very good negotiated price, you may wish to consider the Private purchase agreement.
Completion of the sale.
In Ibiza and anywhere else in Spain, a public notary, who is responsible for ensuring that the deed is drawn up correctly and that the purchase price is paid to the seller, prepares the deed. The notary also certifies the identity of the parties and witnesses the signing of the deed. He may also arrange for its registration (in the name of the new owner) in the local property register and collects any fees or taxes that are due.
A notary represents the state and doesn’t protect the interests of the buyer or the seller and rarely points out possible pitfalls in a contract, offers advice or volunteers any information. If you don’t understand the deed, you should have it checked by your lawyer or, alternatively, have him prepare it on your behalf. If you’ve contracted the services of a lawyer, rest assured that he or she will assist you during the entire process.
Once all documents are in order and financing is set, all parties sign the deed of transfer at the notary’s office, and the transaction closes. If either buyer or seller (or both) are not on the island for this signing, they can give power of attorney to their lawyer to sign on their behalf at the notary office.
When the final signatures are in place, it’s time to put down the pens, shake hands, exchange smiles and start packing for the move while your lawyer takes care of the registration of your property! Congratulations on your new dream property on Ibiza!
Taxes and fees related to buying property in Ibiza
Clearly, any Ibiza real estate purchase involves taxes and fees to be paid. For more information on taxes and fees related to your purchase in Ibiza please click here.