Thursday, June 08, 2006
Real Estate Guide: Selling a Property in Portugal
The following tips are given in the hope they will prove to be of some assistance to sellers, especially when selling a property in which you have enjoyed for many years.
Resale property is viewed by a potential buyer and in the back of his mind will always be the question - "Why is the property for sale?” The Agent will need a realistic answer.
Most sellers have a pre-conceived idea of the figure they wish to receive for their property. As there are many other factors, which affect the value a more realistic view is to obtain some valuations from chosen Real Estate Agents. A good Agent, will take into consideration the sellers point-of-view, plus their professional local knowledge of similar properties and the current market trends. Discuss with your Agent the policy to use in regard to pricing.
The seller should always bear in mind that a buyer is only interested in paying what they consider to be a reasonable price in relation to what they have been shown elsewhere. Instructing the Agent to market the property at a price determined only by the seller often becomes an obstacle in achieving a sale.
Choose your Real Estate Agent carefully, and we recommend that you do not use more than three, as the buyers tend to think negatively about a property that is being handled by "everyone"! Agents often specialize in certain segments of the market, and these should be considered in relation to the selling potential of a property. It is strongly recommended that you have the same market price for all Agents to avoid possible manipulation by prospective buyers.
Prepare a sales package for your real estate Agent.
Arrange for access to the property to be made as easy as possible. The buyers are normally viewing during a short visit to the Algarve and sales are often lost because of limitations created by the seller.
We strongly recommend that a seller carefully thinks about the risks involved before considering handing the property to sell to any individual who is not a Real Estate Agent. If anything later goes wrong these individuals have no legal responsibility in your sale and you may have involved a in serious legal problems.
Many properties in the past were purchased through an Offshore Company. This method places a property in the ownership of a Company that is registered outside Portugal through a Share Purchase Agreement. If the property is already in an Offshore Company it is safe to assume that the buyers lawyer will explain to his client the advantages and disadvantages about this type of ownership may recommend to dispense with the Offshore ownership.
The legal regulations relating to selling a property in Portugal are relatively uncomplicated and the movement of the resulting funds is unrestricted.
If selling is the intention of the owner then it makes very good sense to make sure that the property is placed where it will be best exposed to the potential market.
Firstly, there is the considerable convenience to owners in using a licensed Real Estate Agent - especially owners that are often tend to be absent.
Most Agents spend serious money in marketing their list of products in foreign markets.
Established Agents also enjoy many referrals from past contacts and clients.
Agents will use their professional skill in presenting a property to potential buyers which in turn increases the chance of a sale being achieved.
As most foreign buyers have little or no real knowledge of the Algarve an Agent has to invest considerable time to achieve each sale.
The market system in the Algarve is that a commission related by a percentage of the actual sales value is paid by the seller to the Real Estate Agent. It is not the normal practice for any commission to be paid by the buyer.
Agents will request a seller to sign a legally binding "Contrato de Mediação" which is a document required under law stating the terms of agreement, the details of the property, the price sought, and the commission that is to be paid to the Agent. In Portugal there are occasional agreements between the various Real Estate Agents. The usual position is that a commission is paid by the seller to the Agent that is chosen by the buyer. This is regardless of the possibility of other Agents being involved in the sale.
When an owner decides to sell a property it is necessary to check that they have all the necessary documentation and that it is up-to-date. It is advisable to have this package of documents ready to be given to each of the Real Estate Agents they have selected to represent their interests.
In the case of an Urban property the necessary documentation is as follows:
a) A photocopy of the Habitation License for property constructed after 1951 (Other documents may be required).
b) A photocopy of the Certificate of the insertion in the records of the Land Conservatory.
c) A photocopy of the detailed "Caderneta Urbana" from the Tax Office.
d) A photocopy of the "Escritura" when they originally purchased the property.
e) A photocopy of the Plans of the property.
f) A photocopy of any maintenance agreement, any regulations related to the re-sale or restrictions imposed by a developer.
g) A photocopy of the last payment of the "Contribuição Autárquica".
f) A photocopy of the ID and their "Contribuição Fiscal" from the Tax office for each of the owners named in the "Escritura" document.
In the case of a rural property an extra document is necessary which is a detailed description of the rural part of the property. This is named a "Caderneta Rústica" and it is issued by the local Tax Office.
Promissory Contract - In order to secure the Deal, it is advisable and usual in Portugal to sign a Promissory Contract of Purchase and Sale "contrato promessa de compra e venda", whereby all conditions, for the Sale agreed between the Vendor and the Buyer will be stated including completion date. A deposit is payable at the signature of the said contract and its amount subject to agreement between the parties. This promissory contract is also signed by both the vendor and the buyer and an agreed deposit is paid by the buyer to the vendor (normally 10% of the value of the property). This contract safeguards both parties; should the vendor not complete the sale, he is required by law to repay twice the amount of the deposit to the buyer. Should the buyer not complete the purchase, the vendor is entitled to retain the deposit paid.
Notarial deeds of Purchase and Sale completion is known in Portugal as "Escritura Pública de Compra e Venda" whereby ONLY THEN the ownership of the property is transferred to the Buyer. All the property documents must be submitted to the notary, together with the proof of payment of tax on the transfer of the property known as Municipal Transfer Tax (MTT) whenever applicable. This "escritura" is signed at a Notary's book on the date you have agreed to close the deal. At this same time the balance of the purchase price is paid to the vendor. ¶ 12:17 PM
Resale property is viewed by a potential buyer and in the back of his mind will always be the question - "Why is the property for sale?” The Agent will need a realistic answer.
