How to Sell a Financed Property: A Step-by-Step Guide for a Secure Sale

Selling a Financed Property in Portugal

Evaluate the Conditions of the Current Financing

Before starting the sales process, it is crucial to understand the terms of your property financing. Familiarize yourself with the interest rates, repayment schedules, and any penalties for early repayment. Some banks in Portugal allow the transfer of the loan to a new buyer, which can be a viable option for both parties.

Gather the Necessary Documentation

Selling a financed property requires a set of specific documents. Key among these is the Property Registration Certificate, which verifies the property’s status in the registry, including ownership and associated liabilities. The Tax Registry Certificate, issued by the Tax Authority, provides fiscal details about the property, including its description and valuation. Lastly, the Loan Agreement outlines the financing terms and remaining balance, ensuring the buyer is fully informed about the financial commitments. Having these documents organized speeds up the process and ensures transparency, making the transaction smoother.

Consider Paying Off the Outstanding Loan

One option for selling a financed property is to pay off the remaining loan balance before selling. In Portugal, some banks allow early repayment without significant penalties, but confirming if fees apply is essential. While this simplifies the process, it requires sufficient resources for settlement.

Explore Loan Transfer Options

Another alternative is transferring the loan to the new buyer. This process, known as a "contractual position transfer," involves the buyer assuming the seller’s loan. However, it requires the bank’s approval and confirmation of the buyer’s financial capacity.

Property Valuation: Essential for a Fair Sale

Before setting a selling price, it is advisable to have a professional property valuation. Engel & Völkers offers property personal valuation services to determine the market value based on the property’s location, features, and condition. An accurate valuation is key to attracting buyers and ensuring a fair sale.

Set the Sale Price Based on the Loan Balance and Market Trends

When selling a financed property, it is important to consider both the loan’s remaining balance and the property’s market value. Ideally, the sale price should cover the outstanding loan and yield a profit. Expert guidance from a reputable real estate agency, such as Engel & Völkers, can help set a competitive and appealing price.

Use a Real Estate Agency for a Smooth Process

Engaging a real estate agency is particularly beneficial when selling financed properties. Engel & Völkers boasts a team specialized in the Portuguese market and experienced in handling the nuances of financed property sales. From managing documentation to negotiating with banks, their expertise can streamline every step of the process.

Stay Informed About Tax Implications

Selling property in Portugal is subject to capital gains tax, calculated on the profit from the sale. To determine this, factors like the original purchase price, loan balance, and sale costs must be considered. Consulting an accountant or tax specialist can be advantageous for identifying strategies to minimize taxes, particularly if you plan to reinvest in another property.

Market the Property to Attract Buyers

Engel & Völkers offers a range of marketing solutions to promote your property. Effective advertising, including high-quality photos, detailed descriptions, and virtual tours, can quickly attract potential buyers—even those outside the region.

Finalizing the Sale: Bank Processes and Legal Formalities

Once a buyer is interested, formalize their purchase offer and begin coordinating with the bank. This step includes introducing the buyer to the bank for loan approval if they intend to assume the existing financing. Engel & Völkers can assist in this phase, ensuring clear communication and proper documentation.

The Preliminary Sale Agreement (CPCV) follows, detailing the conditions agreed upon by the seller and buyer, including the deadline for the public deed. This agreement often includes a deposit, guaranteeing the transaction’s seriousness.

Finally, signing the public deed concludes the sale. At this stage, any remaining loan balance should be settled with the bank. This can be done using proceeds from the sale or by transferring the loan to the buyer.

Although selling a financed property involves multiple steps and important decisions, careful planning and the right support can simplify the process and lead to a successful outcome.

Relying on the expertise of a renowned real estate agency like Engel & Völkers can make a significant difference, from the initial valuation to the sale's completion. Always consider the tax and legal implications carefully to ensure a smooth and secure transaction.