Buyer's Guide

1. WHAT YOU SHOULD KNOW – CHOOSING A HOUSE TAKES TIME
2. DO YOU KNOW WHERE TO LOOK?
3. REAL ESTATE AGENCIES
4. DO YOU KNOW WHAT TO ASK FROM A REAL ESTATE AGENT?
5. HOW DO YOU CHOOSE YOUR REAL ESTATE AGENT?
6. WHAT YOU SHOULD KNOW ABOUT REAL ESTATE AGENTS
7. WHAT YOU SHOULD KNOW IF YOU WORK ALONE
8. WHAT YOU SHOULD KNOW IF YOU – BUY OR RENT
9. WHAT YOU SHOULD KNOW WHEN YOU VISIT A HOUSE
10. WHAT YOU SHOULD KNOW ABOUT COMPARATIVE ANALYSIS
11. DO YOU KNOW HOW TO AVOID POSSIBLE PROBLEMS
12. CLOSING THE DEAL – CONCLUDING A PROTOCOL, A DRAFT DEED OF CONVEYANCE, AND AN AUTHENTICATED DEED OF CONVEYANCE

1. WHAT YOU SHOULD KNOW – CHOOSING A HOUSE TAKES TIME

You should never decide on a house before watching what generally takes place on the real estate market for at least three or four weeks, without obtaining comprehensive information on prices, and the trends of supply and demand. You should talk to a couple of owners, and consult with a real estate agent in order to analyze the current price level. Only then you will know if the chosen dwelling place is worth the price charged by the owner or not, and this will help you negotiate a right price on your own, or together with the real estate agent.

1. DO YOU KNOW WHERE TO LOOK?

When you have decided to buy a house, the first thing you should do is obtain a lot of information. You can receive information in an informal way (from friends, acquaintances, co-workers), as well as in a formal way (real estate advertisements in newspapers or other publications, or directly from real estate agencies you can contact in order to find a house).

1. REAL ESTATE AGENCIES

When you visit a real estate agency, you should find qualified personnel who would ensure reliability, and the best conditions for closing a deal. All the foreign employees of multinational companies who come to Romania go to agencies; many businesspersons who want to open branches in other countries, where they are not familiar with the real estate environment, do the same. Multinational companies use real estate consulting firms to buy or rent offices, or dwelling places for their employees.

•  DO YOU KNOW WHAT TO ASK FROM A REAL ESTATE AGENT?

Why should you consult real estate agents? Because they deal with owners, and houses offers everyday.

An expert real estate agent will give you information on the houses that are for sale, their prices, what you should check at a house, on location, area, neighborhoods, nearby markets, documentation you need in order to conclude a deed of conveyance, a possible mortgage on the house, the person who has the right to sell it, and lots of other connected things.

•  HOW DO YOU CHOOSE YOUR REAL ESTATE AGENT?

First, the agent should be employed by an easily identifiable real estate agency. The firm should have a fixed head office, an identification sign (at the entrance), an office arranged for public relations, a secretariat, and also a negotiation room, in which customers can privately discuss with firm's representatives details of payment, price, confidentiality. The agency should also be a member of a professional union, where you can check its activities, possible cases of misconduct, and its accreditation.

Before deciding whether you want to work with a certain agent or not, consider the following.

If you buy a house, think you are working with an agent who has specialized in your type of property.

The agent will help you focus your search, and analyze the market.

The agent arranges for you to visit houses that are for sale, and accompanies you on these visits.

The agent coordinates all the aspects of the deal, from the offer presentation and the preparation for the visit, to the consultation regarding relevant valid legislation and documentation during the transaction.

The agent presents the seller's offer, and helps you negotiate the transaction.

The seller and the buyer have difficulties negotiating directly, because of the frequent lack of trust, and negotiating abilities.

The buyers and the sellers do not have specialized knowledge about properties, and the transaction process requires closing a deal. Problems connected with legal issues, fees, areas, etc. usually occur here.

1. WHAT YOU SHOULD KNOW ABOUT REAL ESTATE AGENTS

The activities of real estate agents and real estate agencies are regulated by the law on the establishing of trading companies, and Government Decision 3/2000 on the activities and legal obligations of real estate agents. Unfortunately, this decision is elliptical and somewhat counterproductive, as it is very confusing, and lacks the coherence of a law that should actually regulate an economic activity with profound implications.

In their activities, respectable real estate agencies, which are members of professional associations, have adopted the ethics and good practice code , and thus the consumers of real estate services can solve their real estate problems safely, quickly, and professionally.

Bucharest real estate market practice has imposed the so-called double real estate agent, who can represent both the buyer and the sender. Double agency representation requires both parties', the seller's and the buyer's, awareness and consent. In fact, a double agent undertakes to look after both parties' interests. This takes place during the entire transaction process. The real estate agent's fee is paid both by the seller and the buyer. The fee usually ranges between 4 and 6%, and is divided between the seller and the buyer, as follows:

•  The seller pays 2 to 3% of the selling price.

