(Editor’s note: This is Pt. 2 of two parts about Christina Hudson’s house hunting in Athens which, like so much of Europe, has a very tight housing market. You can see Pt. 1 here.)
During my search for a new apartment in Athens, I had discovered that things can be very difficult because lots of people who are selling have complicated debts attached to the home and/or they haven’t done all the paperwork they need to do in order to sell because they don’t have the cash to do so and count on the deposit of the buyer to sort out those issues.
Futhermore, sometimes the seller tries to hide – or doesn’t even know about – loose threads which have to be tied up until the buyer’s lawyer starts doing their due diligence. It is not uncommon for distant relatives to have a claim to part of the property or for an old debt (even one which was paid off ages ago)
to still be on official record.
We experienced the latter.
Bafflingly complicated process
Our lawyer found one such old (but paid off) home loan still on the record. Our lawyer informed the seller we were working with that she would have to go through a bafflingly complex process in order to a). prove she had paid off a home loan which she had finished with years ago and b). get the record of that debt removed from the property record.
Was it as easy as getting a letter from the bank which stated the loan had been paid off in full? No, not it was not!
That was just the first step, actually.
The full process required the seller to retain a lawyer to complete some complicated paperwork, pay some fees and request that the application for this process be seen and approved by a special committee (a sort of court date) and on and on. Had our lawyer not found this issue when doing due diligence on the property, we would have “inherited” the problem and its related costs (both time and money.)
This is a common finding in Athens and there are many others.
Fees and commissions … lots of fees and commissions
You must hire a good real estate lawyer to carefully comb through the property history. In addition to the mandatory hiring of a lawyer as well as a simvolaiografos (a notary who also check documents and draws up any down-payment documents as well as others, including the final sales contract), be sure to have an engineer check out the house as well as the paperwork related to the construction and history of the building.
As of today, most lawyers and notaries in Athens will take a 1-percent or 2-percent commission on the final sale price. If you use a real estate agent to find your home, (s)he will take 2 percent as well. Real estate agents actually take a commission from both the buyer and the seller here now. They generally do very little so it is not money that most of us hand over happily.
Yes, you can negotiate some of these fees with some professionals, but they aren’t generally flexible and here’s the next shocker: Not included in their fees is the 24 percent VAT.
Real Estate transfer tax: At just over 3 percent of the purchase price, we had no idea about this tax until the week before we signed the final contract, so finding that out was quite memorable, to say the least.
Land Registry Fee: And even after that, there is an extra unexpected fee we had to pay today – the Land Registry Fee. We had to pay just over 2,000 euros to submit our purchase agreement/housing contract (dunno what to call it) which documents new home ownership with the national land registry.
Let’s just say that the costs beyond the actual purchase price are quite significant and should be added up carefully before you sign any agreements.
Wait … there’s more
If you have concerns about plumbing, electricity issues and so on, you will need to hire separate pros in order to assess the property accordingly. I thought the engineer would do all of that. I was wrong. Do not rely on owners to disclose issues. We had a pro who thankfully let us know that the chimney in our place was made of asbestos! We had to negotiate the replacement of that before we signed as well.
Also make sure that you understand that any down payments should be protected legally (i.e., use a notary or lawyer to draw up a proper agreement). Escrow is not used so you want to first of all be sure the house is exactly what you want before you make any down payment. Even with a proper agreement in place, it is not easy to get your money back.
The agent will offer an agreement for both parties to sign for a first quick down payment (customarily 1,000-to-5,000 euros) but that is very informal and you would have to go through a lot of extra hoops to have a return of the money enforced. A bit further down the line, many sellers will ask for a 10-percent deposit, so it is absolutely crucial that you are sure about the house and have done some basic checks before that happens. It’s one thing to lose 5,000 euros and another to lose 20,000 or even 50,000 euros depending on the cost of the home.
You should get all documents translated into your language so you can look at terms carefully.
Read everything and get legal advice before signing anything. Of course that is important anywhere, but her the justice system in Athens is overburdened and expensive so you really don’t want to get into any legal battles.
Banks here in Athens right now are all more or less offering the same deals on home loans. The costs are all split a bit differently but the monthly payments are more or less the same at most major banks. Be aware that they will not offer a lot of help with breaking down the numbers, so you might need to consult with an accountant for some assistance.
I hope you find your dream home. The process is definitely challenging, but that actually makes getting those keys in your hands feel like a very sweet victory!
Read more about Athens here in Dispatches’ archives.