Have you had a bad experience, when buying a new property?

New builds” and “Off-plan property” are buzzwords of the past few years and are still hot topics for many people across the globe. As the idea of owning abroad starts to mature and many buyers have taken the plunge, what are the thoughts of the public today?

My experience - Buying a property in the Costa del Sol, Spain.

I bought a brand new beachfront apartment in an urbanisation on the Costa del Sol. The experience of buying was quite pleasant, a little unnerving as it all seems to go very smoothly. I used a good lawyer and what I thought was a reputable developer. There were some snags that needed sorting, the developer put most of the easy issues right, but never came back to sort out larger issues. I looked into taking them to court, but decided against in on the advice of my lawyers. We were lied to about the community fees, which the administrator just kept taking and the work wasn’t getting done on the urbanisation. The developer happened to be the president of the community and as such was working with the administrator to get the residents to pay all the costs towards the urbanisation. When we rallied around to get support, many owners were not interested and the developer still owned the majority of the development as such we could not throw him out! They got very frosty with us when we put up signs on the urbanisation to rally support and as such showed their true colours. The community is getting there now, slow but sure. As many new communities will not be set up until the urbanisation is finished, you are never in the know about who has bought there and how the community will be formed. You really can’t do much about this, just bear it in mind when you choose a place to buy!

I would like to build up a section to this website which praises good developers and ranks them, as I feel there isn’t a resource which provides this sort of information. “Built by buyers for buyers”? type thing (cheesy but good). Do you think this is a good idea?

I am always interested to hear from buyers of new properties. So if you have a story to tell, write in my comments section below.

Points you might want to include:
What were the problems?
Could the issues been resolved easily?
Were you treated well?
Would you buy again?
What would you do differently in the future?

I have just read a comment on Peter Conradi’s Blog regarding buying in Switzerland. I had never really considered this country, as it is expensive and conjures images of cold bleak winters. However Dave Gittens has posted his experience of buying an apartment in the Valais region of the Swiss Alps. His page discusses the reasons for buying and details the fact that is isn’t as expensive as one would expect! The Irish times has an interesting article on buying a property in Switzerland. If you would like to know more about properties in this area, see Alpine Property Investments.

The number of overseas property companies, estate marketing overseas and international developers has mushroomed over the last few years in line with buying abroad becoming increasingly popular. When a lucrative market experiences rapid growth it inevitably will attract a rogue element. This comes in many forms, but agents or individuals taking monies and then disappearing leaving the buyer with nothing is a horror story everyone has heard. The answer to fraud in most industries is to set-up a professional bodies or trade association to self-regulate, represent and endorse its members.

The need for an Overseas Property Real Estate Association

After visiting a trade exhibition in December 2005, I came across the stand of a new Association being set up for the overseas property industry. The Assocation of International Property Professionals states on its website “The AIPP is about standards in the industry and bringing those to the attention of the public. The buying public will look for the AIPP stamp of approval. When anyone sees the AIPP’s logo, they should feel confident about doing business.”

From the timeshare scandals of old to the recent property scandals, here at Nubricks we believe the overseas industry is badly in need of an honest voice, so will the AIPP be the answer??

So what does the AIPP stamp signify?

They have a “Code of Conduct” on their site, which outlines many of the problems related to overseas property. In practice though, I feel that policing this industry is a big job, given the number of constrasting inter country regulations which is only set to increase a new emerging markets start to welcome foreign investment. The success of the AIPP hinges on its ability to build its profile through publicity and raise awareness of good industry practice which in turn is taken on board by overseas buyers. I think the concept is good, so lets hope they can drive standards up.

In our blog post about choosing a good overseas property agent we pointed out that trade associations and professional bodies vary in practice. The purpose of listing professional ly recognised bodies below is to help you make a more informed choice when selecting your overseas property professional whether they be self-employed or a multi-national organisation.

Remember professional membership is not necessarily a guarantee of quality service for the consumer or that you will be lawfully entitled to any compensation in the advent any member malpractice, they may however offer advice and assist with meditation of a complaints process.

