Property Advice: Reselling
NOTE: Below is a short guide to selling your property, if you'd like our full Resales Information pack please contact us today.
To make any money from buying property the emphasis must be put on Reselling the property at a later date, and for more money that originally paid.
There are a number of ways to sell your property and a lot of different agencies willing to list your property for sale. The best way to determine your "selling strategy" is to understand how each of the choices you make regarding the selling process affects your profit.
Who Should I list my Property with?
For most people, the first option should be to list the property with the agency that sold you the property in the first instance. Assuming you were happy with the service received then it's a good start.
Other than that, you should decide if you want to have it listed exclusively with an agent, or non exclusively with many agents. There are pros and cons for each of these choices. The benefit of having it listed exclusively is that agency will focus on that property more than any of their non-exclusively listed properties. This means if the agency has a lot of clients you will have a good chance of them seeing your property, which of course would mean a quicker sale.
However if there are only a few clients, then it is highly likely you would not receive many clients which in turn results in the property being on the market for some time.
If the above is true, then you want your property to receive the most exposure as possible. List it with a large agency, which perhaps will not be limited in their number of clientele and have large shop presence. The idea here is basically get it in the windows and get people looking at it.
Unfortunately the longer it takes to sell, the harder it will be. As with any property if you are shown a property that's been on the market for a long time, you immediately wonder why! It's no different here. You should hope to sell within 6 months, as long as you chose the agency or agencies well, and set a realistic price.
How much will it cost?
Typically most agents will charge a 5% commission based on the price the property sells for. This figure is also subject to I.V.A. tax which is currently 23%. For example a property selling for €100,000, would mean a commission of €6,150 would be paid to the agent (€5,000 + €1,1500 I.V.A.). It is worth bearing in mind that these costs ARE a deduction against any capital gain made on the sale.
Although the commission paid outside the UK and Ireland are higher, it is worth noting that trying to list a property with any agent for a 1% commission is a futile action.
Other Property Costs
There will also be a costs incurred to hire a lawyer to act on your behalf in the process. Although the cost is minimal on the sellers side, and in most cases if you have been happy with the services of the lawyer you employed to purchase the property you would be advised to use the same one, as they will have the original file with any pertinent details relating to the property. It is normal for a small charge dependant on the lawyer, but €500 - €1,000 would be acceptable.
Capital Gains Tax in Portugal is set at 20% for non residents, it is worth noting however that you should declare ALL your earnings in your country of residence as there may be additional funds to pay, or you may be entitled to claim back part of the tax paid in Portugal.
What price should I list my Property for?
There are many factors to take into account when setting a sales price. You will of course be given a suggestion by your listing agent, and in most cases you should follow their advice. Remember the only reason any property doesn't sell is the price. If it's too high, no matter what you may think, it will not sell.
If you wish to ascertain a price yourself, the easiest way to do this is to have a valuation carried out on your property, which will cost around €300 and will be the only certainty of the value which the banks would attribute to the property.
For those properties in an apartment complex, it may be a good idea to obtain the sales prices of those around yours and compare these; the key factors are size, quality, and age. Other factors to take into account are the actually facilities and upkeep of the development. A nice looking garden and pool area are a huge plus when reselling.
Ultimately the price you would hope to achieve is at least 50% of the money invested in the property assuming you keep it for 5 years. For example, you bought for €100,000, and invested €30,000; therefore you should look to make at least €15,000 from the sale. A sales price of €125,000 would therefore be sufficient. If you take this example as a bottom line figure, you should, assuming you bought smartly, have a bit of room for increased profit.
Furnished or Unfurnished?
It is no secret that having furniture in your property when showing people around, makes it a lot easier to sell, and gives a much better impression of the room sizes. However it is worth noting that, “unique” furniture is not always a plus! Large dressers and nightstands can make a room look cluttered and smaller than it actually is.
If you intend to leave the furniture, do not expect to make any more money because of this, however it is an added incentive and provided the furniture was not a €50,000 custom made package, leaving it for the new buyer is probably the better option.