The pros and cons of buying an alienated property in Spain in 2024

The pros and cons of buying an alienated property in Spain in 2024

There are many apartments in Spain that are seized by banks. These provide a good chance to buy property at an attractive price.

To make this a reality, it is important to know what the real estate characteristics are, what the embargo process looks like and, finally, what should be taken into account when seizing a house. This is important information to avoid risks typically associated with these purchases.

Contents:

Purchasing alienated real estate

The embargo on apartments comes from a judicial or administrative decision on the non-payment of recognized debts. When the borrower cannot repay the mortgage due to lack of funds, the bank can involve him in a lawsuit. That is, the financial institution returns the property in order to be able to sell it and return the money. Thus, the creditor, without receiving the corresponding payment, declares its rights through the court.

The process from the termination of the mortgage repayment to the beginning of the embargo process is very slow. Until the tenant stops paying 12 installments in a row, the foreclosure will not begin.

Any property of the debtor may be seized, from furniture and household appliances to cars, etc., except in cases provided for by law.

The creditor's right to seize also allows him to sell the debtor's apartment at auction in order to return the payment due to him. It should be clarified that the transfer of the debtor's apartment to the creditor is not carried out using arrest. The latter ensures the payment of the loan through the future sale of the property at auction.

The pros and cons of buying an alienated property in Spain in 2022

Alienation process

The real estate expropriation can last more than a year and goes through the following stages:

  1. Notification of payment violation: if 15 days have passed since the date of non-payment, banks contact the debtor and warn him about the consequences of late payment.
  2. Official reports: if a month of non-payment has already passed, the lender begins to report the problem through official sources.
  3. Delay: after 5 months without payments from the debtor, they are entered on a list of defaulters.
  4. Lawsuit: banks initiate a buyout for non-payment exceeding 12 installments.
  5. Land Registry: this body formalizes the process in order to continue the formalities.
  6. Auction: this can be officially announced without notifying the debtor.
  7. Eviction: the debtor is asked to leave the premises. If they refuse, the police will assist.

Advantages of buying alienated real estate

There are many advantages of buying this type of real estate.

  1. The main advantage is its low price as people want to sell the property quickly to avoid unnecessary expenses such as monthly rent or tax payments.
  2. When buying an apartment at a lower price, you have a great opportunity to allocate spare money to repair or restore the property. This will increase the value of the house.
  3. In some cases, the bank provides 100% financing of the house and covers the costs of the Service Bureau, notary, registration and taxes.
  4. The bank should also be responsible for paying the property tax and outstanding community contributions if any.
  5. Banks also often offer a longer repayment period - about 50 years. This is very important since you can get access to real estate without having first saved up.

As you can see, the purchase of alienated real estate has many advantages.

Disadvantages of buying «bank» apartments

However, there are also disadvantages that you need to be aware of.

  1. The debt of the former renter can be transferred together with the real estate. The buyer must make sure that the seizure of real estate is approved by the court and that the documents in the Land Register are properly executed.
  2. On the other hand, bank apartments are usually in poor condition as they do not receive service from the bank.
  3. You must pay for the property through the bank that sells it to you.

The pros and cons of buying an alienated property in Spain in 2022

Buying Tips

Buying an embargo is a very important process that often requires expert advice.

If you are planning to buy a seized apartment, follow these tips below.

  • As a rule, banking institutions belong to one business group and it in turn has other companies with different social goals. Thus, it is normal to search for apartments seized by banks in its subsidiaries. Let's provide an example: Caixabank will sell apartments seized through ServiHabitat and Sabadell will do it through Solvia.

    We offer you a list of banks where you can buy collateral real estate:

    Real estate subsidiaryBank
    Altamira Santander
    Bankinter portal inmobiliario Bankinter
    Escogecasa Abanca
    Habitaclic Caja Sur
    Haya Bankia, BBVA, Liberbank
    Servihabitat Caixabank
    Solvia Sabadell
  • Find out about the alienated real estate for sale. You can do this by visiting various banking institutions and web pages.
  • Visit several houses so you can choose from different options.
  • Agree on a price that suits you. Unlike newly built apartments, discounts can be significant for alienated houses.
  • Carefully study the amount of interest rates. The bank may impose other financial products, such as home insurance, etc. Find out from your competitors about the rates offered to get a general idea of the price.

Characteristics of houses recovered by the bank

Many people wonder what the general characteristics of this real estate are but it is difficult to find a general pattern. If we look at the portfolio of houses of any bank, we will see that they have all types like apartments or chalets, large or small, in cities or provinces.

Thus, there is no single type. However, this property belonged to insolvent people so most often, it is located in unprivileged areas.

In other words, it is not typical for banks to confiscate apartments in the Salamanca area or villas in La Moraleja, or at least this will be less common than the foreclosure of an apartment in Lavapies or Vallecas. It's just a matter of average annual income which is directly related to creditworthiness.

In addition, due to the current recovery in the real estate sector, there is a constant flow of real estate transactions in large cities. Therefore, for instance, it is not often possible to find apartments like this in Madrid. The reason is quite simple: the bank does not need to sell an apartment at a reduced price as it is easily sold at market price.

How to find out if bank real estate is profitable

In many cases, discounts on bank apartments are a simple devaluation compared to their original price. Therefore, the advertised prices are not always real. If you want to find good offers, it is advisable to take the following steps:

  • Compare the price of the property with other similar houses that have similar characteristics and are sold in the same area. This information can be found on any real estate portal.
  • Check the condition of the house to make sure it is not damaged as it may be sold cheaply for this reason. If the damage is significant, it is necessary to assess whether it is worth buying and repairing it later.
  • If you have found information on the real estate portal, it is reasonable to check the previous real estate prices to see what the changes are.

Is it worth buying an alienated property?

Real estate sold by financial organizations has its pros and cons so it is not suitable for everyone. Let's see which 2 types of buyers may be interested in purchasing it.

If one does not have enough savings, many banks finance the purchase 100% which can be a plus.

If there is a favorable offer, it may be interesting to buy an apartment or a house from a bank. However, you need to make sure that all the documents are in order.

The pros and cons of buying an alienated property in Spain in 2022

Our assistance in buying real estate in Spain

Current offers for real estate in Spain at attractive prices are listed in the Spain-Real.Estate catalog. View real estate offers, find out their characteristics and find the apartment of your dreams on your own or entrust the choice to professionals. We have specialists who are well acquainted with all the nuances of the local market. If you are interested in real estate in Spain, you are guaranteed to find your dream home with us.

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