It is essential that potential buyers investing abroad understand that each country has its own laws, rules and regulations regulating the sale and purchase of its real estate. In France and the United States for example real estate brokers are required by law to sit professionally accredited exams to obtain a licence to practice. The UK and France however, along with many other European countries do not have this prerequisite.

You may find it useful to know more about best practice in the UK estate agency industry as a starting point.

The National Association of Estate Agents is the largest professional body for estate agents in the UK although a number of international agents also belong to this association.

Many estate agents are also members of The Royal Institution of Chartered Surveyors.
The Ombudsman Scheme for Estate Agents is an independent body set up to protect consumers and a number of professional bodies also encourage their members to subscribe to the Estate Agent’s Code of Practice, which guards against discrimination, deception, and dishonesty.

Here are professional bodies specifically related to Overseas, International and European property:

AIPP The Association of International Property Professionals
FOPDAC Federation of Overseas Property Developers, Agents and Consultants

A selection of real estate assocations based in Europe and Worldwide

International Confederation of European Real Estate Agents
The International Real Estate Federation
European Estate Agents Union

Cyprus Cyprus Real Estate Agents Association
(email: yianna@ccci.org.cy telephone: +35 7253 67 467)
France Federation Nationale des Agents Immobiliers et Mandataires (French only)
Syndicat Nationale des Professionnels Immobilier (French only)
Union Nationale de la Propriete Immobiliere
Greece Hellenic Federation of Real Estate Agents (requires Greek fonts installed)
Italy Federazione Italiana degli Agenti Immobiliari Professionali
Portugal Associacao Portuguesa das Empresas de Mediacao Imobiliaria (Portguese only)
Spain Association Profesional de Gestores Intermediarios en Promociones de Edificaciones
Agentes de la Propiedad Inmobiliara (Spanish only)
Turkey Istanbul Chamber of Real Estate Commission Agents (tel. +90 2123 270 061)
USA National Association of Realtors

If you know of any other international bodies or associations related to real estate, feel free to add to the comments at the bottom of this blog post.

Back in November 2005 I visited Vegas for the first time on a trip to the PubCon webmaster conference. Its quite a place and seems to be in a period of rapid expansion. There where building sites everywhere, even on the strip itself.

Whilst I was there I stumbled across a real estate show that was taking place in the Wynn Hotel many local and national agents were there showcasing their newest projects.

Here is a summary of what is hot in Vegas at present…

Continue reading ‘New Properties in Las Vegas’

Lets face it we are not all going to have a smooth ride when it comes to selling our investment properties, but why is it some people seem to make a living out of this business and the rest of us can’t shift our property that was supposed to make us rich??
 
Did you think about the following…
 
Exit Costs and Strategy for no sale
 
Buying a property abroad is easy. Selling it to make a profit is where it gets hard. There are numerous stories of disgruntled buyers, who can’t resell their investments 2 years down the line. The exit costs of an investment property can sometimes be as costly as the buying costs and many people do not take this into account. Depending on the country selling costs can escalate when you consider agent’s fees can be up to as much as 10%, higher rate non-residence Capital Gains and other legal/notary fees.
 
Scenario 1– Your property will not sell before completion
 
You should always consider the risk if you cannot resell your off-plan investment before completion. What are the consequences?
 
Buying Taxes
VAT to paid on outstanding payments
Final lump sum (may need a mortgage)
Mortgage set-up and closure costs
Mortgage Payments whilst property is on the market to sell
Community Fees
 
Scenario 2– Your property will not sell and you need to rent it out to cover costs
 
You will need to find a trustworthy rental company (A familiar story I’ve heard is that a property owner turns up to his holiday apartment only to find Mr and Mrs Bloggs are renting it for their two week holiday unbeknown to him)
 
Costs of rental agent’s fees vary, so do your homework.
 
Weight up short term versus long term rentals.
High maintenance/potential high return versus steady income/piece of mind
 
Brain on the plan syndrome
 
I heard this expression a number of years ago now, but still find that it rings true. Buyers on a property inspection trip abroad, make rash decisions. The “on holiday” mindset, often clouds their judgement. Just remember in your home country it is unlikely that you will buy a house in a weekend and part with £4000 without more research to back up your decision. Use a lawyer as in many countries there is a lot of red tape surrounding foreign ownership. Do your research before you get there and test the agent/developers knowledge.

