Tips for home buying and selling in phase 3 of the de-escalation process
Most Spaniards are already looking ahead to the third phase of de-escalation, which begins in most provinces today, 8 June. This last stage towards what has been called the ‘new normal’ is also accelerating the flow of professional activity in many sectors, including real estate. Although the difficulties in closing transactions and visiting properties in person in recent months have partly paralysed the home buying and selling sector, real estate professionals are optimistic and 55% point to stabilisation and moderate growth in these operations in the coming months, according to the 1st Real Estate Barometer – ‘The market sentiment of real estate professionals’ carried out by UCI and SIRA. This is also indicated by the‘CIS Consumer Confidence Index’, carried out in April: 9% of Spaniards are considering buying a home, especially young people between 25 and 34 years of age and residents in large towns. Is it a good time to buy a home? What steps can interested buyers take? And what about sellers? How to carry out the transaction if they are in different provinces? How to apply for a mortgage? What protection measures should be taken into account? UCI – Unión de Créditos Inmobiliarios – has created an Express Guide to buying and selling homes in the third phase of de-escalation, based on the advice of the real estate experts present at the special edition of Inmociónate en Casa. They are summarised in the following points:
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- Online search: during the period of confinement, great advances have been made in the digitisation of the usual processes for the sale and purchase of real estate. 3D floor plans, virtual video tours, tools to recreate the furnishings and decoration of the future home or live virtual tours between buyer and real estate agent allow buyers to search for their dream home at the click of a button, thus speeding up a large part of the property purchase process.
- Location: the location of the property has always been a factor to be taken into account when buying. But after these months with reduced mobility, buyers will demand more than ever to have supermarkets, schools, transport, parks or health centres nearby, all factors that can be analysed in the first steps of the search for a property at the click of a button, observing from the screen the services offered by the different areas of interest, in order to discard those that are of no interest and refine the search.
- Energy efficiency: it is important to check the year of construction of the property, as half of the Spanish property stock is over 40 years old. It is also important to analyse the energy rating, which ranges from A (most efficient) to G (least efficient), which, when translated into the buyer’s pocket, means savings and comfort or expense and less comfort. Thermal insulation, the entrance or not of natural light or the ventilation system are basic variables to measure it. Whether or not the property meets these characteristics will allow the future buyer to assess the need for refurbishment.
- Bills: before buying a property it is essential to ensure that the property is up to date with the payment of all services, such as electricity and water or community fees.
- Virtual bureaucracy: behind a purchase and sale transaction there are administrative and bureaucratic formalities that must be completed before and after the signing of the contract. Trying to prepare them in advance, during the early stages of de-escalation will also help to shorten the process of buying a property, which is usually around two months. In addition, the digital signature is now incorporated in many of these operations, which will also make it possible to be more agile in the procedures and to sign regardless of the place of residence.
- Do your accounts: banks and financial institutions continue to offer the opportunity to make telematic and telephone consultations to apply for a mortgage. In the first instance, to avoid unnecessary risks, you can start the process online and then complete it in person. It is also possible to make a preliminary calculation using online mortgage simulators. In any case, it is still advisable to have 20% of the down payment for the purchase of the property and to bear in mind that interest rates range from 1.50% for a variable rate to 2.90% for a fixed rate. However, expert advice is key to making the best decision, such as the personalised consultations offered by UCI. Currently, the financial conditions are optimal in variable, mixed or fixed rate mortgages. However, in the face of possible upward pressure on interest rates, long-term fixed or mixed rates are emerging as the best alternative for those who want to secure a fixed instalment.
- Visits: this is one of the key points in property purchase and sale operations and one of the aspects that has most paralysed the sector in recent months. From phase 1, visits to the properties are permitted, provided that they are in the same province as the current residence of the future buyer. Although visits are essential to process these transactions, technological tools help all parties to make an important filter to visit only when it is strictly necessary and the purchase decision is well advanced. After the end of the de-escalation period, appointments outside the province of residence can also be concentrated. When making the visit, limited groups of people are recommended; preferably three: the real estate agent and a maximum of two in the role of buyer, preferably without children. In addition to following some protection and hygiene guidelines: use of gloves, masks and hydroalcoholic gel for all participants, maintaining a safety distance of 1.5-2 metres and avoiding as much as possible the transit in common areas of the property, such as lifts or stairs. Likewise, after each visit, property managers should ventilate and disinfect the properties for the next visit.
- New demands: the ‘stay at home’ of these months has led many Spaniards to analyse factors in their homes that they had previously taken less into account, such as natural light; the existence of open and outdoor spaces, such as terraces, gardens or balconies, and the size of the property itself, which leads a large percentage to want to change home in the near future and will therefore increase demand. However, José Manuel Fernández, deputy general manager of UCI, points out that “the search for these new factors will not have a long run¨, unless companies decide in the long term to bet more on teleworking, and that this is not a temporary situation, in which case interest in housing in the periphery or far from large urban centres could increase, as living close to the workplace will no longer be a priority”.
- Labour market: the employment situation of buyers in the medium to long term will be a key factor in taking the step of buying and studying the viability of mortgage loans. Although it is true that some sellers could also put on the real estate market offers with significant falls in urgent situations caused by the need for liquidity.
- Trend towards moderation and lower prices: 2019 closed with a 4% year-on-year increase in the price of housing. On the contrary, according to data from the ‘I Real Estate Barometer of UCI and SIRA’, half of the professionals in the sector point to a stabilisation or moderate decrease in the price of real estate this 2020 due to the pandemic.
