Are we being deceived by Overseas Property Developers?

[PRP]

I’ve recently been discussing with a few well know Overseas Property Developers about some off-plan and ready to move in apartments in Bulgaria and I can’t believe what I am hearing!

Am I the only one who feels this way?

The phrases “unbelievable”, “never to be repeated” and “never been a better time to invest” sales patter are extremely convincing to the less investment savvy. However, I am beginning to find some of them using an approach that is downright deceptive in the way the investment opportunity is being presented.

For sure, there is a lot of development going on and the prices are still attractive but those investors seeking to buy on a buy-to-let basis are surely being taken for a ride.

In one of the developments, over 70% of the units already sold, have been purchased on a buy-to-let basis - people who need to rent out their property to meet the ongoing financial commitments of a mortgage. I was told on not one, not two but three occasions by the sales manager, the rental proposition and demand is extremely high and that I should easily be looking to secure between 25-30 weeks of rental income each year. This is a blatant lie!!!

Achieving 25-30 weeks of rental income each year is possible for some but not in a development that is saturated with this level of competition. With the saturation of rental properties in such a small area (and this was just one of about 12 new developments in the local area) I predict that for many buy-to-let investors the outcome will be financial ruin.

Has anyone else experienced the same?

Chris Thomas
Property Rental Profits

 

[just-alex]

deception...........

Good point but I think it goes even further than that............there are strict guidelines for estate agents and marketers of property in the UK which do not seem to apply or are being flouted by anyone who is primarily using the internet as a commercial sales tool for property abroad..............

First duty is that of not misleading clients by providing erroneous, ambiguous, confusing, inaccurate or exagerrated info.....and making outrageous claims.

Out of date info on the internet is also a huge problem....some agents and developers are leaving inaccurate old info on their site up to a year or more after its posting.

Secondly it is not permitted to take advantage of a client's lack of knowledge or experience. Thus those who follow the above methods are breaking the rules twice over.

The websites are often poorly researched and make ridiculous 'ease of travel claims' and do not check or deliberately mis-supply distances and availabilities.

Telephone conversations which follow after the 'bait' has been swallowed frequently follow the same misleading path with claims about progress, planning permissions etc all being exaggerated. Reservations have been know to be 'double booked'.....in order to transfer clients at a later date to a different, harder to sell, property and to get money in quicker...

Developers and agents who produce contracts bias them heavily in their favour and leave little time for clients to read , digest and thoroughly examine the nuances disguised within, often in poorly written and confusing grammar no matter what language ,by clever lawyers.

All in all I am having serious second thoughts about the International Property World and it's dubious and unethical practices.........based on two years researching and buying experience and treatment in Spain, Dubai and Morocco.....I don't expect other countries are any better............

You have consider if the risks are worth the investment, I suppose, but there are going to be a lot of casualties along the way.................

 

[DC]

Chris, interesting. There is So much bull in international real estate, I hear of 1 or 2 hard luck stories every week. Mis selling is so rife, I think maybe regulation needs to come in.

Just out of interest who was offering or blagging in Bulgaria?

 

[Sunny Days]

Deception

Yes there are too many unethical players in real estate (worldwide). There are always unethical players in any "game" when there's big money involved.

RESEARCH is the key to avoiding them. Know the facts - don't believe what you're told. Speak to independent parties already involved in the area. If you can't find out the facts, don't go into the market. Don't shirk on your responsibility to research.

GO IN WITH YOUR EYES OPEN. dON'T GET EMOTIVE OR EXCITED ABOUT AN INVESTMENT - it's just numbers and money and it has to make a return for you or else you're not being a very good investor. If you get excited or emotive about a property / investment you are more vulnerable to these deceivers.

 

[DC]

Well said above. True do you own due diligence, get your own independent lawyer, try to avoid pressure sales inspection trips.. use the internet as a forum and a tool for research, ask for rental guarantees and yields to be proved, be prepared.

