Dream Home Abroad: Brian and Jenny’s Sad Story when Buying Spanish Property

Brian and Jenny’s sad Story

Searching for overseas properties Brian and Jenny came to the Costa Blanca to find their Spanish Property, their dream place in the sun.

Brian and Jenny had come to Spain on holiday a few years ago and knew the area well, having spent time on the Costa Blanca and thoroughly enjoyed it. This is the story of how they decided to purchase Investment Property with the aim to settle there for their retirement years but then made probably the biggest mistake of their lives!

They met Madam Elesha in Torrevieja.

Having decided that it would be a good idea to research the investment property market whilst on Holiday, Brian and Jenny had the misfortune on that fine day, to walk into the premises of the worst estate agent Europe has ever seen. Not only was Elisha charming. she was clever. She was also the biggest rogue estate agent on the Costas!

Poor Brian.

Her enthusiasm for her vocation was overwhelming. The shop was full of staff and buzzing with customers, some of whom were gushing with thanks for receiving such wonderful service. One such was a burly Geordie with 2 days growth on his face and with several weeks’ growth on his beer stomach. He had come up to the Madam and thanked her profusely during Brian’s interview. All of this made Brian and Jenny enthusiastic and comfortable in their new surroundings. Elisha perused her book looking for Inland properties, away from the madding crowd for her new clients. Having made some suggestions they all agreed to go and look at about 10 inland properties the very next day.

Brian and Jenny retired to the nearby town and their favorite Bar and had a wonderful evening relaxing in the evening sunshine that was Guadamar.

The next day Madam Elisha collected them personally in her car and set off inland to the hills behind Albatera, a popular town with Brits and Ecuadorians alike and a haven for the Spanish looking for brand new Spanish Apartments (Piso).

However these did not interest Brian too much as he wanted seclusion and privacy and his own Spanish Villa set in acres of lemon trees! They spent all day touring around the area looking at Spanish Property for Sale. Much of it needed attention and they were a little tired even though they had enjoyed a decent lunch. Now they were ready to go back to their Hotel for a well earned Spanish aperitif but of course, you have probably guessed it, when they arrived at the final property, it was a different story! Having shown them a lot of cheap Spanish Property in need of renovation she had saved this one to last. They were now used to seeing what they didn’t like and had downgraded the dream into some form of reality. But here it was, set in olive and lemon groves extending to about 5 acres a Spanish Villa which would need some work to upgrade it but just about ticking all their boxes.

Their budget was 200K and this was 22K over the top. Brian tried to haggle but she was unmoved. Brian and Jenny were immediately committed to this property and the agent sensed it. She knew that she had planted all the right psychological seeds by showing some property in need of a lot of work and had now shown them what she knew, they really wanted.

Brian and Jenny made the classic error of showing their huge enthusiasm for this property instead of playing it cool and dismissive. So taken were they, with Madam Elisha that they acted completely naturally and displayed their emotions on their sleeves.

“Come to the office tomorrow she proclaimed and we will discuss it further!”

Brian and Jenny were thrilled and excited by the prospect of owning their property in Spain; they had a really good night out and rolled into the office the next morning a bit worse for wear.

“Now what do you think” she asked, already knowing the answer. Brian told her what she wanted to hear, it was a bit over the top but they wanted it and they could afford it. She had them in the palm of her hand, in surroundings which they found both professional and re-assuring, but they weren’t quite ready for what happened next.

The phrase”I will need a deposit now” seemed to roll off the tongue quite lazily but still landed with a bit of a slap from a wet fish onto Brian’s face.

Here was the catch. Allegedly, there was another couple interested in the property they had seen yesterday, and they were poised to buy it through another agent. Elsiha told them that she had only found this out that very morning. However a deposit of 20K now, would secure it for them but, it would need to be today and in cash to clinch the deal.

Now I have never really worked this one out, but apparently the sun plays a big part in the decision making process of Northern Europeans when buying Overseas Property in sunny Mediterranean climes. In the UK they would not have contemplated it but in the heat of a Spanish morning they thought it was quite a normal thing in Spain! Without hesitation or deviation they trotted off to the Bank to arrange the cash in fear of losing their dream home in the Sun. With a mix of transfers and credit cards they came up with the loot by 5pm that day; quite a feat for Brian and Jenny. They returned to the Agent’s office to find a bustling scene, Brian was clutching his bag somewhat nervously, and looking around for more of that comfort zone of yesterday. Wasn’t that the burly Geordie sitting in the back of the office drinking coffee and chatting to one of the staff?

