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Pitfalls buying direct from owner ?

Discussion in 'Buying Overseas Property' started by fabian, Sep 19, 2006.

  1. fabian

    fabian New Member

    Hi everyone,
    Can anybody advise whether there are any pitfalls from buying direct from the owner of a property via an advert, who is not using an estate agent ?
    Thanks a lot
  2. gregory

    gregory New Member

    Hi Fabian
    Shouldn't see any reason for any private purchasing pitfalls if you use a good independent lawyer to check out the paperwork and the property is of recent construction.

    If the property is much older and requires work then please tread very carefully...which I'm sure you're doing if you're on this forum!

    Common sense always prevails and bear in mind that vendors in Spain lie just as often as estate agents! For instance if they've told you that there's no problem building another level on the house, or putting an extension on etc then double check every point.
    See you again
  3. 10cents

    10cents New Member

    Buying direct from the owner can usually save you some money. However, real estate agents also exist for the purpose of checking out the property and seeing to it that they meet the local codes before putting it on the market.
  4. prettypiggy

    prettypiggy New Member

    Totally disagree with the above post. I’m sorry, but fine words butter no parsnips. Real estate agents don’t exist for the purpose of checking out the property for two reasons:
    1. They don’t have the qualification, lawyers do. An estate agent would think that a preliminary contract has the power of a title deed until the latter is signed. Agents have a lot of delusions like this one and that’s to be expected: in respect of law they are not trained at university or a college, but rather through reading newspaper articles and chatting with fellow mates.
    2. Agents are not liable if they are wrong and – most importantly – they are not liable by law if they don’t check things diligently or if they don’t check them at all.

    An agent is a middleman and that’s that. He mediates between the parties SO THAT A CONTRACT IS CONCLUDED. That’s his clear objective, that’s what an agent is paid for. No deal, no pay: what does checking has to do with this? I wonder where this popular idea of the agent who checks things comes from. It’s not substantiated by any verifiable facts, there are a lot of facts that disprove it and yet it’s commonplace. How come!
  5. prettypiggy

    prettypiggy New Member

    2B or not 2B? Is this a grade of pencil? In Bulgaria some estate agents think that the preliminary contract has the power of the title deed until the latter is signed. The agents have a lot of delusions. Most of them think that a preliminary contract reserves the property (actually the developer can sell the property to a third person although he’s obliged not to); that signing of a title deed transfers property in itself (actually it’s the registration of this title deed that does it); that everything is surely o. k if a notary has no objection to sign the title deed; that a foreigner whose company has bought land in Bulgaria owns himself this land and so on. By law no special training is required of the agents in Bulgaria. And actually no special training is needed because the law never envisaged that some property agents will check things. How is possible for someone to check things if he has no idea what has to be checked? As for their integrity, I remember a case when an agent was annoyed that the preliminary contract is not immediately signed because no Certificate of Actual State was submitted by the representative of the developer, that is to say because no power of attorney was submitted by the representative of the seller. For her checking this was a waste of time. She was conveniently assuming that this person had to be the manager of the company just because he has said so.

  6. Well, in the US, realtors, estate agents as you call them, are governed by the same regulatory committee as lawyers.

    We are liable if we are wrong, our due diligence is closely monitored. We can face civil and criminal charges if we are found guilty of certain actions. Beyond that I can be fined for misinformation, without charges being filed, this from our governing board.

    But you are right we are a middle some extent.
  7. oregon woodsmoke

    oregon woodsmoke New Member

    My answer applies to the USA only.

    You can certainly buy without an agent and not have any problems doing so. In the western part of the country, an escrow office (title company) makes sure that all the correct documents are signed and they will issue title insurance. They make sure the ownership of the property is not clouded and they make sure that the money goes to the right place and all the right papers are signed and recorded.

    On the east coast, a real estate attorney does the same job as the escrow office.

    However, an agent is valuable. If you have a buyer's agent, he should make sure that your offer contains enough contingiencies that you can get out of the contract if you discover something wrong with the property. Your agent will follow the papwork through escrow and make sure everything is getting done as quickly as possible and your agent will keep in contact with the bank to make sure the loan is going through on schedule.

    Your agent should have specialized knowledge about the area. Do you know that you should ask for an environmental survey if the proprty has ever contained a gas station, dry cleaners, or buried oil tank? Any decent agent will put that into the offer automatically.