 

[just-alex]

deception

Everything everyone says is true , but you are all speaking with the benefit of hindsight and are the survivors.......what I am saying is that in order to protect everyone there needs to be more legislation in this field and all concerned parties should write to Meglena Kuneva either directly or via their Euro MP . She is very thorough and is in charge of European Commission on Consumer Protection

fax 02 2995372
phone 02 2993684

address: Meglena Kuneva, Member of the European Commission, Rue de la Loi 200, B1049 Brussels.

Solidarity!!!!

 

[David Thrift]

IDIPs help overseas property buyers



Unlike the government’s HIP scheme which was widely criticised by real estate professionals for its inefficiency and ineffectiveness, the new IDIP (International Developer Information Pack) resource is being welcomed as a useful tool for agents and property investors alike. IDIPs enable thorough checks to be carried out on overseas developers and developments to minimise risk.
Many international property advisors have claimed that using IDIPs will soon be common practice for overseas investors, and have hailed IDIPs as a revolutionising resource for global property markets. Hopefully now the sort of investment disasters we saw recently in Spain, where thousands of investors, including a large number of Britons, lost their homes because of illegal development, will be a thing of the past.
The UK’s largest property websites like the Buy Assosciation who supply Rightmove.co.uk have praised the IDIP scheme, claiming it will be hugely advantageous to investors in overseas off-plan developments. Felicity Quigley of Buy Association commented:
“As a service, the IDIP provides peace of mind that the most important aspect of a property purchase is taken care of by qualified legal professionals who have extensive knowledge of their local markets as well as a UK presence. For those investors looking to be more ‘hands off’ with their off plan investment, an independent due diligence assessment will save them valuable time and effort whilst ensuring that the property they are buying is legally sound.”
Contact 08452300787 or visit idipreport.com

 

[Paul_in_Crete]

Buyer Beware

I’ve recently been discussing with a few well know Overseas Property Developers about some off-plan and ready to move in apartments in Bulgaria and I can’t believe what I am hearing!

Am I the only one who feels this way?

The phrases “unbelievable”, “never to be repeated” and “never been a better time to invest” sales patter are extremely convincing to the less investment savvy. However, I am beginning to find some of them using an approach that is downright deceptive in the way the investment opportunity is being presented.

For sure, there is a lot of development going on and the prices are still attractive but those investors seeking to buy on a buy-to-let basis are surely being taken for a ride.

In one of the developments, over 70% of the units already sold, have been purchased on a buy-to-let basis - people who need to rent out their property to meet the ongoing financial commitments of a mortgage. I was told on not one, not two but three occasions by the sales manager, the rental proposition and demand is extremely high and that I should easily be looking to secure between 25-30 weeks of rental income each year. This is a blatant lie!!!

Achieving 25-30 weeks of rental income each year is possible for some but not in a development that is saturated with this level of competition. With the saturation of rental properties in such a small area (and this was just one of about 12 new developments in the local area) I predict that for many buy-to-let investors the outcome will be financial ruin.

Has anyone else experienced the same?

Chris Thomas
Property Rental Profits

Hi Chris, It part and parcle for the property investment game, you risk purchasing in a Country with poor legistation for a high investment return.

From my experince of working in the property Industry, you will get all types of developers/lawyers/estate agents honest and not so honest. You have to judge each country on it own merits, and the law protecting the buyer.

If you are looking for a more mature market have you considered Crete in Greece. As the Greek law is more protective of the buyer.

Paul Elwood (Property Consultant -Crete Property & Construction Company - Theo Construction)

 

[JMBroad]

IDIPs help overseas property buyers



Unlike the government’s HIP scheme which was widely criticised by real estate professionals for its inefficiency and ineffectiveness, the new IDIP (International Developer Information Pack) resource is being welcomed as a useful tool for agents and property investors alike. IDIPs enable thorough checks to be carried out on overseas developers and developments to minimise risk.
Many international property advisors have claimed that using IDIPs will soon be common practice for overseas investors, and have hailed IDIPs as a revolutionising resource for global property markets. Hopefully now the sort of investment disasters we saw recently in Spain, where thousands of investors, including a large number of Britons, lost their homes because of illegal development, will be a thing of the past.
The UK’s largest property websites like the Buy Assosciation who supply Rightmove.co.uk have praised the IDIP scheme, claiming it will be hugely advantageous to investors in overseas off-plan developments. Felicity Quigley of Buy Association commented:
“As a service, the IDIP provides peace of mind that the most important aspect of a property purchase is taken care of by qualified legal professionals who have extensive knowledge of their local markets as well as a UK presence. For those investors looking to be more ‘hands off’ with their off plan investment, an independent due diligence assessment will save them valuable time and effort whilst ensuring that the property they are buying is legally sound.”
Contact 08452300787 or visit idipreport.com

Hi David,

Just curious, sounds like a great plan especially if eventually there is enough clout to get the developers to answer within a reasonable time-frame or utopically before launching the development itself.

