Finding And Buying A Home
Author Leaonne Hall is an expert on the overseas property market and has written extensively for a number of newsstand titles. She previously produced three editions of the Red Guide to Buying Property in Eastern Europe, and has been writing in detail on the individual markets since 2003.
PART 1: CHOOSING A PROPERTY
Once you’ve established where you are going to buy your new property, the next decision is to choose what you’re going to buy.
FIXING A BUDGET
This is always the most important part of planning your property purchase and whatever type of property you intend to buy, before you begin house hunting, it is essential to have established the parameters for your budget, and ideally have even factored in a contingency plan should things become more costly than you originally intended.
So, how do you establish how much to spend? It all depends on your usage and where you choose to buy. If you intend to relocate to Eastern Europe, you may already own a property in the UK that you can sell, investing the equity in your new home overseas. Have you got any savings or a source of rental income that can go towards a purchase? Do you need to save a certain amount of money before you begin your property search and, if so, how much? Knowing where you are planning to purchase allows you to pre-empt any additional costs – such as property tax and notaries’ fees – allowing you to sit down and do the sums, detailing all the costs you may incur along the way. Additional costs are generally as follows:
- Agents’ fees – between 2% and 6%
- Stamp duty – varies
- Property tax – varies
- Deposit – generally 10%
- Legal fees – generally 1%
- Mortgage repayments
- Land registry fees
- Survey costs
- VAT (on new buildings)
- Fittings and furnishings.
Before committing to a purchase, if you aren’t going to be buying the property outright, then always check you will be able to raise any required cash through a mortgage or loan, and work out how much you’ll be entitled to borrow. Many mortgage sites offer an online budget planner service which will give you a rough guide as to how much you will be allowed to borrow. You also need to factor in the cost of the deposit; this varies depending on where you decide to buy and is usually between 10% and 20%, so ensure you find out exactly how much you’ll be required to pay when you sign the provisional contract to avoid any nasty shocks. Certain countries may also require you to be able to invest a certain amount of your own money into the purchase.
If you are buying a newly-built property, figuring out how much you will be required to shell out is a straightforward process – most of the costs are covered in the list above. Don’t forget details such as paying a community upkeep fee, though this will vary depending on where you choose to buy, but is generally between £5 – £10 per square metre per year.
If you are looking to renovate a property then budgeting for the process does get slightly more complicated. Renovation requires a strict budget and regardless of where you buy, the rules are the same as if renovating in the UK. You shouldn’t always assume that just because you are renovating in Eastern Europe this means lower costs. In Bulgaria, the demand for workmen and the rise in the number of restorations means that renovating a house might cost almost as much as it would in the UK. Always do your research and price-up potential renovation costs, making sure you get a thorough survey done prior to agreeing to buy. Generally, a renovation budget should allow for an additional 15% contingency to allow for the process costing more than you accounted for – and it generally does.
Whatever your final decision may be, never throw caution to the wind, don’t listen to persuasive, slick-talking agents and don’t be rushed into anything. There are very few people who don’t have to worry about sticking to a budget, so take care. You certainly wouldn’t buy a property in the UK if you didn’t have the money, so why should Eastern Europe be any different?
RESEARCHING THE PURCHASE
There are a variety of methods and sources available to you when you’re researching the purchase of your dream home, but the recommended – and most common – starting point is the internet. There is a wealth of material out there and by surfing the net you can get a better idea of the type of agent you need, the kind of property and prices you’d be looking at, as well as a cache of contacts you can arrange to meet. Never commit to an agent or property online and don’t put any money forward, even if you’re assured that it doesn’t tie you to anything.
Search engines such as Google are the best starting point for your web-based research. Terms such as ‘Turkey property’ or ‘Bulgaria estate agent’ will throw up hundreds of listings, so try to be more specific if you’ve already tracked down the location of your choice. Keep a list or bookmark all your favourite sites so they can be easily found again.
There are numerous books, property magazines and newspapers out there that are filled with useful advice and contact details for lawyers, estate agents and property finders, and they are a mine of information – for example the weekend broadsheets and the wealth of magazines in your local newsagents are all good starting points, as are online resources such as World of Property.
For more personal advice you can attend exhibitions. These give you the chance to meet some of the agents face-to-face and also allow you to pick up literature on developments, countries and the purchasing process, and provide you with the opportunity to discuss the market and get advice about the right investment for you. Many also offer useful seminars which can help you get to grips with the state of affairs in a specific country. A list of these and all the exhibitors are available online. Go armed with a list of questions and a large bag to carry all the brochures home in, but beware the seductive spiel of some agents who will try to commit you to a sale then and there.
