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Will home values ​​go up in 2022 and 2023?

The residential sector faces innumerable challenges in the coming months. The economy is preparing for a rise in interest rates, which could mitigate the high existing inflation; all this in the midst of a global supply crisis and a war crisis that stalks the European region.

In this climate of uncertainty, the residential sector could slow down its growth, but without entering a downward trend. The main reasons for this cooling in the residential segment is an environment of higher financing costs and the lower savings rate of families, as a result of high inflation.

House prices do not reflect bubble symptoms

So far, the effort rate of families, that is, the percentage of salary that they allocate to housing, is below the 35% threshold. At the end of 2021, it was at 33%, although it may rise slightly during this year. However, it is far from the figures that were reached in the real estate bubble, where it exceeded levels of 50%.

In addition, the indebtedness undertaken by families continues at levels that the market calls healthy. The average loan to value of mortgages is 65% and only 10% of them exceed 80%, minimum levels of 20 years. Additionally, in recent years, most of the loans linked to housing signed are at a fixed rate, which represents perfect coverage in a climate of interest rate increases by central banks.

In 2021, more than 566,000 properties were transacted, something unusual since the previous recession. These levels were last reached in 2008. Despite the slowdown, in 2022 and 2023, they estimate that sales will be above half a million.

The price of housing in Spain

The average price of housing in Spain stands at 1,823 euros per square meter; based on transaction data, collected by Brains Real Estate’s Real Estate Big Data platform. This represents 9.6% below the maximum price reached in the real estate bubble, in the first quarter of 2008.

Specifically, new construction is 14% higher in cost than second-hand housing; a trend that is expected to increase in the coming years. However, the number of new property sales continues to be between 11% and 15%.

In the case of rent, it is at a maximum, with a tireless rise since 2015. Renting a home costs an average of 10.5 euros per square meter per month, compared to the 6.8 euros it cost at the beginning of 2015.

The average gross return of those investors who opt for residential rentals is 6.6%; according to Brains Real Estate.

Source: Brainsre News

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Learn about the trends that characterize the real estate market in 2022

Interest in real estate is picking up, both in coastal resorts and big cities. The beginning of 2021 has been quite challenging. After the first year of the coronavirus pandemic, the downward trend in foreign investment in Spain seemed to have continued.

However, an effective vaccination campaign opened up more optimistic prospects, which contributed to the general economic recovery in Spain, especially in the real estate sector with an increasing number of property hunters buying investment apartments in Spain.

Rising property prices

The reactivation of the real estate market has caused an increase in real estate prices in the main tourist centers of the region. But this is not a problem for foreign investors. They tend to buy properties that fit their requirements without paying much attention to their price tags. In fact, this is what contributes to the increase in property prices in general.

This is a trend that we are also seeing among local investors who are looking for a home not only for vacations, but also for long-term living or even telecommuting.

What will happen in the short and long term?

Since the beginning of 2021, a moderate recovery in the real estate market has been observed, which will undoubtedly continue in the coming months. There has been a growth in interest in buying or renting a second home, both by foreigners and locals. For this reason, investors will look for homes that allow you to work many miles away from your office.

In 2022, an increase in home sales is expected in the tourist regions of Spain. According to a report prepared by CaixaBank Research, in 2022 a tangible increase in home sales is expected in the tourist regions of Spain, where a significant proportion of buyers are foreigners.

In the midst of the Covid-19 pandemic, the number of purchases and sales of residential real estate in these regions decreased by 17.8%, and although the recovery is not yet fast enough, there is much to be said for a return to the previous . level.

Spain-Real.Estate experts believe that in the foreseeable future, the demand for houses and apartments in Spain by foreigners will return to its previous level, which is already noticeable by the number of search queries on the Internet. The expected introduction of a residence permit in Spain for “digital nomads” is also expected to increase the demand for houses and apartments.

What characteristics will mark the sector?

Looking ahead to 2022, everything indicates that the progressive economic recovery, together with other factors such as inflation, the supply crisis and the new Housing Law, could draw a new roadmap in the residential real estate market. On the occasion of the arrival of the new financial year, Solvia experts identify the main characteristics that will mark the sector:

Stabilization of sales. The Spanish continue to opt for the purchase and this has been reflected in the number of operations in 2021. This year, the trend will continue. This rebound will not be as sharp as that of recent months, registering a more moderate increase, located within an estimated range of growth in the number of transactions greater than 5%.

