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Post by Madgolfer on May 13, 2012 9:21:54 GMT 1
This is a scheme we came we came up with and tested in 2010-2011 and which seems to have captured a few peoples interest. Might work for other agencies/buyers/sellers elsewhere in Croatia?
Its an alternative option for people looking to buy a permanent residence in Croatia but who are unable to raise the funding at the current time, perhaps they cant sell their current home etc.
A sale price is agreed between buyer and seller and also a monthly "rental" amount as well as any other terms such as damage deposit and so on.
Generally a period of between one and three years is an acceptable term giving a buyer time to either sell their own home or to raise the funds through another source. Some people might consider renting out their own home to cover their costs in Croatia and maybe even make a profit?
At the end of the rental period (if not before) the sale is completed in the usual way and the balance of the agreed price is paid, LESS the rent already paid.
If the buyer decides not to proceed for any reason then the property is returned to the seller in its original condition or better. The buyer looses his rental payments and the seller gains the same.
The scheme works particularly well for people who are unsure if living in Croatia is really for them or not, almost a "TRY BEFORE YOU BUY" arrangement.
The scheme does come under a "sales contract" in legal terms so there are costs involved with notary and lawyers etc, but that does keep it outside of any rental issues as the monthly payments are deemed to be capital payments not rent. It does not generally work for sellers with a mortgage as lenders are opposed to this type of arrangement.
Its has found us some clients that we would not have otherwise seen so maybe it will work for others elsewhere in Croatia.
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Post by crojoe on May 13, 2012 9:38:24 GMT 1
This is a scheme we came we came up with and tested in 2010-2011 and which seems to have captured a few peoples interest. Might work for other agencies/buyers/sellers elsewhere in Croatia? Its an alternative option for people looking to buy a permanent residence in Croatia but who are unable to raise the funding at the current time, perhaps they cant sell their current home etc. A sale price is agreed between buyer and seller and also a monthly "rental" amount as well as any other terms such as damage deposit and so on. Generally a period of between one and three years is an acceptable term giving a buyer time to either sell their own home or to raise the funds through another source. Some people might consider renting out their own home to cover their costs in Croatia and maybe even make a profit? At the end of the rental period (if not before) the sale is completed in the usual way and the balance of the agreed price is paid, LESS the rent already paid. If the buyer decides not to proceed for any reason then the property is returned to the seller in its original condition or better. The buyer looses his rental payments and the seller gains the same. The scheme works particularly well for people who are unsure if living in Croatia is really for them or not, almost a "TRY BEFORE YOU BUY" arrangement. The scheme does come under a "sales contract" in legal terms so there are costs involved with notary and lawyers etc, but that does keep it outside of any rental issues as the monthly payments are deemed to be capital payments not rent. It does not generally work for sellers with a mortgage as lenders are opposed to this type of arrangement. Its has found us some clients that we would not have otherwise seen so maybe it will work for others elsewhere in Croatia. This consept has been around a while in the West, but you just might be the pioneers of it in Croatia. Hats of to you for trying new things in favor of all winning out. Bet if there where more such schemes out there then many more people would be happy, instead of the "get rich now" schemes so many seem to hang all their hopes on.
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Post by Madgolfer on May 14, 2012 6:00:37 GMT 1
As in any contract there are exit options on both sides.
The seller gets a sale conditional on the buyer being able to raise the funds within the agreed period and with so few buyers around these days this is proving to be an acceptable option for some sellers. Plus they get some of their money in stages over the agreed period. A seller takes into account the time frame involved and prices his property accordingly. If the buyer pulls out at the end of the term then the seller has at least achieved some income from the property rather than it just sitting there empty for one, two or three years.
The buyer gets to purchase at a (hopefully) low current price and to move to Croatia quicker than they would otherwise be able to. They get to try out living in Country without going "all-in" straight away. If they still cant raise the funds at the end of the period they can pull out and loose the money they have paid or re negotiate another term.
Its a scheme that has attracted some interest during the recession, but I'm not sure it would appeal to sellers or buyers in a booming market.
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Post by Carol on May 14, 2012 22:47:54 GMT 1
How do you determine "same condition or better" because often this is just a question of taste?
e.g. if someone lets out there home with all the walls painted white and gets it back in various shades of black with green stripes who is to say which is better? or if an old, heavy oak door that needs repair is removed in favour of a brand new pine one, who is to judge which is better?
Do you get round this by taking a detailed inventory and making the buyer obtain the sellers permission before making "improvements"?
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Post by Carol on May 14, 2012 22:51:18 GMT 1
If the seller agrees the price at 2011 prices and then when the sale date arrives in 2014, he finds that he'd get 30% more, can the seller pull out of the sale?
If the seller can withdraw, then what happens to the rent money paid?
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Post by Madgolfer on May 18, 2012 8:14:13 GMT 1
How do you determine "same condition or better" because often this is just a question of taste? Its a pretty straight forward agreement that the property gets left in the same condition or better than it started.
e.g. if someone lets out there home with all the walls painted white and gets it back in various shades of black with green stripes who is to say which is better? Something like changing colour schemes is a relatively minor thing and could be agreed between the two parties before hand.
or if an old, heavy oak door that needs repair is removed in favour of a brand new pine one, who is to judge which is better? Again just needs to be agreed between the two parties beforehand.
Do you get round this by taking a detailed inventory and making the buyer obtain the sellers permission before making "improvements"? Photo records tend to cover most eventualties.
If the seller agrees the price at 2011 prices and then when the sale date arrives in 2014, he finds that he'd get 30% more, can the seller pull out of the sale? The emphasis is on the buyer to come up with the funds by the agreed date, failure to do so might well lead to them loosing the property or having to pay an increased price if the value has increased. We haven't experienced this situation as prices are dropping rather than increasing and are likely to continue doing so for some time yet?
If the seller can withdraw, then what happens to the rent money paid? The seller can only withdraw if the buyer fails to raise the funds by the agreed date.
OK the scheme is not for everyone but there are people out there stuck in the trap of wanting to move abroad but not being able to sell their current property at the moment. Sellers in Croatia are sitting on properties that they cant shift because there are no buyers and yet their properties still need to be maintained, aired etc. It can be a win-win for both parties if the agreed price is realistic and the risk is really in judging when the market will improve and this awful recession will come to an end.
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Post by Carol on May 18, 2012 8:30:57 GMT 1
My agency has had similar issues UTV, the TV companies wnat everyone to be available according to their timetable, and then they change their minds at the last minute.
So you'll convince a series of sellers to put their houses on the programme (not always easy). Then the TV company will make a timetable a few weeks in advance and you'll advise people of the times warning that it might vary by a couple of hours earlier or later. Then the Tv company will arrive and will decide on a whim that they are not interested in that property anymore and they'd like 5 new ones to choose from. So you nearly kill yourself jumping through that hoop (damaging your relationship with your clients in the meantime) and the TV company sees maybe 2 of the 5 properties you worked hard to get at short notice. Then they leave and don't even bother telling you when the TV programme is going to be broadcast.
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Post by Madgolfer on May 18, 2012 14:48:24 GMT 1
Posting in the wrong thread me thinks Carol ??
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