Most sellers have a pre-conceived idea of the figure they wish to receive for their property. As there are many other factors, which affect the value a more realistic view is to obtain some valuations from chosen Real Estate Agents. A good Agent, will take into consideration the sellers point-of-view, plus their professional local knowledge of similar properties and the current market trends. Discuss with your Agent the policy to use in regard to pricing.
The seller should always bear in mind that a buyer is only interested in paying what they consider to be a reasonable price in relation to what they have been shown elsewhere. Instructing the Agent to market the property at a price determined only by the seller often becomes an obstacle in achieving a sale.
Choose your Real Estate Agent carefully, and we recommend that you do not use more than three, as the buyers tend to think negatively about a property that is being handled by "everyone"! Agents often specialize in certain segments of the market, and these should be considered in relation to the selling potential of a property. It is strongly recommended that you have the same market price for all Agents to avoid possible manipulation by prospective buyers.
Prepare a sales package for your real estate Agent.
Arrange for access to the property to be made as easy as possible. The buyers are normally viewing during a short visit to the Algarve and sales are often lost because of limitations created by the seller.
We strongly recommend that a seller carefully thinks about the risks involved before considering handing the property to sell to any individual who is not a Real Estate Agent. If anything later goes wrong these individuals have no legal responsibility in your sale and you may have involved a in serious legal problems.
Many properties in the past were purchased through an Offshore Company. This method places a property in the ownership of a Company that is registered outside Portugal through a Share Purchase Agreement. If the property is already in an Offshore Company it is safe to assume that the buyers lawyer will explain to his client the advantages and disadvantages about this type of ownership may recommend to dispense with the Offshore ownership.
The legal regulations relating to selling a property in Portugal are relatively uncomplicated and the movement of the resulting funds is unrestricted.
If selling is the intention of the owner then it makes very good sense to make sure that the property is placed where it will be best exposed to the potential market.
Firstly, there is the considerable convenience to owners in using a licensed Real Estate Agent - especially owners that are often tend to be absent.
Most Agents spend serious money in marketing their list of products in foreign markets.
Established Agents also enjoy many referrals from past contacts and clients.
Agents will use their professional skill in presenting a property to potential buyers which in turn increases the chance of a sale being achieved.
As most foreign buyers have little or no real knowledge of the Algarve an Agent has to invest considerable time to achieve each sale.
The market system in the Algarve is that a commission related by a percentage of the actual sales value is paid by the seller to the Real Estate Agent. It is not the normal practice for any commission to be paid by the buyer.
Agents will request a seller to sign a legally binding "Contrato de Mediação" which is a document required under law stating the terms of agreement, the details of the property, the price sought, and the commission that is to be paid to the Agent. In Portugal there are occasional agreements between the various Real Estate Agents. The usual position is that a commission is paid by the seller to the Agent that is chosen by the buyer. This is regardless of the possibility of other Agents being involved in the sale.
When an owner decides to sell a property it is necessary to check that they have all the necessary documentation and that it is up-to-date. It is advisable to have this package of documents ready to be given to each of the Real Estate Agents they have selected to represent their interests.
In the case of an Urban property the necessary documentation is as follows:
a) A photocopy of the Habitation License for property constructed after 1951 (Other documents may be required).
b) A photocopy of the Certificate of the insertion in the records of the Land Conservatory.
c) A photocopy of the detailed "Caderneta Urbana" from the Tax Office.
d) A photocopy of the "Escritura" when they originally purchased the property.
e) A photocopy of the Plans of the property.
f) A photocopy of any maintenance agreement, any regulations related to the re-sale or restrictions imposed by a developer.
g) A photocopy of the last payment of the "Contribuição Autárquica".
f) A photocopy of the ID and their "Contribuição Fiscal" from the Tax office for each of the owners named in the "Escritura" document.
In the case of a rural property an extra document is necessary which is a detailed description of the rural part of the property. This is named a "Caderneta Rústica" and it is issued by the local Tax Office.
Promissory Contract - In order to secure the Deal, it is advisable and usual in Portugal to sign a Promissory Contract of Purchase and Sale "contrato promessa de compra e venda", whereby all conditions, for the Sale agreed between the Vendor and the Buyer will be stated including completion date. A deposit is payable at the signature of the said contract and its amount subject to agreement between the parties. This promissory contract is also signed by both the vendor and the buyer and an agreed deposit is paid by the buyer to the vendor (normally 10% of the value of the property). This contract safeguards both parties; should the vendor not complete the sale, he is required by law to repay twice the amount of the deposit to the buyer. Should the buyer not complete the purchase, the vendor is entitled to retain the deposit paid.
Notarial deeds of Purchase and Sale completion is known in Portugal as "Escritura Pública de Compra e Venda" whereby ONLY THEN the ownership of the property is transferred to the Buyer. All the property documents must be submitted to the notary, together with the proof of payment of tax on the transfer of the property known as Municipal Transfer Tax (MTT) whenever applicable. This "escritura" is signed at a Notary's book on the date you have agreed to close the deal. At this same time the balance of the purchase price is paid to the vendor. ¶ 12:17 PM