Rising value of real estate, with more moderate increases. Although this indicator will be conditioned by several factors, such as inflation, the influence of the end of the moratoria in the second half of the year or the shortage of supplies, the forecasts seem to indicate that house prices will continue to rise. With small fluctuations, showing moderate increases of approximately 3%, and can reach up to 6%, according to the recent forecasts of the Spanish Association of Value Analysis (AEV).

Rebound in mortgage operations. The year 2021 has not only been characterized by the increase in the contracting of new mortgages (+26% year-on-year in October and +20% compared to 2019, according to the College of Registrars), but also by the increase in novations or subrogations. This advance, caused by the growth in demand for housing, the facilities now offered by the law regulating real estate credit contracts or the favorable conditions offered by banks, will retain its positive context in 2022.

Increase in housing supply. Despite the fact that the Bank of Spain warned at the end of 2021 of a housing supply with little dynamism, especially with regard to new construction housing and single-family properties, a type of asset that has begun to arouse great interest in the market, also pointed out that this path would change in 2022, at least in the medium term, thanks to the implementation of the Housing Rehabilitation and Urban Regeneration Plan, which, backed by European Next Generation funds, could boost residential activity, both rehabilitation like new construction.

Recovery of the rental market. Although it remains to be seen how the new Housing Law affects the rental market, which is expected to come into force in 2022, forecasts suggest that this new year will mark a turning point, with a recovery in demand and, very especially, of prices, which will experience a generalized increase of approximately 5%. First, in the big cities and, later, in the rest of the country.

Growth of professional rental management. Currently, more than 90% of the rental housing stock is in private hands. This makes it difficult to respond to new market demands, such as digital access to contracting and rental services, or adaptation to issues related to energy efficiency or new legislation.

Build to rent boom. The improvement in the rental market, the greater interest in newly built properties, and the increase in professionalized management of leased assets will make build-to-rent one of the major trends of the year. In fact, by 2022, the increase in investment in this line of business will exceed 10% according to the latest estimates.

The digital transformation of the sector, more real than ever. The COVID-19 health crisis accelerated the digital transformation processes of many sectors, including real estate, which led many traditional real estate companies to look for new alternatives to attract customers and facilitate processes. It is expected that during 2022 this trend will take hold, which allows, among other things, the signing of mortgages electronically, virtual visits, the professionalized management of potential buyers or tenants, or the use of machine learning to predict demand.

If you are interested in buying or selling your property and need professional advice, contact us and we will manage all your requirements as soon as possible.

Source: Alimarket

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The real estate market gains momentum with more than 9,000 sales

The real estate market has closed 2021 with clear signs of recovery, after a 5% decrease as a result of the pandemic. According to official figures, until November, 8,200 sales operations were carried out, and forecasts suggest that 2022 will close above 9,000. This is 30% more than a year before, according to data from the General Council of Notaries.

The ease of financing that banks are currently providing, together with low interest rates, are factors that explain the current dynamism of the real estate market in the Canary Islands. To this must be added the savings of households, the improvement in consumer confidence and the need that the pandemic has discovered for larger homes with open spaces.

What’s behind the growing demand?

The demand is formed above all by residents, among whom there are people looking for their first home, and others who, after covid, have decided to change their home. The pandemic has generated new demand and supply, since these are people who sell their homes to buy others. To this demand we must add the foreigners who in 2021 returned to the real estate market of the islands.

Small investors who want to acquire flats as a ‘refuge’ of profitability before other forms of investment are also added. Renting a home on the islands can yield a return of 6% compared to 0.3% given by ten-year government bonds, for example.

The projections for the next months of the year

For the coming months, the real estate sector is confident that the market will maintain its current dynamism. However, problems could arise in relation to the lack of supply of new housing. In 2021, the construction sector boomed, offering the market some 3,500 homes. It is expected to continue at the same pace to respond to demand and prevent prices from being excessively stressed.

One of the peculiarities of the purchases that are currently being made is that many are made with their own resources in their entirety, without closing a mortgage, or partially, resorting to credit in a small percentage.

