Keith’s Weekly Property News April 3-2021
Timing: For CBI buyers and Investors
Timing a good real estate deal correctly is often the critical factor, particularly in these highly volatile times. Clwyd regulations change, currency gyrates, and sellers often get the jitters, wondering if they are unloading their real estate too cheaply.
That is why timing is key. CBI buyers are faced with several hurdles: it is difficult to move on properties that are mortgaged or may have liens (incidentally, where often best deals reside), and buyers have to organise POAs across borders, work with lawyers who are not as speedy as we would like them to be, time zones, valuations reports and more.
Here is the standard buying procedure in Turkey.
-Identify the property
-negotiate (anywhere from 1-3 days)
-pay down a small deposit (5% range)
-move to finalise sale anywhere from a few days to a few weeks.
The buying procedure for CBI buyers
-Repeat first 2 steps above.
-Do initial checks to see if there are liens or mortgages (should be done by lawyer)
-Send the property for valuation (2-3 days).
-If the lawyer does net yet have POA or the Turkish account is not set up, the process will be delayed until that time. The time frames for this are very imprecise. That is why I am suggesting it is not a good idea to offer on properties until these are in hand. Then there is also the time needed to set up the bank account (2-3 days + wire transfer, which typically seems to be 1-2 days).
Non-CBI buyers can move faster if they are okay with their agent doing the deposit and sales agreement. The lawyer can be part of this process or not, but they will not sign the sales agreement if they do not have the POA. The only problem with this is establishing a time frame for closing which should be written in the contract. Given the range of times needed to execute POAs etc, this might not be the best option, but may be considered on a case by case basis, or when the deal is just too good to pass up.
In sum, it is best to have a POA + account open before entering negotiations on properties. Research and working towards identifying properties was a great strategy until that time. It gives enough time to get a real sense of the market.
Of course, clients who are in-country can speed up all of the above significantly. It can take just a few days to be in a buying position. So, if you see that property that you want, sometimes putting down a small deposit can work. Then you could order the valuation, fly over and tie it up within a week.
So, as you can see, various time frames. You have to select the one that works best for you and that you are most comfortable with.
Assuming all of the above are in place – POA/funds in Turkish account – you can move very fast if something really attractive comes up. You can be almost sure there will be others giving serious consideration to such a property in that situation. In those cases, we try to apply pressure to the seller by saying that the client is only here for a few days and just wants to buy a property quickly, making them think they may have caught a good buyer. Whatever works, right?
Notes on closing costs
In law, the 4% stamp duty is supposed to be shared by buyer and seller. However, the buyer sometimes/usually insists on an ‘in pocket’ amount and the buyers bears the cost. It all works out in the end to the same thing: what is the total cost to you being the only question that matters. Some clients object to this, so we just go back to the seller, they agree to pay the 2% stamp and raise their ‘in pocket’ amount 2%
This is how a typical negotiation on a budget property has been going these days.
Asking price is 600.000TL. The seller goes down and says he will accept 550.000TL in pocket, but not pay the expenses. In this case, the buyer would pay 550.000 + 4% stamp + 2.5-3% commission, so it often ends up back up near the asking price with the closing costs.
On properties over 1.5 mil TL, the scenario is often a bit looser and sometimes more penetration is made in the negotiation, though not always. Mostly, we are identifying properties that are well-priced and trying to nibble away a bit at it (see notes from last week and currency implications)
Notes on commission
As of February, when a client comes through referral our standard commission is 3%. However, on properties over 1 mil TL, we can be flexible on this and negotiate case by case.
However, on budget properties, 2% just does not work. It means we will often make just over 1K for a sale in many cases, which may still require much effort. We feel that the discounts we secure for the client by finding under-valued properties far outweigh this 1 percent.
Update on Transferwise:
Many clients have given positive reports. Great exchange rate, ease of set up and speed of transfer all received top marks. I am always happy to hear of alternative methods. I have used it many times in the past myself and was highly satisfied.
– Property picks for this week:
Property links distributed during weekly zoom session
Tagged: Istanbul property, buying property in Istanbul, central Istanbul, Istanbul apartments, Istanbul buildings, Istanbul investment, Istanbul property, Istanbul property sale, Istanbul real estate, Istanbul renovations, Property in Istanbul.