Regular readers of this Blog will know I have always maintained a prudent sense of “skepticism” regarding quoted property prices here in Mallorca. While not all prices are inflated it is true that owners have a tendency to add a generous slice of “hope value” to the price they put on their properties (or on occasions seem a little deluded in respect of the value their “prize asset”!!)
So it was of little surprise to to see this quoted in the Mallorca Daily Bulletin a few weeks back:
“Antoni Gayá, the president of the Association of Real Estate Services, says that property prices in the Balearics are over-inflated. One of the “great problems” with the islands’ property market is that prices demanded have “little to do with the market price” and are typically between 20 and 30 per cent higher than their real value. He stresses that this is not an issue confined to Palma but one that exists on all the islands and that excessive prices apply both to properties for sale and for rent.
With properties for sale, Gayà notes, these can often go unsold for several months because the price is too high. Owners don’t want to lower the price, but in some instances do end up dropping it. Official figures suggest that the eventual sale price is often lower than the original advertised price”.
So if you are a buyer what should you think and do? Excuse the cliche but let’s start with “buyer beware”!! That is always a good starting point. Then comes “buyer become informed”, and what I mean by that is we can’t just rely on headline catching figures quoted in the local rag!! I am sure there are some properties where the quoted asking price is 20-30% over the odds (I suspect there will be a few others even more over priced!) but equally there will be properties where there will be a much more usual “margin” to negotiate of 5 or 10% which we are all accustomed to! And to be fair there will always be a few properties that are “priced to sell” and where what is being quoted is a fair reflection of the underlying value of the asset.
What I worry about with these headlines is that buyers could think they must try to negotiate at least 20-30% off any property price to ensure they are not being “done” (so to speak!!!). If one adopted this tactic I suspect I can almost guarantee the buyer will never buy, or if they eventually do, it will be at a lower discount and they will spend the rest of their days wondering if they have overpaid, rather than enjoying their wonderful home in Mallorca!!!
So what should one do? Take each property in isolation, don’t use headline figures, and analyse the quoting price, or any value you know a deal can be struck at – ie get informed and / or be represented by someone who is informed and honest and can help you identify the underlying value(s) of the individual properties before you start negotiating!! Cue Novi Property Mallorca!!!