Prices rise 6% and will continue to rise in 2022

Housing prices have risen in 2021 between 4% and 6%. In the second case, the rebound has been greater due to the rise in the price of raw materials. According to Tinsa data, the average price per square meter on the islands is 1,376 euros. The figure assumes that it is still 28% below maximum prices. From the lows, they are up 20%.

By province, Santa Cruz de Tenerife has experienced a greater increase, of 10.9%, while in Las Palmas the rise is 5.2%. By capital, the city of Las Palmas de Gran Canaria presents a higher price, of 1,526 euros, while in Santa Cruz de Tenerife, the square meter stands at 1,394 euros. Prices are expected to continue to rise slightly throughout this year, although the experts consulted reject the possibility of a new bubble.

From the Official Association of Real Estate Agents, it points out that there is no prospect that the market will overheat or become tense in the coming years and they completely rule out the possibility that Spain will once again plunge into a real estate bubble situation.

If you are thinking of buying or selling a property and need professional advice, contact us and we will manage your request.

Source: Canarias7

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Keys to the sustained growth of the real estate sector in 2022

2021 has been a year of recovery, and as travel restrictions were lifted and vaccine programs advanced, international and Spanish buyers have looked to acquire Spanish properties and as a result, 2022 has seen strong results across the board.

Sales have soared and, in some areas, are back to pre-pandemic levels. Prices have also increased again with newly built properties.

Economic scenario in 2022

In a generally positive context for the Spanish property market, there is also widespread optimism for the economy. This year Spain has experienced solid GDP growth and has just received billions of euros in European funds, which constitutes a huge injection in the country’s balance sheets.

In addition, household savings have returned to pre-crisis levels. Bankinter’s latest analysis for the real estate sector in Spain forecasts that household savings will continue to increase in 2022, so greater liquidity among buyers seems likely.

Property prices in Spain

So what does a buoyant economy and housing market mean for home prices next year? The 2021 trend was upward and everything indicates that 2022 will see a similar scenario. Bankinter currently forecasts a 2% price rise overall next year. It is estimated that the rebound will be greater, particularly in the most requested parts of Spain.

There is certainly plenty of room for growth as Spanish property values ​​remain well below their peak reached in 2007. According to Tinsa’s latest market report, they stood at -29% in October this year. Also, with interest rates still at record lows, few investment products offer the same returns as real estate.

Sales of Spanish real estate in 2022

With savings at pre-crisis levels and the Euribor mortgage interest rate still below zero, everything points to strong housing demand next year. Bankinter forecasts some 500,000 operations, figures similar to those seen for the last time in 2007. Of these, 400,000 would be second-hand sales and the remaining 100,000 for new construction.

Land sales will continue to experience strong growth. Purchases in this sector have risen by around 45% so far this year, a rate that has pushed up land prices in Spain by 11%. Bankinter expects more moderate increases in land prices in 2022 but continuity in demand.

New lifestyle trends instigated by the pandemic have fueled demand for new build properties. These offer larger homes and higher quality finishes, both of which are highly sought after features among homebuyers.

Bankinter says the market could easily accommodate 100,000 new additions next year after 90,000 this year. The figures are in stark contrast to 2013, when development of just 34,000 new properties in Spain began.

The advance of digitization

Experts explain that the arrival of the pandemic has changed the way we live and, therefore, the type of home we need; another of the factors that have facilitated the high increase in transactions in the real estate market. Therefore, technology is positioned as a key link to respond to the new needs of both buyers and sellers.

According to the latest Casavo report, 86% of Spaniards living in Madrid and Barcelona who were in the process of selling a property throughout 2021, stated that they turned to real estate operators. Whether the sale is made on their own account or through the intermediation of a real estate operator, what seems evident is the use of digital channels to advertise the home. 81% of the operators opt for internet platforms and pages, a solution that is also chosen by 77% of the sellers who decide to manage the sale on their own.

Why wait until 2022 in real estate?

Everything within the broader economic context points to a strong year for Spanish real estate in 2022. And with prices and demand continuing their upward trend, it makes financial sense to buy now rather than wait until next year.

If you want to take a look at what is on the market on the island of Tenerife, contact our team of experts. They will be happy to advise you on the best location and the property that suits you best.

