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Overseas Agents: How to avoid getting ripped-off

Published 16th May 2007

Choosing a good overseas agent is essential for investors hoping to buy property abroad…

“Choose your overseas property agent wisely” cautions Chintan Mahida of Nubricks. “Selecting a good overseas property agent is paramount as he or she needs to be someone reliable who can be your eyes and ears throughout the buying process and beyond to completion.”

“It’s a bit like the Crystal Maze, there are pitfalls to avoid and hurdles to overcome, property and tax laws vary from country to country, and language barriers can make transactions tricky.”

Five obvious benefits
• An overseas property agent should be able to give you an accurate picture of the market and tell you the price you should be looking to pay for the kind of property you are looking for.

• An overseas agent can match your needs to property currently on the market and can use local contacts to source property to match your specifications.

• An overseas property agent will have a good knowledge of the country’s local regulations, customs and laws relating to buying property there.

• Overseas agents often provide ongoing after sales support and offer a range of other important services such as financial advice and furnishing and letting services.

• Overseas agents can present you with a range of different property options to show you what’s on the market and what you can get for your money.

Seek and you shall find online
The Internet is a great place to begin your search, with so much free information available online. Online overseas forums and blogs are a good source of ‘been there done that’ stories. Take anyone offering overly rosy recommendations with a pinch of salt, as they may just be an agent or developer in disguise.

Alternatively, local papers, overseas property magazines and overseas property shows and expos are a great way to talk face to face with people. However, there is no substitute for visiting your place in the sun in the flesh.
Word of mouth
Word of mouth is probably the best recommendation you can get. Use the expertise of friends and colleagues who have invested overseas – they will probably be able to point you in the direction of a trusted good overseas property agent that they have used in the past.

Be aware that a number of overseas property firms offer past clients referral incentives for recommendations, so find out why they are being recommended and check the validity of any testimonials given to you by the agent.

Talk to buyers who have already bought with the agent and question what they think about the service they received throughout the process, and if they are happy with the development or property they choose.

Local property expert or big shiny overseas company?
Contacting at least three overseas estate agents is recommended before making a decision on whom to go with. All that glistens is not gold and here in the UK we are far too used to buying with big brands. Whilst there are some big reputable overseas property companies out there, slick marketing and strong sales are not a substitute for good local knowledge.

Using an agent with offices in the UK might sound comforting but beware that some will simply pass you over to their overseas agent contact as a client referral.

There are upsides and downsides to choosing a local agent - on one hand a local resident has invaluable knowledge that UK agents may lack, along with access to property through local connections that you might not otherwise see. However local agents have different expectations of service levels and communication can be somewhat lacking, especially if language is also an issue.

Come fly with me
Once you’ve registered your interest with an overseas property agent, he or she will get in touch and discuss your requirements. At some point in the process you will need to go out and inspect the property or development in the flesh. Many agents will deduct this expense from the final cost of the property, but it’s still best to ensure you don’t go before you’re ready.

Keep in mind that a cheap inspection trip isn’t the most important factor in choosing an overseas agent - it’s more of a sales gimmick. Ignore the sales pitch for the BWM 3 series that you will be ferried around in and the five star accommodation you will be provided with and concentrate on making sure your chosen overseas agent has a proven track record.

You are going to be spending whole days with your agent so make sure it’s someone you can get on with. The big boys have massive call centres so make a point of asking to speak to the agent you are going to actually view property with, not just the telesales girl making your appointment.

An agent is for life not just the summer holidays

Make sure you ask lots of questions!

If you are buying-to-let or buying-to-sell these are some important considerations to bear in mind, including:
• What is the expected return on your investment?
• What sort of price increases have properties seen over the last few years?
• If you’re interesting in BTL, what sort of rent will the property command?

Some overseas property agents will guarantee a certain level of return on the property, but make sure that their forecasts are realistic.

Many overseas agents are eager to sell, sell, sell but often change their tune when it comes to reselling your investment. Ask for real evidence of what properties they have sold and don’t forget to ask about their proposed online and offline marketing methods.

