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Perhaps you want to realize profits from the improved exchange rate, capital gains over the last years or, in the worst case, you have a negative cash flow property which you want to unload. Before selling because of this last option please see our earlier article: 6 Simple Tips to Save 30,000 CZK a Year On Your Czech Rental Property which may help you to turn your cash flow around.
In each case, you want to be able to sell your property and get the maximum value possible for it. Most of the time you will also be under a time constraint due to your mortgage fixation period (see point 1 below). How can you manage both of these things in the sale of your property?
We have compiled our top 5 tips from CZECH POINT 101’s years of real estate experience in the country which are vital for executing a resale for maximum profit.
If you live outside the country and are unable to manage the sale yourself, consider these factors as a criteria list for who you would chose to resale your property.
1. Research your mortgage payout options
Almost certainly you have purchased with a Czech mortgage. The thing many buyer’s don’t realize is that Czech banks have very high penalties if you try to payout the mortgage at a time other than when the fixation comes up for renewal.
The penalty can run up to a massive 25% of the unpaid amount of the mortgage. Ouch, ouch, ouch! There goes any currency gains you were looking forward to.
Also important to realize is that there is an exact time period, sometimes as short as a day, in which the bank expects payment to be made. Missing this by one day can mean paying the penalty.
Often the bank also needs to be notified at least a month before the fixation day comes up that the mortgage is going to be paid out.
As you can see, all of this requires timing and research!
2. Have a price reduction strategy
Based on your deadline, whether it is the mortgage pay down date or a date you personally need the cash, set definite dates at which point you would lower the price if you didn’t have a future purchase contract signed.
3. Advertise the property on ‘for sale by owner’ websites
It has been estimated that 50% of property in Czech Republic is sold without going through a real estate agency.
Why is this?
Firstly, real estate commissions are from 3 to 5% and typically on the higher side of this range.
Secondly, real estate agents have a very bad reputation in Czech Republic for and partly because there are no barriers for entry into the industry as there are currently no regulations for getting a real estate license. Because of this, fraud and agents acting only in behalf of their commission (ie. saying or doing whatever is necessary to get their commission) has been common and continues to occur with alarming frequency.
There are a few ‘for sale by owner’ websites but the one with the most recognition is www.bezrealitky.cz. It is also good to advertise on other real estate servers where agents also advertise including www.sreality.cz.
4. Check real estate agencies’ cooperation agreements
It is not common to have exclusive agreements between a real estate company and an owner in Czech Republic but some real estate firms do require it.
If you sign such an agreement with a real estate firm be sure to check out which other agencies they cooperate and have some rough idea about how the commission would be split if another agency brought a buyer. 50/50 is common but some agencies try for 75/25. If a cooperating agency will only get 25% of the total commission they will not be motivated to bring a buyer.
5. Ensure cooperation of the tenant, if there is one
Inform the tenant early on about the desire to sell the property and try to get their cooperation with viewings. With a conventional rental contract it could be necessary to wait until termination of the agreement in order to hand the ownership over. When using CZECH POINT 101’s contract system, three month’s notice is possible.
For more details on what a tenant’s rights are in a sale situation, see our earlier article on Czech Landlord and Tenant Laws.
Good preparation and following a defined strategy will help you get the best possible return on your property resale in Czech Republic.
You can ask any questions about this article or Czech property in general, by contacting us at: info@czechpoint101.com.
5 Vitals to Execute a Maximum Value Resale in Czech Republic
Submitted by Nathan Brown on – No Comment |
Are you looking to sell your property in Czech Republic?
Property in Telc
In each case, you want to be able to sell your property and get the maximum value possible for it. Most of the time you will also be under a time constraint due to your mortgage fixation period (see point 1 below). How can you manage both of these things in the sale of your property?
We have compiled our top 5 tips from CZECH POINT 101’s years of real estate experience in the country which are vital for executing a resale for maximum profit.
If you live outside the country and are unable to manage the sale yourself, consider these factors as a criteria list for who you would chose to resale your property.
1. Research your mortgage payout options
Almost certainly you have purchased with a Czech mortgage. The thing many buyer’s don’t realize is that Czech banks have very high penalties if you try to payout the mortgage at a time other than when the fixation comes up for renewal.
The penalty can run up to a massive 25% of the unpaid amount of the mortgage. Ouch, ouch, ouch! There goes any currency gains you were looking forward to.
Also important to realize is that there is an exact time period, sometimes as short as a day, in which the bank expects payment to be made. Missing this by one day can mean paying the penalty.
Often the bank also needs to be notified at least a month before the fixation day comes up that the mortgage is going to be paid out.
As you can see, all of this requires timing and research!
2. Have a price reduction strategy
Based on your deadline, whether it is the mortgage pay down date or a date you personally need the cash, set definite dates at which point you would lower the price if you didn’t have a future purchase contract signed.
3. Advertise the property on ‘for sale by owner’ websites
It has been estimated that 50% of property in Czech Republic is sold without going through a real estate agency.
Why is this?
Firstly, real estate commissions are from 3 to 5% and typically on the higher side of this range.
Secondly, real estate agents have a very bad reputation in Czech Republic for and partly because there are no barriers for entry into the industry as there are currently no regulations for getting a real estate license. Because of this, fraud and agents acting only in behalf of their commission (ie. saying or doing whatever is necessary to get their commission) has been common and continues to occur with alarming frequency.
There are a few ‘for sale by owner’ websites but the one with the most recognition is www.bezrealitky.cz. It is also good to advertise on other real estate servers where agents also advertise including www.sreality.cz.
4. Check real estate agencies’ cooperation agreements
It is not common to have exclusive agreements between a real estate company and an owner in Czech Republic but some real estate firms do require it.
If you sign such an agreement with a real estate firm be sure to check out which other agencies they cooperate and have some rough idea about how the commission would be split if another agency brought a buyer. 50/50 is common but some agencies try for 75/25. If a cooperating agency will only get 25% of the total commission they will not be motivated to bring a buyer.
5. Ensure cooperation of the tenant, if there is one
Inform the tenant early on about the desire to sell the property and try to get their cooperation with viewings. With a conventional rental contract it could be necessary to wait until termination of the agreement in order to hand the ownership over. When using CZECH POINT 101’s contract system, three month’s notice is possible.
For more details on what a tenant’s rights are in a sale situation, see our earlier article on Czech Landlord and Tenant Laws.
Good preparation and following a defined strategy will help you get the best possible return on your property resale in Czech Republic.
You can ask any questions about this article or Czech property in general, by contacting us at: info@czechpoint101.com.
If you liked this article you would probably also be interested in:
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- Resource website for listed prices of Czech real estate
- Rents Increasing as Mortgage Payments Greatly Exceed Rents
- Czech Republic rated second in the world for property price growth Q1 2009 at 9.9%
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