1. If you decide to buy your property through an SRO, be sure it is near to completion, if not already fully completed, before starting negotiations.
Often an individual will first find the property they are interested in and then approach us to start a new SRO setup. This may feel like the natural order of buying property; however, since a new ‘real estate only’ SRO setup takes four to five weeks to complete it means the individual risks losing the property.
Although this may seem like a chicken and egg situation, if you are committed to buying in the Czech Republic and want to use an SRO, take the step of getting it processed early.
2. Obtain pre-approval for a Czech mortgage or arrange financing in your home country.
This not only puts you in a stronger bargaining position but also permits you to jump immediately to the next step of negotiating the purchase agreement without giving a deposit to the real estate agent (see the next point).
3. We strongly recommend that you never give a deposit directly to the real estate agent.
Experience has shown that once the money goes into the real estate agent’s hands it is very difficult to retrieve. Even if a deposit contract is signed don’t expect it to be honored. In one situation a signed purchase agreement was cancelled at the instigation of the seller and he acknowledged this in writing but the real estate agent still refused to refund the deposit. This situation is progressing towards the courts.
Usually the real estate agent wants the deposit before you have even seen the purchase contract or have anything in writing concerning the final price. Being committed with a substantial deposit plays into their hands because then you are more inclined to agree to changed or otherwise unacceptable terms to the purchase agreement.
What we recommend to our clients is that you first have everything in order and then when you find a property that you are interested in, proceed directly to the purchase agreement.
4. Commit all real estate fees and the purchase price to a notary office.
Notary offices in the Czech Republic function as a neutral third party and are safer to deal with than committing the purchase price to the real estate agency itself.
Even though agents may insist that it is ‘company policy’ for them to handle the full purchase price we have found they will agree to commit everything to a notary when you convince them that you are serious and coming forward with cash.
If your real estate agent continues to insist that they will only accept the purchase price going directly to them, move on to another agency or drop the property altogether as something strange is going on.
5. Check the land title on a property before negotiating and verify a recent original copy before signing a purchase agreement.
One of the first steps to ensure that you are not wasting time and energy on a property project is to verify that the seller really owns what they are claiming. The real estate agent should provide a copy of this for verification soon after interest is expressed and is expected to get a recent copy from the Land Registry before the purchase agreement is signed.
There are many horror stories of individuals buying land only to find out it is not really theirs because the seller was not the owner. In one recent situation the real estate agent asserted that a number of properties for sale were owned entirely by the one seller. He had strongly insisted on getting a deposit and proceeding toward the sale but the individual was suspicious and contacted us. We investigated on behalf of the buyer and discovered that not only was the seller only 8/9ths owner but also that the 1/9ths owner was going into bankruptcy. Of course this affected negotiations on the ‘bargain’ property.
6. Have a trusted lawyer versant in Czech and English review all contracts to be signed.
This is especially important if you feel it becomes necessary to sign any contracts with a real estate agency. Usually the contracts are very much in the favor of the agency and makes it difficult to retrieve any money held by them.
Often communication becomes a critical factor when dealing with legal matters. Be sure to get a lawyer who is fully conversant in English. It is often good to have a meeting with them beforehand to determine the level of their English language. Miscommunications can be very serious and costly when you are dealing with an investment project.
7. Be prepared to walk away from a property if too many factors are negative.
You might have already begun negotiating on a property when you start feeling uneasy about the way things are proceeding. In such a case, you need to be mentally prepared to walk away from the deal.
In one situation a real estate agent not only wanted his fees paid to him before we signed the purchase agreement but he wanted us to pay him in his office and not at the notary office. Also he informed us that the seller was not actually going to be meeting us at the notary office but that he would provide a signed version of the purchase agreement, signed at some other location. Our client had to walk away from this deal because there were strong indications that the real estate agent was neither acting professionally nor ethically.
You can ask any questions about this article or Czech property in general, by contacting us at: info@czechpoint101.com.
Updated/Aktualizováno: December 9, 2014,
