Are prices of Spanish property bottomed out? Yes and no!

August 31, 2009 - Posted By (Admin) in (News)

Everybody seems to be talking about the credit crunch and the economy nowadays and everybody has an opinion of his own. Probably one of the heaviest discussed subjects are the local property prices and predictions whether they have bottomed out or will fall more.

I would like to share our point of view on this subject. Before I do this I would like to state one thing that is very important: nobody can see what the future brings and nobody can say with certainty what property prices will do, one can only give his opinion.

Now the big question is: Have the property prices of Marbella property bottomed out or not?

My answer is: Yes and No......and maybe!

I will explain myself a little better. Yes is because some properties can be bought at great discounts, some of them are marketed at bottom prices and other ones although still marketed at higher prices, simply by making an offer (cash will help) can be bought at bottom prices

No is because a lot of vendors still have not adapted to the changed climate. They still keep on to their prices they thought to get two years ago. They might move a little down but not much. These people simply will not sell the coming ..... years. The dotted line is the starting point for my explanation of the third answer...maybe.

Now the maybe is because who can tell with certainty what the future holds. The greatest experts all have their own predictions and 90% of the time they are wrong. Simply because unexpected things happen. Sentiments can change very quickly and although we are in a very negative sentiment right now this could change quite fast.

BUT........ a negative sentiment can go even more negative just as fast or faster. Although we think some properties can not get any cheaper if sentiment changes they can, because in the end a property is worth what the client who is looking for that type of house wants to pay for it. (ok the seller must be ready to let it go for that price but sellers are not in a very strong position now)

We have seen properties priced at the top of the market for 1.2 million being sold for 550.000 euros. But we also have seen properties being offered at 600.000 euros for 550.000.

Now who has done a better deal? The second property was marketed in the top of the market for 800.000 euros and the property dropped price a couple of times until the asking price was at its bottom (the vendors absolute bottom) of 600.000. From there very little negotiation space was left and the property finally sold for 550.000 euros. Great deal or not?

The first property was marketed when it was sold for 925.000 euros. An offer of 500.000 euros was brought in (700.000 euros less than the initial asking price) and it finally sold for 550.000 euros. Great deal or not?

If it is a great deal or not depends. Obviously if the sentiment gets more negative it might not be, but in general we expect these people to have done a great deal.

But....I think in the whole discussion a lot of people forget an important detail!

Are you looking for the house where you can get the most discount?......Or do you simply want a great house?

If the second one is your answer than I advice to stop looking for your bargain but instead create your own. How?....

Quite simply, look for the property that suits you and then just try to negotiate a price you feel comfortable with. If you can´t get it for that price don´t do it, if you can great. Now if you get the house you really want for more money than the bargain around the corner that had a couple of downsides for you, did you do a bad deal?.......... Make that one up for yourself, but our opinion is that you have always done a better deal paying a little more for a great property on a great location than when you have paid a ´great low price´ for a not so good property.

Ok I am strolling of from the core of this subject. To get back to prices bottoming out do your market research and compare all similar properties and you will find which properties have been bottomed out and which not.........Simple as that, it is not rocket science. All you need to do is search for the house you like and compare if the price is competitive. If not do not get scared away yet, ask the owner or agent if you can discuss the price and try and make an offer you feel comfortable with.

Key to having success is starting at an offer that is low enough to make sure you can get to a price where you feel good and high enough that you do not lose interest from a vendor.