Brian could not concentrate but the Madam had spotted him and his bag.

She quickly ushered them into her private office and duly counted the cash.

“Do you have a solicitor or shall I arrange one for you?”

This was more of a command rather than a question. Brian and Jenny did not know any lawyers there. Why should they? Relieved that Elisha was able to arrange such things in minutes was good enough for Brian and he duly signed a document in Spanish which Elisha said was an instruction to the lawyer she had recommended to act on their behalf.

Drinks came in the form of local Cava (Sparkling Spanish wine) and several glasses were consumed in the excited and charged atmosphere. In the course of conversation Brian asked when the balance of monies was due to be paid, as he did not need a Spanish mortgage, having their life savings in an ISA ready and waiting to transfer. He was duly given a lot of information and bank account numbers from Elisha and told to standby for her call.

Brian and Jenny spent a very enjoyable remaining few days making several trips to the new villa they had bought to gaze longingly from outside of the gate, making extensive notes and plans for their future Retirement Home Abroad.

I always recommend a buyer should do this before making up their mind to purchase. By all means make a choice of one or two properties but don’t excite an agent too much. Request return visits, which should never be resisted by the agents, some of whom live in fear of losing the client directly to the seller or another property agent, simply because there is far too much commission at stake. Thirty to forty thousand Euros is not unusual to change hands on the completion date and shared amongst two or more agents or an agent of agents!

What is becoming more reasonable amongst those who adhere to the guidelines of an accredited Association like MyPropertyPal Overseas Property Agents is four to ten thousand Euros.

Brian and Jenny returned home to the UK without a second thought, blissfully happy in the knowledge that they had paid their deposit on their new Spanish Property. Oblivious to the danger they were in and what might happen to them should they continue down their current path. They thought they had achieved their dream and were now looking forward eagerly to Brian hanging up his boots.

Those who are buyers of Overseas Property should never give any form of a deposit to a Property Agent without first consulting an English speaking lawyer, and preferably not one recommended by the agent.

Even then a deposit should be given through the auspices of the lawyer’s office after he has first checked out that the property exists in legal ownership with legal boundaries and without the encumbrance of any debt.

Buyers should be warned not to put up with any agent pressure and to be advised not to rush into buying something they have set their heart on that their head has not properly thought through.

If Brian had only made one visit to the website of mypropertypal.com he would have found this invaluable advice waiting for him!

Good agents may recommend lawyers and they may be bona fide, but it is always better to act independently and check out whether the agent is part of an accredited Property Agents Association.

See Part Two of the Madam’s Tale, for the final episode in this tragic tale based on a true story, of a corrupt rogue estate agent from Torrevieja

By Hugo Raymond

Founder of mypropertypal.com and the Association of myPropertyPal Overseas Property Agents

Postscipt: ask a PropertyPal it’sfree!

Buying a Home? Watch Out For These Estate Agent Tricks

This is the second in a series of three articles warning home buyers and sellers about the main tricks estate agents use to get hold of your money. These articles are aimed at helping you avoid being fleeced by your estate agent.

Selling to buyers

Although we all know that agents are acting for sellers, many are experts in befriending buyers and getting them to feel that they are on our side, working to help us get the best property at the best price. If you’re buying a property you should be on your guard against several sales traps including the block, stock-shifting, pumping up the price, the spider’s web and the sealed-bid scam.

1. The Block

Of all estate agents’ tricks, the block is probably the one people least expect. Most of us assume agents want to sell properties to us and so it doesn’t occur to us that they may be interested in preventing us from buying. There are several reasons an agent might try to block us from buying a property. The most obvious is that they’ve planned a slash-and-grab for themselves or one of their contacts and so don’t want us to disrupt their plans by buying at a higher price than they’re offering. Another reason may be that the agent has a buyer who is also taking out a mortgage through that agent or an associate mortgage agent. The agent can earn almost as much commission from flogging the mortgage as from selling the property and so may be less interested helping a buyer with cash or who has organised their own mortgage. In both these cases, an agent may withhold our offers from a seller or, if they do pass on our offers, they may discourage the seller from accepting them by suggesting that we may not be in a good position to buy. An investigation by one journalist found that of six offers made to estate agents, only two were passed on to sellers.

2. The stock-shift

Buyers may be looking for their ideal home, but agents can only sell the properties they have on their books. Moreover, they have to shift their stock if they are to meet their sales targets. Unless an agent is lucky enough to have properties that perfectly match buyers’ requirements, the only way they can get their monthly bonus is by convincing buyers to take whatever they’ve got to sell. So the art of a successful agent is to influence buyers to compromise and take what is available rather than hold out for their dream property.