Source: El Economista

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Know the details about the State Housing Plan 2022-2025

The new Public Housing Plan 2022-2025 sets medium and long-term objectives to increase the number of homes in Spain, especially social contracting and affordable prices. In this new blog post, we’ll take a look at the main issues addressed by this support program and point out who will be able to take advantage of the grants.

The Official State Gazette (BOE) published Royal Decree 42/2022 dated January 18, which regulates the Public Housing Affordability Plan 2022-2025. After making changes to the 2018-2021 Housing Plan, the programs were geared towards the rental market (as opposed to real estate), as well as increasing the stock of public housing.

What is the objective of the State Housing Plan 2022-2025?

The objective of this program is to increase the number of public housing offers and to establish aid in the purchase of up to 60% of housing by state administrations, their subsidiaries or subordinate organizations up to 60% of the cost. This applies to housing for the purpose of directly replenishing the state housing fund.

Organizations in this category will be able to receive up to EUR 700 per m2, but not more than 50% of the costs or EUR 50,000 euros for each property. The rent cannot exceed 10 euros per m2 and will be calculated for at least 20 years for elderly or disabled people with incomes below five minimum wages. In addition, the Housing Plan includes a program to provide some 15,000 SAREB apartments for social and affordable rental.

What are the benefits of the State Housing Plan 2022-2025?

In addition to the preference for the coexistence model and other new ways in which public spaces receive a larger surface than private spaces. They can get up to €420 per m2, but not more than 50% of the cost, and up to €50,000 per dwelling, which will be rented at a price of no more than €8 per m2 to people earning less than five times the minimum wage.

These are the conditions of the State Plan

The subsidy is granted so that any private entity can provide affordable or social rental housing to autonomous communities and municipalities. The facilities will be provided for a period of at least 7 years on the condition that the regions and municipalities rent them at a price not exceeding 400 euros per month to people with incomes not exceeding five minimum wages.

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Learn about the new Architecture Quality Law

How can the quality of architecture be protected, promoted and fostered? This is an issue on which progress has been made today in Spain. On January 18, the Council of Ministers approved the Draft Law on Quality in Architecture for its subsequent submission to the General Courts of Spain, thus beginning its parliamentary process.

This is a new legislative proposal promoted by the Ministry of Transport, Mobility and Urban Agenda, currently under the direction of the Minister Raquel Sánchez Jiménez. This initiative aims to protect, promote and encourage architectural quality as a good of general interest, promoting links that favor the approach of architecture to society.

Iñaqui Carnicero, General Director of Agenda Urbana y Arquitectura, points out that this law “has found its most propitious context at the present time, since it is aligned with various European and international initiatives promoted recently, such as the New European Bauhaus, the Urban Agendas, the Davos Declaration and the Wave of Renewal”.

A Law to consolidate a new social model

Below we share some excerpts from the statement issued by the Ministry where some of the most important points are delved into, such as the creation of two fundamental bodies to guide action and enhance the role of public authorities.

House of Architecture and Architectural Quality Council

The first of these seeks, among other things, to bring the values ​​of architecture closer to society, becoming a national and international benchmark for the dissemination of the discipline and promoting it as a tool for cultural diplomacy.

On the other hand, the second is constituted as a platform for the exchange of knowledge and participation, as well as for consultation and advice on matters related to the content of this Law, such as promoting the adoption of norms or general measures for the improvement of the quality of Architecture, as well as preparing and disseminating specification models and other guiding documents.

Regulatory framework of the Law

It is a legislative instrument that reinforces the exemplary role of the public administration, promoting the planning of the rehabilitation of the public building stock. Along the same lines, the draft bill includes a series of amendments to Law 9/2017, of November 8, on Public Sector Contracts, aimed at improving the quality of the architecture promoted by the Administration.

Next Generation Funds

The Law is included as reform 4 of component 2 of the Recovery, Transformation and Resilience Plan (PRTR), approved by the Government of Spain to deal with the crisis caused by COVID-19, which focuses on promoting rehabilitation and improvement of the building stock, both in urban and rural areas.

It is also part of the European legislative initiatives to promote energy efficiency, renewable energies and the fight against energy poverty and will promote the application of the “energy efficiency first” principle, in accordance with Recommendation (EU) 2021/1749 of the Commission on September 28, 2021.