- A Place in the Sun – www.aplaceinthesunlive.com
- Homes Overseas – www.homesoverseas.co.uk/Exhibitions
- International Holiday and Overseas Property Show – www.premierexhibitions.com
- Overseas Property Expo, www.overseaspropertyexpo.com
- Property Investor – www.propertyinvestor.co.uk
- The First Time Buyer’s Property Show – www.firstrungnow.com
- The Homebuyer Show – www.homebuyer.co.uk
- The Sunday Business Post Property Expo 2007 – http://www.propertyexpo.ie
- Worldwide Property Show, Resale & Rental Property Show – www.dslexhibitions.ae
Read up on the countries you are thinking of buying in, learn about the geography and culture and get hold of some guide books such as Lonely Planet, Rough Guides and Bradt Guides. Look at the political and economic state of the country and find out what the future prognosis for the property market is. Take a look at budget flight options (see www.flycheapo.com) and any new routes that might open up or further develop the market, and where possible, take a trip out to the country and arrange to view as many properties as you can. Make sure you visit during both summer and winter as a property can take on a wholly different character during the cold winter months and during peak/off peak season.
FINDING AN ESTATE AGENT
So, you’ve established a budget, done your preliminary and background research and now you want to move to the next stage – finding an estate agent to help you in your quest to secure a pad overseas.
The essential thing to remember is to always do your homework on prospective agents before getting underway with any property searches or purchasing. It is vital to do your background research when it comes to agents as different companies may offer the same property at different prices and also charge different fees. Some agents may even try to charge to show you around properties, which is an undesirable practice and one that is best avoided.
Always try to go with a company who has come recommended from friends or family. Visit the AIPP (www.aipp.org.uk) and Fopdac (www.fopdac.com) websites and check out their list of vetted agents and lawyers. There’s also the International Real Estate Federation (www.fiabci.com) and the Confederation of European Real estate Agents (www.webcei.com).
Recommendations for choosing an estate agent:
- Always ask an agent if they are regulated and ask if you can see their certification, as the governing body will safeguard you against getting ripped off or losing your money.
- Employ someone who knows the area well and knows how the purchasing process works in the country – this could save a lot of hassle in the long run when it comes to paperwork and red tape.
- Many agencies are paid by the seller or developer of the property, meaning their services to you will be free. However, some agents will then charge the buyer a finders’ fee which can be up to 3–5%. Before you start to work together, check what their policy is.
- Make sure the agent has a good selection of property on their books – this will not only provide you with ample choice but also reveals that they are a proactive company.
- Whoever you choose to work with, always make sure you keep a record of your conversations and dealings with them and keep pestering – the last thing you want is to be forgotten under a pile of other clients.
- The key to avoid being ripped-off is to do your research. If you go to an agent armed with background knowledge, this will make them realise that not only are you serious as an investor, but that they can’t pull the wool over your eyes. They will also be able to do a better job for you if they know your budget, limitations and exactly what you are looking for.
TRY BEFORE YOU BUY
You wouldn’t buy a car without taking it for a test drive, having already visited numerous garages, and nor should you commit to buying a property without having first visited the area and looked at a number of different properties. The biggest mistake you can make is to commit to buying a property without travelling out to the country and checking the area – and the property – first. Even if you have employed the services of a house search agency, get them to narrow the options down and then you should take a week out to go and view them all.
Getting to know Eastern Europe before you buy is essential – and also the most fun bit of the purchasing process. Try to travel extensively around your country of choice before making any firm decisions. Buy a map and guidebook and make notes, take photos and check out exactly what facilities would be available to you if you bought there.
The best way to see everything is to take as much time as possible, to rent a property in the area, hire a car and spend time living as you would if you bought a home there. This is the closest you can get to experiencing what life would be like in Eastern Europe, and also gives you a chance to meet and talk with the locals, and try to discover what life in the area is really like. Pick up the local papers to look for advertised property and also employ word of mouth – talk to local residents about your property search as they may know of any houses for sale.
Inspection trips are another way to spend time experiencing a country, and doing this can help you to make an informed purchase. However, there are disadvantages and inspection trips have had a bad press in the past, thanks to the use of aggressive sales techniques and the bullying of clients. If you do choose to go on a viewing trip then don’t let yourself be pressurised into anything.
On the positive side, there are many advantages to viewing trips. For one thing you will be provided with a portfolio of properties to visit that meet your specifications, you’ll get to know your estate agents, you’ll be provided with subsidised flights and accommodation and you will get the opportunity to get to know the country and the purchasing process. Be aware that these can be genuinely helpful trips, but do not treat them as free holidays, and ensure you know exactly what costs you are likely to incur.