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Go Global…
Exploring European Real Estate
By Patricia Tan
For the past few years, the weakness of the U.S. Dollar has made it relatively expensive for Americans to purchase property in Europe. Recent changes in the global currency landscape have changed that. At the time of going to press, the British Pound was trading 30% lower than its peak, and the mighty Euro had taken a significant tumble too. This shift in exchange rates, coupled with falling prices and over supply of real estate in many European countries, suddenly makes an investment there look attractive to those holding U.S. Dollars.
So for those Dollar-rich investors looking to make a real estate investment in Europe, what are some of the issues they may encounter along the way?
The first and best advice to heed is don’t assume anything is like the U.S.A. The method of buying property will undoubtedly vary from country to country, but you can rest assured that it will not resemble a U.S.A. real estate transaction in any way!
First, finding the property is much more difficult. The concept of a Multiple Listing System (MLS) is alien to all European countries. While there may be some level of cooperation between agents in a local area, it is not unusual to see a property listed by several agents, and often at different asking prices. The buyer must work with several agents and look at each of their personal listings to find the right property. This may be very time consuming and costly. American buyers will find the concept of a buyer’s agent, someone acting in the best interests of the buyer, to be unknown in many markets.
It is very unusual in most European countries to find any kind of required licensing for real estate agents. In some countries there may be trade associations, but membership is usually voluntary. The consumer needs to be aware that the protections afforded by America’s stringent licensing requirements for REALTORS® do not exist in Europe.
The seller’s duty to disclose any known defects with a property is not something that can be relied upon in Europe. Furthermore, many European homes will be “old”, and potentially much older than the buildings Americans are used to living in. Buildings can date from 1500s and before, and may have been in the same family ownership for many generations. The phrase buyer beware certainly springs to mind when purchasing an older property. Licensed home inspection is not a recognized trade in most countries. Thorough inspection of a property will probably involve several tradesmen who will each examine the property from the point of view of their own expertise. The electrician may uncover some plumbing problems. The plumber may observe some potential structural issues, the engineer may highlight potential roof problems and so the list goes on. It is the buyer’s job to make sense of these often conflicting reports and decide just how much maintenance and renovation may be needed!
In most, if not all countries, it is imperative that an attorney draws up the contract of sale. This will usually be done after all negotiations have been completed verbally, and the buyer’s attorney will work with the seller’s attorney to document the agreement between both parties. Each attorney will obviously be looking to protect his client’s best interests, and it can be some time to get to a fully executed contract. In some countries, advances have been made towards a standardized contract of sale, but even negotiating this can take time.
The way title to a property is recorded in each country will differ, and the method of ensuring that good title is passed will be different depending upon the country and its history. Title searches may take a several months to complete. This is usually part of the attorney’s duties, and happens once contract terms have been agreed. Title insurance may not be the norm, or even available in many countries
The options for financing a purchase will vary from country to country, as will the ability and ease of moving funds from U.S.A. to another country. Most countries have stringent money laundering rules in place, and buyers should allow time to fulfill any local requirements for sourcing funds. The timing of currency exchange is also a vital consideration, and one which should be tackled with the assistance of a specialist currency company, rather than the purchaser’s local banker.
Having said all of that, finding and owning your own little piece of Europe can be most fulfilling. Americans are often drawn to Europe by a desire to uncover their personal heritage and family roots. Once there they fall in love with the people, culture, history, food and wine, and general joie de vivre of their chosen corner of this very varied continent!
The International Division of Prudential Palms Realty in Sarasota employs real estate professionals from many European countries, fluent in 14 different languages. They will be happy to advise on aspects of European property ownership. Call Patricia Tan on 941-504-9232 for more details.
Patricia Tan was born in England, and moved to Sarasota in 1997. Her career afforded her the opportunity to live and work in many countries around the world, including Australia, Hong Kong, Singapore, Malaysia, Indonesia, Germany, France, Belgium, Netherlands and the United Kingdom. She spent five years as a Director of an American real estate franchise in England in 1990s. Patricia has served as Chairperson of Sarasota Association of REALTORS®’ International Council, and serves on Florida Association of REALTORS®’ International Operations Committee. She currently works as International Sales Director for Prudential Palms Realty. Patricia may be reached at 941-487-5107 or patriciatan@prudentialpalmsrealty.com [2].
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