    Do you know wells should have flow test and water quality test and septic tanks get pumped and inspected at the SELLER's expense? But not automatically. You have to ask for it in your offer.

    In some states you must be sure to get a certificate of occupancy before you close escrow.

    It's one thing to have a really good understanding of real estate where you live, but it is something else to know all the nuances in foreign countries.

    I am not an agent. I have sold and purchased using agents and sold and purchased without using agents. Unless you have experience, I would recomend using an agent.

    It is very rare that you would get any savings by not using an agent. All that happens is that the seller gets more money. The buyer doesn't pay less.
  8. AnotherPropertyGuy

    AnotherPropertyGuy New Member

    Local knowledge needed

    If buying direct from owner, you need local knowledge to make sure that:

    1. The sale and purchase is legitimate. (Hire a good solicitor).
    2. You are paying a good price for the property.

    One great reason to buy direct from the owner is to cut costs. You also might get a cheaper price, particularly if you offer cash.

    Try to get a really good idea of what the property is worth. In the UK this is easy with the help of websites that tell you the price of property in that exact area since 2000. Have a look at the Our Property website for example. If the property you are buying has been sold in the last 8 years, you'll be able to see exactly what that property was bought for. Very handy indeed! Not many countries provide this data though, so pinning down a value is harder.
  9. dave99

    dave99 New Member

    Often safer than using an "agent"

    As a developer I would say that wouldn't I, especially since I refuse to pay an agent for doing "not a lot".

    It's silly to put all developers or all agents into the same "pot", however there are few benefits to using an agent and many advantages to "buying direct" from the owner / developer (not always the same thing).

    I'm only building apartments in Egypt so this is not a worldwide pertinent view.

    A good agent can and will "add value", but not in proportion to "percentage" of the value of the property being sold.

    In Egypt the percentage being paid may be higher than in other places in Europe because the value of the sale is still ridiculously low (eg High quality 2 bedroom apartment for ONLY £30K) so 5% of that is not a lot compared to 2% of £200k in say Cyprus).

    At the end of the day it's the developer who benefits from using an agent since he is paying for buyers ONLY - not wasted effort.

    You are always dealing with the developer anyway since it his contract, and going thru an agent just complicates things. In Egypt the Agent is often out of the picture as soon as the contract is signed.

    If you have the chance to actually meet the developer either local to you (eg I'm in the UK and sell to UK families) then that has to be better than working thru an intermediary of any kind.

    Prices may be a little less without an agents commission but there are still "selling cost" for the developer to be built into the final price.

    So called agent discounts are often only what the developer is offering anyway or could be a reduced commission arrangement between you and the agent maybe.
  10. DC

    DC Member

    It depends on where you are buying and your expertise in buying. in that market.

    Sure I would buy things directly, but I would still use a fine lawyer and sometimes a bank for back up.
  11. geester

    geester New Member

    Depends which country, by mainly he will not have any insurance if anything goes wrong...If he tells you its got a damp proof course and say it doesnt.

    Your then out on a limb.:D
  12. prettypiggy

    prettypiggy New Member

    When we talk about buying property in Bulgaria the Bulgarian legislation applies. And under it there are actually not real estate agents in Bulgaria. The word used is ‘посредник’ which means ‘middleman’ or ‘go between’ And this is not merely linguistic argument as it goes to the core of why agents are so unaccountable. Those that call themselves agents in Bulgaria are not liable as representatives under Contracts and Obligations Act as in fact they are no representatives. But the English people buying in Bulgaria always talk of agents.
  13. prettypiggy

    prettypiggy New Member

    Nothing of the kind in Bulgaria. No securities are ever used. No letters of credit, no mortgages to secure buyer’s rights, even the simplest security is rarely applied: paying the price to the notary instead of direct to the developer. The reason is that the middlemen operating in Bulgaria, who you for some unknown reason call agents, are not liable if something goes wrong. Lawyers are liable under certain conditions, but in Bulgaria the buyer expects the agent to find him one. The result of this is that agents find tame lawyers who are more loyal to them, than to those who pay them. Thus corners are cut.

    And the result of all this is so fantastic, that still a lot of buyers can not comprehend it: using a middleman (called ‘agent’) makes buying more risky, not less!
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