How to sell a house in Spain .. could it happen here

Translation of an anonymous comment left on a blog

"Officially, house prices in Spain have dropped 5%. In the meantime, the financial institution in which I work (and I imagine the rest of the banks) has been offering real estate, recently taken back from promotors in lieu of loan repayment or foreclosure, out the back door to its employees at discounts of 35% from original prices - with 100% financing. Almost all were sold within a month.

Also, they are offering foreclosed homes from individuals at substantial discounts, rather than selling them by auction, as would normally be the case. … house.html

There’s always been a dramatic difference between new build and second hand prices in Spain, particularly when you’re looking at properties being sold to foreigners.

The interesting bit is the selling to it’s employees.

Spain has always been a very dodgy place for buying property.
Basicially the buyer and the vendor agree on a price (e.g. 200k).
Just as they are about to sign, the official price is reduced to 120k and a large cash sum is presented to the seller in a suitcase.
This happens in the solicitors office and is expected by both sides.
It is the norm.

Unfortunately being so ‘cash friendly’, Spain has become a haven for European and Russian criminals. Its lack of extradition treaties help as well.

Talk about inviting trouble !

Over 40,000 EAs closed up business in Spain in 2008. Some of the Spanish banks sell repossesed gaffs on their official websites.

Also true in Portugal though the mechanism is slightly different.

Here the buyer and seller first discuss the real price and then agree on what (reduced) price to put on the contract. Depending on the level of trust between the parties, the remainder is handed over either before or after the sign-off. Banks will allow this hand-off to take place on the premises, out of hours or in behind the counter.

So institutionalised is this practice that banks will even give two loans on the one property - the first is the official mortgage to cover the part on the document which is registered, and the other for the extra portion (so as not to arise suspicion by having mortgages that are officially 150% of the registered value). This 2nd loan is typically done as a home improvement loan and so interest rates are higher than normal mortgage rates, so the banks even make money on it.

And no-one bats an eyelid.

It is said in Spain that there are as many €500 notes in the system as €20 notes.
Just that they are never ever seen in public.
Visiting any town in Spain is also quite an experience, as they build high so cranes are always in use - and the empties are very hard to hide.
A trip around Madrid on any of the ring roads gives you quite a shock, but go to any large town/small city, and you will see much the same, cities expanding at an enormous rate, and the same as in Ireland, immigrants arriving in huge numbers to build and live in the empties.
On a recent trip out of Barcelona, I travelled about sixty kms before I got out of the ribbon development - a narrow strip was built up the whole way out, and this wasn’t along the coast, but inland.

Absolutely. From a planning point of view, the Iberian peninsula makes Ireland look like a well ordered Swiss canton. … ghost.html

1 hour Spanish TV documentary

Yeah, crazy system. I know of one pair who were trying to sell their property in the south of spain as they were leaving to come back home. When they went to meet the buyer he said he only had half the cash so could he give them the rest the next day. They insisted on waiting so he got the rest for them after a few hours. On their way to the airport a pickup with three masked men with bats started flashing them and trying to get them to pull over. Fortunately they were in a land cruiser so they kept driving and the pickup eventually gave up.

My understanding is that in Argentina the same shit happens, but the level of trust is such that both sides usually have men with AK47s present to make sure things happen as arranged.