How do you envision making it not only secure for investors but also feasible for best RoI? In most cases (as you state you get your information from the developers) the developments which are selling fast and furiously are also the slowest to provide the information.

I can see the benefits for someone buying a second residence but wouldn't it be counterproductive for the pure financial investors?

Undeniably the best possible DD has to be done before every and any purchase, whether it be by the buyers themselves, agents or an independent source such as yourself or all of the above. The legal representative of the buyer should also do most of what is needed (assuming they are competent) before signing the contract?

 

[David Thrift]

Hi David,

Just curious, sounds like a great plan especially if eventually there is enough clout to get the developers to answer within a reasonable time-frame or utopically before launching the development itself.

How do you envision making it not only secure for investors but also feasible for best RoI? In most cases (as you state you get your information from the developers) the developments which are selling fast and furiously are also the slowest to provide the information.

I can see the benefits for someone buying a second residence but wouldn't it be counterproductive for the pure financial investors?

Undeniably the best possible DD has to be done before every and any purchase, whether it be by the buyers themselves, agents or an independent source such as yourself or all of the above. The legal representative of the buyer should also do most of what is needed (assuming they are competent) before signing the contract?

Hi JM
The service is for off plan investors this is done prior to even putting the deposit down It is the only service available and full investifgations are carried out. The report covers the legal side of the property development, checking planning permission, land tile ownership, building licenses, shareholders and directors, the management contract and everything you need to know about your proposed project.
We already have lots of agents and the public taking up the service and it is conducted via international lawyers in the country who investigate the whole affairs of the developer and development.
The investigation is managed to completion by The Live Overseas our exclusive partners who are a representative of First Title Insurance plc, which is authorised and regulated by the Financial Services Authority. First Title Group is a wholly owned subsidiary of The First American Corporation, they not only have the backing of the world's largest provider of business information, but over 115 years experience in property matters


It will enable you, the purchaser, to have full control of your decision making rather than relying on an unknown source to provide you with information that may not be totally correct. If you are an agent it will allow full independant due-diligence on any developer in the world prior to sale to the consumer
You the investor are now in the driving seat - it enables you to make sure your investment is sound for the future. Lets be honest no one wants to be another statistic with a property nightmare

 

[connection]

unfortunately I fall into the category of naieve buyer who didn't know how to find any information on the Developer except the advertising he was diong for himself.Now I am facing financial ruin and these big developers have us all tied up in legal knots with nowhere to go for information other than fellow victims on forums
these developers are allowed to put about all this misleading advertising and then they ensure that people are too scared to talk openly about their experiences.
If they have nothing to hide why are they so afraid of what is said on forums.I appreciate all the advice above.I wish I had seen it sooner.Anyone wishing to buy in Bulgaria should certainly be wary of any Developer who tries to silence it's customers
silence speaks volumes

 

[connection]

Hi there

can you send me a private message with who the lawyers are and also who is the developer?

I don't know how to send a private message on this site can you help please

 

[bhc]

Buy to rent

Whether its Bulgaria or ROMANIA if you are buying to let on a mortgage you will not be able to meet all the costs unless you can put down a huge deposit.

 

[mickthepropertyguru]

Sending Private Mesage

I don't know how to send a private message on this site can you help please

Hello,
If you click on the person name, a menu will pop down, click on the "send private message" option.
regards
Mick

 

[Investy]

I recommend now only buying built property from highly reputable developers. I would not entertain Bulgaria as it's corrupt from to bottom, and showing little sign of change despite the platitudes and assurances given to the EU Parliament. Romania is far too murky also.