•  The buyer pays the same fee, which is added to the purchase price.

If you work with an agent, you have two choices:

•  You can work with an agent according to an exclusive intermediary agreement.

•  You can work with an agent according to an open intermediary agreement.

In case you are a buyer, it is important for you to choose the right agent. You can copy the checklist below, and use the questions in order to interview a couple of agents before making your choice.

Do you work full-time or part-time as a real estate agent?

____ Full-time (preferable) _____ part-time

Are you employed by an accredited real estate agency?

You can check at the license office, if you are not sure about the authorization of a certain real estate agency. Avoid working with un-accredited agencies, whose activities are not supervised, and which do not comply with the regulations of NUREA (National Union of Real Estate Agents), which guarantees member agencies' proper conduct.

_____ yes _____ no

What is your experience? ______ years

Work with an experienced agent, especially if you buy a property for the first time.

How well do you know the area/areas I am interested in?

An agent who is specialized in the area you are interested in is preferable.

1. Area _________________
2. Area _________________
3. Area _________________

How many other buyers and sellers are you representing at the moment?

You should work with an agent who would give you all the time you need. But remember that the busiest of agents are usually the best.

_____ customers

Will you take care of all the aspects of my transaction, or will you delegate some of the tasks to an associate or assistant?

If you work with a busy agent, a knowledgeable assistant could be useful when you have a lot of questions.

______ all the aspects ______ delegate

Can you give me a list of all the houses you have sold for the last 12 months?

If you are not sure about the respective agent yet, ask for this list so that you could contact some of the customers, and ask about their experience. This list should contain addresses, property types, buyers' and sellers' names, dates of the sales, and prices.

1. WHAT YOU SHOULD KNOW IF YOU WORK ALONE

Look for houses during your own free time, and make your own analysis of market conditions, and types of available houses.

You are responsible for the transaction, therefore you should learn about relevant legal legislation.

Look for specific services, such as legal advice for the conclusion of the deed of conveyance, or house inspection.

Pay for the services you have decided you needed, as well as for assistance in negotiating the deed of conveyance.

1. WHAT YOU SHOULD KNOW IF YOU – BUY OR RENT

•  If you decide to buy a house, analyze the following aspects:

- What are your reasons?

Do you need more rooms for your expanding family, or want to move closer to work or school; is your house too large, and you want to buy a smaller one, which is easier to maintain; do you want to make a real estate investment?

Write a list of priorities , and analyze it thoroughly; thus, you will be able to weigh all aspects in order to make your decision.

- How long are you going to keep this house?

If you expect to leave the place within the next two years, or to stay in the current house and reconfigure the space, maybe you should consider renting. Think whether renting or buying will work better for you.

- Do you have enough cash to cover the costs of down payment, final payment, buying fees, moving, and renovation?

When you buy a real estate property, the down payment you make when you conclude the draft deed of conveyance amounts to 5 to 10% of the purchase price. Calculate how much and when you can afford to pay the entire amount, taking into consideration that in most cases when the authenticated deed of conveyance is signed the seller wants to receive the entire price.

- Can you afford to pay a monthly credit you take in order to buy the property besides your usual expenses?

A monthly credit installment should be less than one third of your net income. Draw up a budget, and estimate the amounts you have to pay. You should also consider the extremely complicated procedures imposed by banks on credit taking when you decide to finance purchases in this way.

9. WHAT YOU SHOULD KNOW WHEN YOU VISIT A HOUSE

Collect all the information you need in order to make comparisons later. A lovely Brancovan-style house may be your favorite until you reread your notes, and discover it needs serious work on its strength structure.

General Requirements

Property category Property type

New One-family property

(villa, house)

Resold Common property (apartment in an

apartment building, or in a villa)

Description Needs Wishes

Maximal price

No. of bedrooms

No. of bathrooms

Living room

Dining room

Family room

Renewed kitchen

Finished basement

Renewed electrical system

Renewed plumbing

Fireplace

Closet

Garage

Main yard

View

Back yard

Swimming pool

Disabled entrance

General condition

Quality schools

Friendly neighbors

Parks in the area

Shops in the area

Public transportation

You should know that if you have written this list correctly, and considered all implications, the chances of a shorter and less stressful buying process would be very high. You should also know that you could give up some of the items on the “Wishes” list, but you should not give up anything, or almost anything on the “Needs” list.

•  WHAT YOU SHOULD KNOW ABOUT COMPARATIVE ANALYSIS

If you work with an agent , he or she should draw up a comparative market analysis. This analysis compares similar neighborhood houses that have been sold recently (for one year or the last 6 months), or that are still for sale, but also houses from other areas, in order to have a synthetic and objective picture of the property type you choose, and its dynamics on the market as a whole. The elements of a good analysis include:

Ø Current market situation

The higher the house demand, the more you will pay, and properties will be sold very quickly.