You should also ask your agent what services he/she will undertake on your behalf, from putting in offers, keep you informed throughout the process and dealing with you on interim check visits to accompanying you to the notary on completion day.

Don’t get conned buying property overseas
The truth is that the business of overseas property has its fair share of unscrupulous agents but no more than any other business. International property, unlike financial services, is not currently regulated by any one specific Government body.

Remember that whilst most estate agents work hard to find your dream property, commission arrangements may mean they are compensated by the seller or the developer which may affect their impartiality.

Chintan Mahida advises: “If you are buying off-plan…always ask to see the developer’s previously completed projects. Did they have snagging problems? If so, were they resolved in a timely fashion? How is the community set-up? Many investment projects have the developer as the holder of the majority vote and can pass through community decisions not necessarily in the interests of owners”.

For hotshot investors buying sight unseen, due diligence especially from a legal perspective is even more vital. There is no better way to size up a property or development site than stand on the plot itself, see your view, meet potential neighbours and find out if that new aqua park really is being built nearby.”

The importance of good communication.

Keep lines of communication open.

No-one likes to be the bearer of bad news but delays are inevitable, so make it easy for your agent to keep you updated. With skype chat or email you can regularly ask for site photos and progress updates, join a forum or subscribe to a blog with comments from other buyers who have bought in your development or area and make the time to fly-out and check on building progress.

Above all:
• Don’t leave your brain on the plane.
• Don’t do anything you wouldn’t do if you were buying a property at home.
• Do visit during the worst season of the year.
• Do remember whilst the property prices might seem a bargain in comparison to your domestic market, £20,000 is still a lot of money to lose.
• Don’t be afraid to challenge any wild claims.

Reputation is key
An agent’s reputation and credentials are the reason repeat business exists; use that to your advantage and choose an overseas company or agent whose good reputation precedes them.

There are a number of professionally recognised bodies for estate agents in the UK which encourage best practices within the industry. The Overseas Property Industry has a number of professional associations which have been set-up with the same goal in mind. In some countries like France and the USA professionally qualified estate agents will hold a licence to practice.

Each organisation has a code of practice which Members have to sign up to. Since these bodies are self-regulatory ( like ABTA for example) and are not required by law it is important to understand that in general the penalties levied by these groups are rarely more serious than expulsion from the group. Membership of professional associations cannot guarantee to guard you against malpractice and often they will help meditate any misgivings you may have against a member.

Choosing a professionally qualified overseas agent linked to one of these bodies is your best option if you know little about the place where you are buying and if an agency is not part of one of these bodies, you might want to inquire as to why not? Often industry groups share their members’ local experiences to build up a network of recommended agents in different countries.

Make sure also that the lawyer you choose is also regulated by a professional body or association. They should know the specifics in buying a property in your chosen country, be proficient in laws and processes there and should have some with local language skills involved in your case.

Experience working with foreign buyers of property is crucial; insist on references from anyone you work with and make sure they are from individuals who have already been in your shoes. If your advisor can’t offer you a reference, think twice about using his services.
NB. Nubricks has compiled a list of International Estate Agency Associations based worldwide.

Added Extras
Money makes the world go round and fees for agents and solicitors vary widely depending on the country. Check with your chosen country’s professional association to find out what the commission rates are like in the area you are looking.

Unfortunately your agency’s priorities are likely to lie with whoever pays them, so be aware they may also receive kickbacks from recommending you to lawyers, currency exchange, furnishing, insurance and rental management companies.

Before parting with any cash, get a guarantee that someone independent will hold your deposit. If the deposit holder has indemnity insurance and a bond then that is even better.

Make your life easier
There are some excellent overseas property agents out there and with a little time and research you will have no difficulty finding a good one to help you purchase your ideal home in the sun.

Horror stories aside, a good overseas property agent can be worth his weigh in gold, eradicating much of the hassle, time-wasting and pitfalls of trying to go it alone.

Source: ' Move Channel Ltd '

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