Many buyers are asking this question. For many years it has been normal practice when buying in Spain for a buyer to be requested to pay over a sum of money to remove the property from marketing activity until such a time as a purchase contract can be signed. These sums range between 3k to 6k.
Back when this general practice started it was true that there were more buyers than property and to not put down a reservation fee would certainly risk the property being sold to another individual as everyone stampeded to buying their dream home or investment in Spain.
Despite quite clear changes to the market the practice of taking a reservation fee has not changed and it is still always requested by agents determined to get some financial commitment to a property before a client can get back on a plane and in case they suffer from buyer’s remorse.
Is it still necessary?
Probably not. Whilst there are still good properties around that have more than one buyer interested, given the amount of property for sale the chances of another buyer coming along and buying before all the necessary legal checks etc are done and a contract can be signed are remote.
The reservation is normally not refundable and even where instances of clauses are included, like subject to mortgage approval, papers all in place etc the piece of paper itself is worthless in a court of law in Spain. This means you have little to no protection if the seller or agent refuses to pay back the reservation monies.
Where the reservation fee is taken as refundable this is normally refundable for a very short period and a period of time that is unlikely to allow for full legal checks to be done and or a mortgage approval to be arranged and valuation where required undertaken. This means in reality if you pass over a reservation it is most likely it will not be refundable if you need to back out.
Most good agents would not of course keep your money and there are plenty of examples of people getting back reservation fees because for whatever reason they have decide to back out but why take the risk.
The only benefit is the reservation fee technically removes the property from the market. The reality however is very different. It is most likely more than one agent is marketing the property and should another buyer be found before you can get to purchase contract the seller has no obligation not to take another offer. Whilst if you pull out you risk losing your reservation fee there are no penalties for the buyer pulling out, they just have to return your money to you.
The best advice, unless you genuinely believe you will lose the property of your dreams is, never to put down a reservation fee. Make a formal offer in writing via the agent subject to contracts. If your offer is accepted appoint an independent lawyer and ensure that all necessary checks and searches are done as quickly as possible and sort your finances so you can safely move to purchase contract at which point the property is secured.
Occasionally a seller will not accept an offer without some indication of financial commitment, if this is the case make sure any reservation fee is passed by your lawyer and that the monies are instructed to be held in yours or the sellers lawyer account not the seller or the agent direct.
If you appoint a lawyer before you visit Spain to act on your behalf, and arrange a mortgage approval in principle before coming to look at property you will be able to move at the optimum speed that will help you secure the property but in no way risk any of your hard earned cash.