A Law born from a process of citizen participation

In its drafting, this future law has been the subject of broad citizen participation, since a multidisciplinary participatory process structured in six tables was carried out, which could be followed electronically and openly. The debates can still be consulted on the website created for this purpose. Round tables were also held with the main affected sectors, the academic and social sector, territorial administrations, professionals and educational centres.

According to the announcement, although the Law was born to respond to an exceptional moment, it also does so with the purpose of establishing a global framework, lasting over time, dynamic and capable of adapting to new challenges and objectives. In this sense, it includes among its objectives the elaboration of a National Architecture Strategy, as a governance tool to implement it.

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Exclusive sale vs. open sale

There are two possibilities when we want to sell a property. We can trust a professional to make the sale or we can try to do it on our own. Even as an individual, you can promote your property by contracting the services of different agencies or real estate companies.

Now, why do people keep using the second method? We believe that the reason is that with this method the owners can have control over the sale. Undoubtedly, the person who sells a property will want to know about everything that happens with his property, so he will consider that by making a direct sale he will be able to control the entire buying-selling process.

This may be a misguided view of how the sale of a given property should be managed. In reality, many people tend to waste money and time doing this type of sale. On the contrary, our recommendation is to leave this task to professionals in the sector who have the necessary tools to efficiently manage the process of buying and selling a property.

Why look for a professional to sell a property?

A professional in the real estate sector is committed to managing the sale efficiently, getting the most out of it while investing the least amount of time. To manage the sale correctly, you will invest in advertising to promote the property on the market, and you will dedicate the time necessary to achieve the goal you set for yourself.

The problem would then be to choose the right professional. How can we do it? To know this, you have to be very clear about some points about what a professional in the sector should do and how it is defined as such. It is very important to take both points into account to avoid bad situations when making the sale.

From Remax Golden Mile we can assure you that it is not a problem or a malfunction of the system. Logically, an inadequate person working on a correct system makes the work inefficient.

Why look for a professional to sell my property?

The professional you decide to choose to manage your sale must present an adequate market analysis. You should also present a marketing plan, as well as a plan of what you will do in each process of the sale. You must report on each visit you make to the property, submitting a report on what is happening with the property. In said report, it must be specified how many people are viewing the property, how many contacts have been received, what are the comments of the clients, etc.

By managing the sale in this way, you can have real control over the sale of the property, not the other way. Each owner must make the choice that best suits their needs. However, our recommendation is that you can choose the option that gives you the best results. If you want to put your property up for sale, contact us and we will manage your request with the best professionals.

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The importance of paperwork when buying a property 29/01/2022 / editorial goldenmile

We must be very clear that at the time of acquiring a property we must assume some budgetary obligations regarding the management of certain legal documentation that said property must have. For example, a notary must be paid to carry out the property registration document, and the corresponding taxes must also be paid. The value of these taxes will depend on whether or not the person buying is a Spanish resident. For example, if the person is a resident, the property transfer tax must be paid, if it is not, another tax model will have to be paid.

Sometimes, due to lack of information or not wanting to add one more expense to the purchase of the home, buyers often skip this important step. It is important to point out to the client who wants to buy a home that said property has an added value above the published purchase price. Then, the acquisition value of a home will consist of the purchase price plus the amount of all taxes generated by this property.

Sometimes it happens when a property is taken that it is in legal noncompliance, for example, it may happen that the person who bought the property did not want to make the corresponding arrangements or was simply poorly advised at the time of acquiring the property. Obviously this can lead to big problems with housing. To avoid this type of inconvenience, at Remax Golden Mile, a simple note is always requested before putting up for sale or buying a property where you can check if the property has any legal fault.

Many agencies select properties without requesting this document, which is essential to put a property up for sale. So, when a client interested in acquiring the property arises, it may happen that it is not registered or presents other legal rulings. If you are a buyer and you are not sure if these procedures were done correctly, we recommend that you request a simple note. With it you can verify if the property is up to date with the legal documentation. Always remember that when buying a property it is important to trust professionals or advisors as they can help you carry out all the necessary procedures.

Always keep in mind that it is the buyer’s obligation to appear at the notary’s office to cancel the corresponding tax and register the property. The writing and cancellation of the registration amount must be made. If this procedure has not been done, the property will always remain as a debtor. This procedure can be done through professionals in the sector. At Remax Golden Mile we have a department specialized in this type of procedure. Contact us and we will help you!

