“It’s not stress that kills us, it’s our reaction to it.” This was the conclusion Hans Selye, a Hungarian-Canadian scientist, came to when he first identified stress as being linked to illness.
Buying a home is a major stress point, right up there with divorce and a new job!
The home buying process in Bali has the potential to push all the wrong buttons in all the wrong places and turn everything ugly. Most of the horror stories occur because rules aren’t followed, corners are cut, laws ignored, and regulations misunderstood. It doesn’t have to be like that.
These are some property investment insights from our experience in the business that we hope will help you better understand the process of buying a home in Bali, and make the experience more memorable, hopefully even enjoyable and ultimately minimize the stress!
Make a Plan and Do Your Research
At Seven Stones Indonesia, we’re very keen on talking to our real estate clients about Investment Road Maps because it’s important you’re clear about what you want and that will change how you can do it.
For example, do you plan to retire? Do you want to start a business? Do you want a holiday-rental home or a private place to escape to? Whatever it is, if you have a road map, you’re more likely to be able to navigate your way around and be in a better position to deal with anything that might not go exactly according to plan.
Research is always important and we encourage you to find out as much as you can about the regulations around buying property in Bali as well as the agents or agencies offering their services. Google and Facebook groups are likely to give you the best spread of information, but it’s important to note that many of the agencies and groups market the same listings.
It might seem a little “old school” but we’re big believers in taking notes. Writing things down helps us to gain clarity, compare areas and prices, and if you’re using agencies, compare services. You can even compare their social media posts to get a feeling about what’s important to them. This will give you a better feel for what, and importantly, who you’re dealing with.
Find an Agent You Can Trust
If you decide to buy a property through an agent, it really helps to choose one that’s not only professional in the way they do business, but is also one you like, or at least you feel you can trust.
That’s not such an easy thing to do because how do you trust someone you’ve only just met? The easiest answer to this is to ask them questions. As many as you can!
After all, it’s your money on the line and you have every right to feel comfortable you’re making the right choices. It’s also a good idea to ask your friends, networks, and connections for recommendations and experiences with an agent or agency. Word of mouth is still the best form of advertising, and that can be good or bad.
It’s worth noting that most vendors in Bali do not have exclusive listing agreements with just one agency, so if you see something you like it’s worth asking your agent if they can help put a deal together for you. The best will be more than happy to work together with other agents or agencies to ensure your home buying journey is easier and you get what you want.
Plan Site Inspections
When you’ve found a few properties and an agent you like, it’s time to go on inspections. This is where using an agent is useful because they’ll have direct contact with vendors and can save you the hassle of trying to organise this yourself. Some people do try though, and for some, it works, but in general, it can be more trouble than it’s worth.
It’s worth planning these inspections in advance. You don’t want to leave them to the last minute just in case the villa you want to see is occupied or under renovation or unavailable for whatever reason. If you can, plan a couple of days ahead of time and be flexible.
Negotiate and Make a Formal Letter of Offer
Don’t feel pressurised to make a rushed decision. Remember, it’s your money.
When you find a property that ticks most, or even all of your boxes, it’s time to negotiate. Again, working with an agent makes this part of the process easier and takes away unnecessary stress. And stress is what we don’t need, right?
Any offer you make should be based on a sound understanding of the property’s market value. Your agent should be able to provide you with the prices of comparable properties and recent transactions in the same area. This is key to being able to negotiate properly.
Good negotiations make the buyer feel they’ve got a good deal and make the vendor feel they’ve got a good price. Good negotiations are usually win-win scenarios.
One of the best ways to negotiate effectively is to work with your agent and submit a formal written offer. It shows you’re serious and that gives you an advantage in any negotiation.
Bear in mind there are taxes to pay. Freehold properties are subject to 5 percent purchase tax while the vendor’s income tax is 2.5 percent on the value determined by the government. Leasehold properties are subject to 10 percent income tax for the vendor.
Down Payments and Deposits
In Bali, it’s normal to pay 10 percent of the purchase price as a deposit for a property. It’s also normal for this to be held in escrow by a notary of your choice. It is definitely NOT normal for your agent or agency to hold onto your money.
The notary will then carry out due diligence to make sure all of the documents and taxes are in order. If due diligence uncovers something seriously wrong that can’t be fixed, you can get your deposit back. However, if you should choose to pull out of the deal at this stage because you’ve had a change of heart, your deposit is not normally refunded.
Due diligence by Notary/ PPAT
Due Diligence can take between one week and one month to complete, depending on the property in question. It’s a very necessary part of the legal process undertaken by a notary or a lawyer to ensure the vendor has the right to sell, all paperwork is in order and there are no disputes to resolve.
Deed of Sale and Purchase
After due diligence has been done and everything has been declared “clean”, it’s time to sign a deed of sale and purchase (AJB).
It’s at this point in the process that full payments have to be made to the notary.
The AJB is the transfer of legal rights of the property for a price you have both agreed upon. Once this is done, you can open the champagne and celebrate owning your new or second home in Bali! And best of all, you’ve managed to do it with minimal stress!
If you’d like to discuss property investments, please feel free to get in touch!
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