A Practical Guide to Buying a Home
Buying a home is one of the most important decisions we make in life, both because of the impact it has on our daily quality of life and because of the significant financial commitment it entails. When choosing a home, there are many factors to consider before finally deciding to buy. This article outlines all the key factors to consider in order to make the right choice and ensure the success of the operation, regardless of the importance of seeking professional advice.
1. Things to Consider Before Buying.
What is my budget?
In addition to the maximum amount you can allocate toward the purchase of a home, you must take into account other additional expenses, such as closing costs, taxes, etc., which amount to an additional 9–12% of the home’s total value.
Where do I want to live?
You need to consider emotional factors and your goals, such as maximum rent, proximity to public transportation, healthcare services, schools, high schools, and daycare centers, shopping areas, stores, grocery stores, recreational areas, sports facilities, outdoor activities, green spaces, proximity to work, and ease of parking…
What kind of housing do I want to live in?
Private-market housing (unregulated in terms of price, though it follows market trends) and affordable housing (reserved for families whose income does not exceed established thresholds). Both types can be new construction, pre-owned, or renovated. In homes that have never been occupied, it’s common for them not to have utility contracts for water, electricity, or gas. Setting up these services can be a significant expense.
You should also consider factors such as:
- Single-family home or apartment.
- New construction or resale property.
- Total, built, and usable square footage.
- Preferred floor level (1st, 2nd, penthouse, etc.)
- Views.
- Construction quality.
- Condition.
- Size.
- Number of bedrooms.
- Floor plan.
- Ceiling height.
- Natural light.
- Number of bathrooms.
- Built-in closets.
- Air conditioning.
- Elevator.
- Parking spaces.
- Terrace.
- Common areas.
- Energy efficiency, rated from A (very efficient) to G (very high energy consumption).
What are the advantages of seeking professional advice?
They are industry professionals. They specialize in specific areas. They know market prices. They have strong negotiation skills. They save you time. They help maximize the value of your home. They find the right property for you. They conduct property viewings. They handle all the paperwork.
What is the legal status of the property?
You must consider factors such as whether the seller is the owner of the property, whether there are any encumbrances, leases, or special housing regulations, whether it is a condominium or a multi-unit building, any outstanding taxes, insurance, energy efficiency certificates, any legal disputes, the certificate of occupancy, zoning compliance, the building’s technical inspection, the building assessment report, and utility bills…
2.- What are the essential elements of a sales contract?
Consent of the parties. The contract is formed and becomes binding once the parties agree on the price and subject matter of the contract, regardless of whether the home has been delivered yet. Subject matter. The home being purchased. Price. It may consist partly of money and partly of something else.
3. Formalization of the contract.
Preparation of the contract. Given the financial significance of purchasing a home, the contract involves several preliminary steps, such as a letter of intent, preliminary negotiations, a preliminary contract or promise to buy, and a purchase option. A letter of intent is a unilateral document that expresses the intention to begin negotiations and make offers. Preliminary negotiations aim to establish the parties’ mutual intent. The parties assume certain obligations, such as acting in good faith, providing information, maintaining trust and confidentiality, refraining from negotiating with third parties, and avoiding harm to the other party.
A preliminary contract or promise of sale is a preliminary agreement that may lead to a preliminary contract prior to the final contract. A purchase option is a contract in which, among other things, the seller is obligated to make the property available within the agreed-upon timeframe, not to sell the property to a third party, and to sell the property when the purchase option is exercised.
Reservation and Deposit. Through a deposit agreement, the buyer reserves the right to purchase a home by paying a sum of money. Depending on the type, these may be: Confirmatory deposits: The amount is applied toward the purchase price of the home as a sign of the contract’s execution. Compensation may be sought if the contract is not fulfilled.
Conclusion and Formation of the Contract. The contract for the sale of a home is formed by the consent of both parties to enter into the contract, through an offer and its acceptance, and from that moment on, the parties are bound to fulfill the terms of the agreement.
4. Purchasing a home for rental.
Data published by the Bank of Spain as of September 3, 2015, show a rental yield of 4.7%, with yields of 5% in Madrid, 4.7% in Barcelona, and 5.45% in Alicante, making them among the most profitable cities for rental investments. This yield is calculated after taking into account expenses such as property tax, garbage collection fees, homeowners’ association dues, home insurance, and costs associated with the purchase of the property (fees, notary, registration, etc.).