Kill Queen

Searches for bank owned repossessions and distressed reached record levels in the first quarter of 2011 according to two leading sites, www.primelocation.com and www.propertyinspain.net

Managers at the two websites say that this activity is strong evidence that families and investors around Europe are aware of the property market in Spain and are looking for deals in the distressed market.

The website www.primelocation.com says that searches for Spanish property exceeded those for homes in France by 20% This is the opposite of the usual situation. Interest in Spanish property searches has increased by 43% whereas that of France increased by only 1%

The website www.propertyinspain.net has thousands of bank owned properties listed on its site. Hey say that the bargains on offer coupled with generous mortgage packages are tempting buyers back into the market.

The property manager of the website www.propertyinspain.net , Ben Walker said that they can nearly always match budget and financial requirements to produce a perfect deal for their clients. Many have booked Fly-to-Buy tickets when they contact the site but in some cases, the best bargains have already been snapped up.

An example of a bargain was the three bedroom riverside apartment on the Costa Blanca that sold for €18,600. Another was a finca with sea views in Mallorca which was offered for €1.7 million. Both sold within weeks of massive reductions to their prices being made.

www.primelocation.com international development manager, Ann Wright explained that there is no single explanation to the trend. She said that it is a combination of hard headed investors making decisions in a depressed market as well as changes in lifestyles and a small amount of politics.

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As sellers of embattled Spanish properties try to sell a two tier market is emerging. On the one hand there are private sellers who for whatever reason need to sell their property. On the other are the banks who are being pressured by their regulator, the Bank of Spain, to dispose of toxic real estate assets, balance their books and provide liquidity to the Spanish economy as a whole.

Distressed developers are being forced to offer discounts of up to 40% or original asking price and the banks are offering generous mortgage packages in order to assist quick sales. One bank is offering an 80% fixed rate mortgage with a three year repayment holiday. This financing is available on thousands of key-ready beachside and golf side apartments and villas.

The strategy is definitely working and the banks have managed to sell off more properties than at any time since the recession hit. However, private sellers are unable to compete with the combination of massive discounts and generous mortgage packages. Private sellers usually need to charge more and there is no access to cheap mortgages for their properties. Even after successful viewings with potential buyers showing interest, deals are not completing as cheaper homes with better mortgages are winning the battle for new buyers.

Leading Spanish property specialists www.propertyinspain.net have over 16,000 properties, both private and bank owned on their books. They say that there is a two tier market emerging and that it is likely to continue for at least another eighteen months until the banks and developers have cleared problem properties from their books.

The firm emphasises that the private properties are offered at reasonable prices and are often in superior condition to bank repossessions. They are advising private sellers that they need to either reduce their asking price or remove their property from the market if they are getting little or no viewings. In one area of the Costa Blanca over 100 private sellers have reduced their total asking price by over €3 million in a campaign known as “Super Sale 2011.”

The firm’s sales manager, Ben Walker said that there is definitely a two tier market in Spain right now and that private sellers are losing out despite their properties usually being a much better offer than repossessions. He said that his firm offers on-line showcases to make it easier for buyers to compare locations, prices, mortgages and value for money. He also said that the firm’s Fly-to-Buy packages include privately owned properties as well as those belonging to banks.

An example of the buyer’s dilemma is this:

Private Sale

• One bedroom, walk to beach apartment
• Fully furnished with communal pool
• 60% mortgage
• €43,000

Bank Repossession

• Two bedroom, drive to beach apartment
• Unfurnished and no pool
• Guaranteed 90% mortgage
• €46,300

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