Concern about method of payment: cash or via bank

[Diana]

I am currently in the process of buying a house in Istria.
The estate agent told me that if I pay directly into his company account I would also have to pay the difference in currency conversion. This would cost me 7000 Euros on the top of the agreed price of the house stated in the contract or the alternative is to pay the whole amount in cash. This would mean I would have to travel back to Croatia in few weeks for the day of final payment plus all my travel expenses.
Is this a common practice in Croatia when buying a property? I am Croatian living in UK. Is the property law and method of payment different for foreigners and for Croatian citizens?
Has anybody had a similar experience?
Any comments or suggestions would be greatly appreciated.

[Graham - Bosmere]

Use a currency dealer rather than the banks. You will find that the exchange rate that you get is much better and they will arrange transfer directly to the bank account in Croatia.

We use Ruesch International in London and they are very fast and helpful. Give them a call on 0800 424 292
They buy the currency for you either at the time of call or when the rate hits a predetermined level.

[Mike]

When we (my Croatian-born wife) bought a property in Croatia a few years ago, the payment was arranged in German Marks. We just sent 90% of the amount by bank transfer. The rest was paid in cash, as the vendor had to pay the agent's commission. The agreement was also that we, the buyers, paid a small amount to the agent, again in cash, although everyone received invoices. Everything went smoothly with no problems at all.

So, are you transferring money from pounds to Euros? Or is there another cost in currency conversion? If you agreed to pay in Euros, then you would have to do so, even if the rate of exchange is not so favourable at the moment.

Furthermore, I am a bit worried that you are being asked to pay the agent and not the vendor. This is unusual, in my opinion.

[Diana]

The arrangement was that I would send Euros from my UK account by bank transfer.The vendor would than receive the money in Kunas. I would need to pay him the difference in conversion rate Euros-Kuna. This for me works out about 7000Euros more than the agreed price. I feel this is unfair and I am not willing to pay that difference. He says this is a common practise when buying a property and is unavoidable (applies to Cro. citizens only). Is this really true?
My agent told me that by Croatian Law, I as a Croatian citizen have to pay my vendor in Kunas (as the property is on my name).
Mike, did you have a receipt or some sort of written proof from your UK bank of how much money was paid into your vendors Croatian account and that he really received that money?
Graham-Bosmere, thanks for your suggestion, I’ll make some inquiries now and see if I can sort this problem the way you suggested.Any more ides?
Are there any more UK Croats buying properties in Croatia with the same problem?
Thanks

[Stephen]

Diana,
Talk to the Vendor as the Euro is very strong at the moment and this might change opinions.They may have family in none EU location that they may have wanted to visit but put it off due to sale pending.Just a suggestion.

I paid for my property in German Marks at the time as the seller wanted it so.I flew to Croatia everytime payment per installment was due as that way I would give the money into the sellers hand and would get my receipt there and then.The cost of the flights was worth it as it not only gave me the time to inspect the property but I could also see the area at different times of the year.I made notes of shops, Restaurants,Bars that were open as I plan to retire to the Apartment.

Regards

Stephen

[Anja]

Diana I did this transaction many times and it was always cheaper to change the money (pound) in local exchange shops in Croatia
If I understood correctly you already have money in EURO and the buyer wants it also in EURO.
I am also Croatian citizen and I paid for my properties in EURO/German Marks.
For you the best solution would be to transfer the money to somebody's EURO account in Croatia.
The person then can get the money from the bank in EURO.
Re the agent, I advise you to be firm and tell the agent that you would only pay in EURO as the price was in EURO.

[Diana]

Anja, I had the same idea: to transfer the money in Euros to the vendors foreign currency account in Croatia. That would be ideal…but my agent told me that such procedure is against the Law in Croatia. As a Croatian Citizen I can only pay Kunas into his bank account when purchasing property. If I insist on paying in Euros it would have to be in cash, which is something I wanted to avoid. I’ll probably have to think about it now.

[Joe]

I live in Croatia part of the year, but am British. I currently rent my house and pay rent in Euro. Strangly enough, we find that changing Pounds into Kuna then buying Euro with Kuna gives us a better rate then straight from Pounds to Euro. If you have to buy Euro, then don't do it in the UK. Day light robbery. That's how the money jingles at the moment.

[Mark]

It is not the exchange rate that is the problem, it is the rip off that the banks and exchange businesses do.

Just look at the commercial rate rather than the tourist rate to see what you could be getting if you did not use the banks. The banks also charge something like £30 to transfer the money to a Croatian account. If you use a bank you are a mug! All you have to do is to do a qucik search on the internet to find a commerical dealer to make the purchase for you as per Grahams advice above. If people were more careful with their money and took professional financial advice they would not get ripped off so easily

[Can anyone help with the forma]

Diana
I would be interested in which agent you are using because we are close to buying in Istria at the moment -Can you recommend local solicitors etc? Is it an old or new house you are buying?
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