 

[Aegean Emerald Properties]

It is the only service available and full investifgations are carried out. The report covers the legal side of the property development, checking planning permission, land tile ownership, building licenses, shareholders and directors, the management contract and everything you need to know about your proposed project.

Hi David,

i agree this is a great idea and worthwhile and needed. However I disagree that it is the only service available. In our company we also provide due diligence reports covering the same criteria as you mention. We get these reports via an independent third party organisation. We have copies of these reports for all the developments we currently carry, and should a customer chose a property we do not have a report for we get them one, and if they then complete the purchase we refund the cost of the report.

I am glad to see more companies realising that this is the way to go, as it is only through transparency and honesty that those of us who have nothing to hide, and who have no intention of ripping anyone off can maintain a good reputation. Unscrupulous developers use agents to flog their shoddy or non-existant properties. Thankfully none of our clients have ever been involved in any problems of this nature, but like buyers I am also nervous of selling properties from develpers I know nothing of. hence the reason we get an independent due diligence report on the builder prior to selling their property.

For anyone considering buying abroad, DD and thorough research s needed - and definitely don't buy off plan without visiting the area! Its better to spend a couple of hundred quid on a flight than potentially be out of pocket by thousands. If you are buying abroad you should be preapred to travel abroad, otherwise you are taking a big risk an laying far too much trust with the develper/agent whose main goal is to sell.

 

[owendale]

Trust is the key

having read most of the above i must agree that many selling overseas property only want One thing ... YOur Money..and they will do anything for it without caring about you...
I have invested in the USA and have my own real estate license , has it helped me sell more or invest , well NO... I become a REALTOR now you would think being UK based and able to provide a full Realtor service I would be snowed under with clients , NO I have not had one client close on any deal .
i own the websites with the string "usalocations" and again Not one client .
It is to my cost i have learnt that UK people just dont care what you can offer them , all they want to do is make MONEY and quickly and many pay out too much !!
I have seen several UK companies charge for admin , finders fees etc etc as well as due diligence service's often charging over £1000 I must congratulate those companies and good luck to every one of them .
The main problem in the uk Is just Lack of knowledge and falling for all those glossy magazine ads..Ignorance really is Bliss...
My advice is simple...
where ever you want to invest ..find out as much as you can about the Protection and guarantees , about local license's etc and check check check all the Facts yourself..
I invested in Georgia USA and it took me 2 trips and over 18 months to finally invest is a place called Valdosta...Talk about cautious...
I only invested when I got to know the agent and most importantly felt i could Trust them.. That is the Key... Good Luck and regards..

 

[Aegean Emerald Properties]

It is to my cost i have learnt that UK people just dont care what you can offer them , all they want to do is make MONEY and quickly and many pay out too much !!

I agree, the gred to make a quick buck is what has turned many buyers heads, and the had the ££ chiging in their eyes when they made the decision - they did not research properly - they were blindsided by the agents promises of 50% return on investment in 1 year rubbish. Its this greed taht fueld the unscrupulous agents to pursue sales with such vehemence.

Isn't it the age old trick that con men use - appeal to the mark's greed? the reason so many paid over the odds is because they thought they could make a killing on a resale/reinvestment etc. but they believed what they wanted to believe and nothing else.

I know a couple who bought a small villa and an apartment at the same time. They used all the cash from the sale of their home in the UK. They bought 2 properties because the agent told them that they could sell them in a year and make at least £25k profit. - and the more they spent the more they would make! No chance, especially not when they paid about £30k too much in the first place. How did he get them to pay so much over the odds - cos he told them how much they would make before he told them how much it would cost. they then thought it was worth the extra expenditure to make a bigger profit. Now 4 years on they have been trying to sell for 3 years - no takers. why? because the market price now is only what they originally paid, and they are determined to make their profit. They no longer have a home in the UK, and have much smaller savings because all their money is tied up in properties which they have overpriced and can't sell. They still wont listen to anybody who advises that their properties are over priced by at least £10k.

Its a case of caveat emptor. If you get carried away by promises of big returns, profits, etc. and don't carry out DD, then you have to accept some responsibility for your loss.