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Investment Fund: Decrease in Property Stock

What is currently happening in the Spanish real estate sector? When is it convenient to buy a property? Is it a good time to buy a home? In the following article we will try to analyze these questions from different perspectives and without any prejudice, of course, based on the objective data currently reported in the real estate sector.

For different reasons we could say that we are currently going through a time of crisis. However, it should be noted that this is a very different crisis from the one experienced by Spain in 2008. At that time there was an economic crisis as a result of market speculation, which generated a financial breakdown in different sectors. This became evident, for example, in the increase in interest rates on mortgage loans granted by entities to buyers.

The consequences of the health crisis

For many years we were building a reality in the sector above the real need that existed at that time. From one day to the next, a large number of properties appeared on the market, which led to an increase in supply and an almost abrupt decrease in demand. Faced with the crisis, even many people who had acquired a property had to give up the purchase because they could not pay for it.

As there was a decrease in purchasing power, market prices logically fell in great proportion to unusual levels, where the cost of sale was not even able to cover even the construction price of the property. Faced with this situation, asset management entities emerged that acquired the large debts generated by the banks. These mechanisms made to a certain extent that the real estate market grew exponentially during those years.

Today, in the post-pandemic era, a new crisis has clearly emerged, but not in the economic sphere but rather in the health field. This new crisis has generated the need for many people to change their way of life, for example, many people have wanted to buy a house abroad; even the so-called work nomads have emerged who have decided to move to quieter and more remote locations to carry out their work remotely.

Increase in demand and decrease in supply

This has generated growth in the real estate sector after the acquisition of new properties. In this sense, and unlike the 2008 crisis, there has been an increase in demand and a decrease in supply. After an analysis based on the properties that currently exist on the market, it should be noted that it is necessary to pay close attention to the current situation. In the current market there is available a fifth of what existed in the market during 2008. Currently, Canaria has 3% of this segment, which adds up to a total of 25 million properties that exist in the Spanish market.

It should be noted that the buildings necessary to meet market demands are not being built either. This is because the pandemic produced a rise in the prices of raw materials for construction, which limited the profit margin of construction companies. From this situation, it can logically be deduced that there will be a rise in real estate prices in the coming months. Clearly we are at a time where there is a lack of stock, that is, where there is much more demand in relation to the supply that we have available in the market.

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The housing boom in the post-pandemic era

Since we entered this new post-pandemic era, approximately in February 2020, we have noticed an important change in the requests made by clients interested in changing or buying a property. For example, many of the people who were already living in a certain place have very soon decided to change their ways of living. This is because their needs have changed. And to what do we owe this change of perspective?

Having to live for a long time locked up in a certain home, and let’s imagine that this property has a small terrace, has obviously led to a lot of rethinking of the form and space where they want to live. Let us even think that there are properties where there is not even a small terrace. Clearly, all these conditions have led people to reflect on their needs.

A change of form and way of living

At this time many people have wanted to make a change, they have wanted to buy, for example, a house with a terrace. Some have even ventured to acquire certain types of properties with very particular characteristics.

It is worth noting, for example, the boom in herrera properties, which have their own market, but which have currently shown notable growth. At Remax Golden Mile, we had the case of one of these properties, which included an orchard to be worked on. The funny thing is that in less than a week he received more than 50 requests for immediate purchase.

A property that is salable

These types of cases make us reflect on the considerations that professionals in the sector must take into account with regard to properties of this type. Let us remember that the fact that someone wants to sell a property does not mean that it is salable, that is, it does not mean that it is suitable for sale in the sense that it has all the documentation in order.

We have noticed the difficulty of putting this type of property up for sale before, since in most cases these spaces are converted into housing, when in reality they do not meet the legal requirements, be it legalization and prescription before the town hall to guarantee that are suitable for habitation.

The work of the real estate agent

For this reason, I not only point out the importance that professionals have at their disposal specialized professionals who know how to manage the proper documentation before the town halls or in the town hall, I also invite these professionals to be aware when selecting the properties they want and they can be sold.

Let’s remember that our job as agents in the real estate sector is to offer salable products for sale and not create or cause problems for those who want to buy a home.