Timing
 
Be careful of the property PR “hype”. The “hottest place to buy” now may not be so hot when you finally get round to buying there.
Look at what has happened to Spain; it is difficult now to make a quick buck. This market is maturing and requires time for an investment to grow. Don’t get me wrong there are still great bargains to be had, but they are few and far between. Short term gains can be achieved in new emerging markets, but be aware its likely that the person sitting next to you on the plane has the same idea in mind.
 
Location

This is probably the single most important decision, when buying a property abroad.
Choose you location based on your needs not the hype. What are its resale prospects? Think about what your potential buyer would be looking for in a second home. i.e. proximity to amenities, travel links etc
 
If you are planning on using the property yourself think about travel time and accessibility. Cape Verde may be the new Bahamas, but unlike Spain its not 2 hours flying time.
 
Listening to agents hype
 
Some of the more unscrupulous companies will “tell you what you want to hear”.

Quotes like:
 
“That piece of land is green belt and will never get built on, so you will always have this view”
 
“You will make 50% return in 2 years”
 
“You will be able to rent it all year round”
 
“There is going to be a beach club, with an infinity pool”
 
DON’T believe everything your hear as sometimes its either not true or its never going to happen. Let common sense prevail. Again research…the land registry at the town hall is usually a good place to start. Check your contract for that infinity pool!
 
“This development/resale is our exclusive product”

If you find a development/property you like, shop around with a couple of agents, as the price may vary.

“A Great Place to Live”. This development is set in 180 acres of beautiful landscaped parkland on high ground overlooking the west coast of Barbados. The first phase of 177 properties has been released. This development has a retirement theme and offers Continuing Care Retirement Community (CCRC) facilities. They operate on the basis of a CCRC and sell homes within the village to purchasers 55 and over, through a lifetime leasehold agreement. These purchasers accept that they will share a proportion of the future property appreciation in return for The Lakes securing their long-term health care costs, property maintenance, and subsidised monthly community fee. The location looks stunning and is definitely going to peaceful, as long as they don’t build around you! Amenities will not be on site until phase 2, so be aware that if you buy in Phase 1 with the intention of moving in straight away, you may have to travel for all facilities.

If you are a property purchaser/investor the following applies:
Property is sold on a 99-year lease in the village to use as a holiday home, for rental purposes or as an investment, with the option to convert to CCRC at any time in the future. A selection of The Lakes Development facilities are shown below: 

Clubhouse
Wellness Centre
Swimming Pools
Tennis Courts – Phase 2
Shops Restaurants - Phase 2
Children’s Playground

For more info:
Tel: Freephone UK 0800 389 0084
Tel: Barbados +1 246 422 6639
Development Website: http://www.thelakescaribbean.com/

“KL’s premier serviced residences next to Empire Tower”
 
This freehold development is slightly out of the centre close to the embassy district. It is probably a 5-minute taxi ride (if traffic is flowing) to KLCC.

The MyHabitat Development will have the following facilities:
 
45-metre lap & plunge swimming pool
Squash court, Gymnasium
Vertical landscaped gardens & ponds
Poolside cafe
24-hour security with CCTV and audio/ video intercom system

For more info:
Tel: +60 321 622328
Development Website: http://www.myhabitat.com.my

I picked up their sales brochure whilst visiting a shopping centre in KL. The tagline states, “Invest in Bukit Bintang and reap 5-star returns”.

I found a post over at propertymalaysia.blogsome.com that has already reviewed this development, so if you are interested go and have a look.

Apparently 60% of the project was sold before it was launched…

The Fairlane Residences Development will have the following facilities:

Advanced security system
Rooftop infinity swimming pool
Gymnasium
Health spa
KL Monorail system within walking distance

Prices start from £53,000
For more info:
Tel: +60 122 490022
Developers Website: Couldn’t find one?!