When it comes to buying a property in Portugal, there are several steps to the process which you will need to go through over the course of searching and buying.
The first thing you need to do when deciding to buy a property in Portugal is to determine what you can afford. You need to determine if you are going to require financing and you have sufficient funds to cover the down payment and closing costs. (Please see buyers closing costs for more information.)
Once you have determined how much you can afford to spend on a property, it is time to decide which real estate agent you want to work with. There can be a tendency to work with several, however, from our personal and professional experience, this can lead to a lot of confusion.
Portugal does not tend to have an exclusive listing market and a number of agencies will also work in partnership with one another.
Our advise: pick someone you have a rapport with, whom you trust and who you feel will keep your best interests at heart.
During the course of this conversation with your agent, you will need to consider the location, type, size, age and condition of your dream property. You can expect your agent to ask you a number of questions based around your requirements.
Things like how you intend to spend your time, what specific usages you may need in the home, if you will be there full time and so on…
Once the details of your property requirements have been outlined, you can begin touring properties that fit your requirements and are within your price range. This can take anywhere from a day or two to several months.
Our advice: Make sure to take some notes on each property you visit.
If you are travelling specifically to Portugal for the intention of viewing and finding a property, you will likely see around 4 to 5 houses in a day. Anymore and this can become overwhelming. Even with just this number it can become difficult to remember everything about the properties you see.
Once you have found a property that matches your needs, the normal procedure is for the agent you have been working with to make a reasonable offer to the seller of the property.
Our advice: Make sure your offers is fair and reasonable.
Most sellers tend to price their homes a little on the high side, so while some offers are accepted immediately, it can be expected that you may need to enter into negotiations. Your agent will oversee this on your behalf to ensure you reach an agreed-upon figure that both you and the seller are happy with.
A good agent will be happy to provide you with a CMA (comparative market analysis) of properties recently sold in the area. This way, you can see how competitive your offer and the property you are looking to secure are.
At this point, it is very important that both parties fully understand what is and is not being included in the purchase.
Once an agreement has been reached that both parties are happy with, it is standard procedure in Portugal for the buyer to then make a reservation (earnest) deposit. Normally in the region of 5000€. This amount is normally lodged in a client account held by your lawyer.
At this stage, this is not a legally binding contract. However, it shows a gesture of good faith to the seller that you intend to complete the purchase, allowing them the security to remove the property from the market so that due diligence can take place and no other offers may be entered or accepted.
Often referred to as the CPVC (Contrato de Promessa de Compra e Venda), The promissory contract is what is considered an exchange contract in the UK. This is a legally binding agreement, which, in Portugal, comes with penalties should either party wish to break it.
Our Advice: Before you go ahead and sign the promissory contract, ensure you are in a position to move forward with the sale and have the necessary funds in place for the promissory contract, which is generally around 20-30%.
Before completing the promissory contract, your lawyer will have undertaken a number of searches on the property. Specifically, to check that the legal classification of the property is correct, a title report is needed to confirm that the person selling it is legally the owner of the property and that the land is registered to them. Your lawyer will also check that there are no liabilities or restrictions registered against it, such as liens, charges, or claims by the tax office.
Within the promissory contract, your lawyer will set out the agreed sale price, who the buyers and sellers are, dates for completion, what is included in the purchase and any clauses that the contract is subject too - This could be stage payments, subject to loan approval or other things.
Also to point out here, that if you are buying with a mortgage then an appraisal will be required as standard by the bank offering finance. However appraisals and home inspections (surveys) are optional in Portugal and at the buyers discretion.
The final stage of the purchase is the public deed, or escrita, as it is called in Portuguese. This must be signed in front of a notary, who will check all the documents relating to the sale and purchase to ensure everything is correct. It is at this point that the balance of the purchase must be paid in full. If doing this with a mortgage, then the bank will be present alongside your lawyer to hand over a bankers draft for the amount financed. Once this has been completed, the property is then legally yours and your lawyer will set about transferring the land register into your name.
Our Advice: Plan ahead. If you cannot be present for the signing, make sure you have set up a power of attorney well in advance.
The original deed will be held on file in the notary, and a certified copy will be issued to you for your own records.