Want to buy a house in Spain? Then you are sure to come across properties for sale from “bank repossessions. But, what does bank repossession mean in Spain? Why is it that so many houses and apartments were/are sold out of bank repossessions in Spain? Is it still interesting to buy a property from Spanish bank repossessions today? What should you pay attention to?

What is bank repossession?

If you are looking for a house or apartment in Spain, you regularly come across houses under the denominator ‘bank repossession’, ‘from the bank’, ‘forced sale’ or ‘repossessed by the bank’.These are houses that have to be sold by force. Especially during real estate crisis of 2007-2008, many properties came on the market in Spain at bargain prices.

Indeed, during the previous decade, Europeans had invested massively in Spanish real estate at a fairly high price. Many people had taken out loans to do so because interest rates were low at the time. Some even bought several apartments or houses at once. When the crisis broke out, they could no longer pay off their heavy loan(s) and had to sell their investment at a loss or have the mortgage lifted by the bank.

The bank as a broker

This left the banks in possession of a mountain of real estate. This is “bank foreclosure. Since the banks did not want bricks but euros in their portfolio, they disposed of the real estate to get back the money lent. This was done far below market prices with discounts of 50% to 70% off the original purchase price. A lot of individuals took advantage of this bank repossession to buy a villa in Spain.

But, just to clarify: a property out of bank repossession does not always have to be a property dating from the crisis. It could just as easily be a contemporary new construction whose owners could no longer pay the loan.

Points to consider when buying out of bank repossession

• If you are purchasing a house or apartment out of bank repossessions in Spain, there are a number of things you need to pay attention to:
• Despite their financial expertise, banks are not real estate experts. Their goal is to recover as much lent money from their property portfolio as possible with as little cost as possible. As a buyer, don’t expect comprehensive services or support from the bank. They usually do not offer much negotiating room.
• Bank foreclosures also sometimes offer apartments or houses from bankrupt developers. Here you should watch out for building defects that were never identified because the project was not completed. In addition, pipes and appliances that have not been used for years can cause problems and additional costs. Be sure to have the permits checked because some developers start building before they even get the green light. If they then go bankrupt, the permits are still not in order.
• Are you buying a home in a bank-owned urbanization? Keep in mind common costs for maintaining and repairing common parts (walls, roofs, halls, stairs, garage, pool, garden…). Check if there is an owners’ association and by how many owners the costs should be borne (the fewer owners, the higher the costs for that you have to pay).
• Have you seen a bargain? Online everything always looks nice but be sure to check on site. You can’t see problems and defects in photos. Keep in mind that after the crisis, bank clerks first bought up the best properties themselves. But, new properties are still being added by: companies going bankrupt, individuals who can no longer pay off their loans,….
• It is advisable to hire a lawyer specializing in real estate transactions to guide you through your purchase. This way you can be sure that everything is done correctly and that you will not have any surprises later on.
• Normally, the sale of a home out of bank foreclosure goes through a real estate agent and a lawyer. The lawyer will check everything such as the building permit, land registry number, whether the community fees have been paid, whether there is an outstanding mortgage, property tax, etc. These costs must all be settled before the sale goes through, this is also the case with a private sale. Only when everything is approved can the sale go through.

Is buying a property in Spain from a bank repossession still interesting?

In general, if it is too good to be true, it is not interesting. The fact is that just after the crisis there were a lot of bargains to be had on the Spanish real estate market. Today, there are certainly beautiful homes for sale out of bank foreclosures. But, there are virtually no more bargains to be found. The Spanish Consumer Union (OCU) warned back in 2015 that properties from bank foreclosures are not always cheaper than houses and apartments offered through a real estate agent or privately, and that you should be careful about dumping prices because there is often a catch.

Nevertheless, the Spanish real estate market is still attractive today. You get great value for money and the wonderful year-round climate comes with it for free. Ideal for bon vivants! The difference with the period just after the crisis of 2