There are various ways of getting buyers to compromise. The easiest is to use fear to push you into making an offer. An agent may tell you that they have the perfect property, that this has just come on the market, but that you’ll have to move quickly before someone else snaps it up. Or if a buyer is hesitating, the agent will use the phantom buyer trick and claim that several other buyers are also interested. To add a little colour the agent may also say that one of the phantom buyers is a cash buyer and therefore in a much better position than you. Or an agent may arrange for several buyers to view a property at the same time. This is intended to make buyers believe that there is competition for the property and can lead to buyers being infected by auction-fever – always a great way to spur them into action and push the price up. Typically an agent will say that prices in the area are going up so if you don’t buy quickly, you’ll end up paying a lot more in a few months time. And there’s the sandwich – here the agent shows a buyer three properties with the first and the third being either unsuitable or out of their range and the middle one being closer to what they want. This helps create the impression in the buyer’s mind that there are few properties fitting their requirements and makes them more open to being fobbed off with something which is reasonably close to what they were looking for.

3. The price pump

Research has repeatedly shown that around 70% of buyers spend on average about 20% more for their homes than they had originally intended. So, whatever a buyer may say to an agent about their price limit, the agent already knows from experience that the large majority of buyers can be squeezed well above this if shown a property they like. The simplest way for the agent to push the price up is to claim that they already have several offers on a property, so if you’re interested, you’re going to have to put in a fairly juicy bid. Or else an agent may use the build-up – show you four or five properties, starting with the cheapest and moving on to the most expensive. Most buyers, when seeing a property they really like, will stretch their financial limit rather than letting the property go to someone else. Another tactic is to show you a home that is way above your financial limit. In comparison, any subsequent properties will seem reasonably priced. Or the agent could use the sneer – take you to an expensive property and then suggest that it’s a pity that you can’t stretch your budget to buy such a perfect home. This is particularly easy if the agent can use buyer’s partner or family to pile on the emotional pressure.

4. The spider’s web

In addition to sellers and property developers, agents have a wide web of people who can help them increase their earnings. For example, if an agent convinces a buyer to use a particular mortgage advisor or supposedly independent financial advisor, on an average loan the advisor will pocket about £2,000 and the agent £1,000 to £1,500. Even if a buyer has finance available, an agent might tell buyers that ‘it’s company policy’ to ensure that all buyers get the best loan deals available and so, whether you want it or not, the agent makes an appointment for you to meet a mortgage salesman with business connections to the agency.

Similarly, an agent will usually get generous kickbacks if they pass buyers onto lawyers and surveyors that they regularly work with. An added advantage of using lawyers and surveyors known to the agent is that they will tend to overlook problems with properties to enable sales to go through. In any town or even areas of a city, most agents, lawyers and surveyors will have worked together in the past and none will want to upset any of the others. So even when a buyer believes their lawyer and surveyor are representing their interests, it’s likely that the lawyer and surveyor will be more sensitive about ensuring continuing a good relationship with the estate agent rather than worrying about the interests of a buyer that they will probably never deal with again. When I began to question both my lawyer and surveyor about things they had apparently ‘overlooked’, the lawyer paid me £6,000 and the surveyor £2,500 – this may have been because they were terribly nice people and particularly liked me; or it may have been because they realised their cosy little arrangement with the estate agent had been rumbled and so were keen to avoid any possibly embarrassing explanations. Any buyer who gets caught in the spider’s web of the agent’s business associates may find it a very expensive experience.

5. Sealed-bid scams

If there are several buyers chasing a property, the seller and agent may ask all the potential purchasers to submit their ‘best and final’ offer in an envelope by a certain date and time with the understanding that the highest bid will be accepted. This is a wonderful way of getting the price up as buyers’ competitive natures can cloud their common sense. But the sealed bid process is open to abuse. For a start, the seller doesn’t have to accept the highest offer – a slightly lower cash offer may be preferable to a higher offer from someone who needs time to arrange finance. Also, once the bids are opened, the agent can easily go back to the bidder with the deepest pockets and suggest that if they increase their offer by a certain amount, then the property is theirs. If they think a potential buyer has access to more money, the agent can also lie about the level of the highest bid or invent a phantom bid in order to push the price higher. Or, if they want to do a slash-and-grab to get the property for themselves, a developer, a family member or friend, then an agent may withhold some bids.