38 | BMV NEWS
SPAIN
Is the Spanish BMV market a myth?
The Spanish property market is in too much of a mess for a real BMV market to exist, according to agents specialising in distressed property in the country. Struggling developers, desperate
homeowners and banks stocked with repossessions are all setting their prices according to how badly they want to sell, meaning a benchmark price is virtually impossible in many of the tourist hotspots. And without a standard to measure against, agents are left to secure whatever price they can for each situation.
The value of mortgages
“Something is worth what someone
else is prepared to pay for it and that’s that,” said Inez Rix, owner of Direct Auctions. “You have an open market price (not value), a bank valuation (upon which they base their lending), the offer price and the declared price at notary!
CYPRUS
Recovery service to solve mortgage problem
A new company is hoping to provide a way for buyers who cannot secure a mortgage to purchase a holiday home, while removing distressed stock from the market. Marcus James Recovery, part of
UK-based financial services company Marcus James Group, matches distressed vendors who can no longer afford their foreign mortgages payments to buyers who do not have large deposits.
Freeing sellers
The company arranges for the buyer to take over ownership of the property and the mortgage payments, leaving the seller to walk away without the property being repossessed. “They do lose their initial deposit…
but by and large they are delighted that we have developed a scheme that allows them to walk away legally,” said the firm’s managing director, Tony
Barker (pictured).
The cost of each property to the
buyer depends on how much of the mortgage has been paid off and so could be above or below market value if the property was bought at the top of the market. But the scheme also helps to stop distressed sales from pulling market prices down, said Barker. “Although the properties could be
sold at more than market value, they usually have around a 20-25% deposit already paid and often come fully furnished. “And anything that maintains
mortgage payments on a property is good for the market. This will help maintain the value of the properties and go some way to keeping the market more buoyant.”
Matchmaking | MJR finds buyers to take over distressed sellers’ mortgage payments
Expansion plans
The company has been operating in Cyprus since December 2009 and claims to have arranged agreements for around 50% of sellers. It plans to
expand its business to Spain and other markets and is working with agents to source vendors and buyers. It charges sellers £495 plus VAT to
list their properties and charges buyers £5250 in fees, including legal costs. Agents are paid a referral fee out of these charges.
No wonder there is no benchmarking.” The problem is so severe that one
unit might be on sale for 50% less than the identical unit next door, said Darren Carter, owner of distressed agent Goldberg & Partners. “It all depends on the seller, the buyer
and even the weather or what week it is as to what price will be agreed. A developer or bank might have sold three units at one price last week and not want to sell at the same price this week.”
Varied prices | Similar units in some developments can differ in price by up to 50%
The value of mortgages
The ability to sell at a below market value is also hampered by the banks’ mortgage regulations. In Portugal, developers are offering units with 100% LTV mortgages by fixing prices at 80% of the lending bank’s valuation, effectively removing the need for a deposit. “In Spain this isn’t legal as the Bank
of Spain ensures their normal lending criteria is adhered to,” said Rix. “In order to achieve a percentage of borrowing against the higher bank valuation, one now has to obtain a doctored purchase contract.” Carter added there are now better finance deals for buying bank product
in Spain, “even 90 or 100% LTV on the price of the property but not including closing costs”, but the mortgage market has become too dynamic. “It feels like banks will offer one LTV
one week and a different one next week once they’ve got their quota for the month.”
www.opp.org.uk | APRIL 2010
MARKETING
DEVELOPER
BUSINESS
DESTINATION
PEOPLE
INDUSTRY
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