Ø Prices of comparable houses sold in the area recently.

Prices differ; try to find out the prices of the most recently sold properties so that you could have a picture.

Ø Seller's motivation.

In the case of a very powerful motivation (divorcing, moving soon, etc.), the seller could be satisfied by a smaller price in exchange of a quick sale. Questions at Ask the seller .

Ø Estimate your purchase costs

If you work with an agent, he or she could show you a list of the closing costs on categories, therefore do not hesitate to ask for it. In case you work alone, ask a notary public, attorney at law, etc. The (final) closing costs could range between 2 and 5% of the property-purchasing price. Are you ready to begin the negotiation ?

11. DO YOU KNOW HOW TO AVOID POSSIBLE PROBLEMS

The real estate agent can help you solve many problems that occur during house purchasing. However, some problems may involve your relations to the seller. Be prepared to solve any disagreements immediately in order to avoid their worsening, or the occurrence of more serious problems.

Problem : You had already made an offer, and then you found another house you wanted to buy.

Solution : Your agent should immediately notify the seller that you want to withdraw your offer. Generally, if the seller has not had time to sign the protocol of conveyance and the draft deed of conveyance, you will not have any problems. If your agent already has the signed documents, you are legally bound to fulfill your obligations, or bear the legal consequences, which could include a partial or total loss of the down payment.

Problem : The seller has concealed some negative elements (hidden flaws) of the house you have already made an offer for.

Solution : The seller and the real estate agents are legally liable for concealing such negative elements (known and not made public); therefore, you have enough grounds to press charges. If the problem is quite serious, you should see your attorney immediately in order to avoid losing any of your legal rights.

Problem : Your agent is not familiar with an area in which you would like to look.

Solution : Work with an agent who has specialized in that area. If you like your agent, ask him or her to recommend somebody.

Problem : Your agent has told the seller's agent how much you wanted to offer.

Solution : Such disclosure is unethical, and potentially illegal. As practical action, look for another house for sale, and another agent.

Problem : Your agent is not willing to present your low offer.

Solution : Your agent has to present all the offers you make to the seller. Notify the real estate agency that employs the respective agent of your discontent, and change the agent.

Problem : You want to change the agent.

Solution : It is easier to change an agent before progressing too much in the process of house purchasing. If you have signed an agreement with the agency, reread it in order to find out the steps you should take to cancel it. In any case, it might be a good idea to contact the firm director so that he or she could intervene, or appoint another agent from the firm.

12. CLOSING THE DEAL – CONCLUDING A PROTOCOL, A DRAFT DEED OF CONVEYANCE, AND AN AUTHENTICATED DEED OF CONVEYANCE

Ø The PROTOCOL of conveyance is the document by which the parties (seller and buyer) concluding the transaction admit that they have received real estate intermediary services, and undertake each on their own to pay a fee to the firm for these services.

Ø The PROTOCOL is a real reciprocal promise of conveyance. It also states that if the seller and the buyer wish to receive, and pay respectively a down payment (or deposit) this can be done only by a draft deed of conveyance, which would exactly state the deposit amount, as well as the date on which parties will go before a notary public.

Ø When signing the PROTOCOL , the agent will ask the parties to write their names clearly, mention the fact that they agree to the transaction, and then sign.

Ø The DRAFT DEED OF CONVEYANCE is a legal document by which the seller and the buyer commonly undertake to close the deal before a Notary Public within the term set by the parties.

Ø At the signing of the draft deed of conveyance a down payment may be made as deposit; its amount cannot exceed 10% of the total selling price.

Ø The DRAFT DEED OF CONVEYANCE may be registered with the Land Registry if the term set for the signing of the authenticated deed of conveyance is longer than the set one, or if the seller has proven to be dishonest. If a DRAFT DEED OF CONVEYANCE has been registered with the Land Registry, it means the real estate property cannot be sold to someone else.

Ø On the day when the transaction is concluded, the documents are checked for accuracy, the seller officially signs before the Notary Public an AUTHENTICATED DEED OF CONVEYANCE by which he or she sells the property to the buyer, and the buyer pays the price of the respective property.

Ø The documents the buyer needs in order to conclude an authenticated deed of conveyance are the following: an identity card, or passport, and a marriage certificate (when it applies).

Ø Penalties

When you conclude a draft deed of conveyance, you should see that it also includes penalties for failing to comply with the conditions of the respective draft deed of conveyance. If a buyer fails to fulfill the conditions provided for by such a deed, he or she will lose the down payment he or she has made. If the seller fails to fulfill the conditions provided for by the draft deed of conveyance, he or she will have to pay the buyer twice the down payment he or she has received from the buyer.

Ø Any real estate agency should employ experts or consultants who would prepare the entire documentation for the conclusion of an authenticated deed of conveyance, and give advice during the entire transaction process.