When is property valuation required?
Individuals usually encounter the need for property valuation when they apply for a housing loan. Banks may require that the value of the property to be bought or used as a security should be valuated by a professional real estate valuator. In addition, valuation is recommended when buyers have doubts whether the asking price corresponds to the market value.
Why do valuators ask for advance payment when their services are ordered?
Advanced payment is currently an established practice in the majority of companies because visiting a property object, analysing comparative data and holding discussions in a valuation committee entails actual work to be performed by a valuator in order to obtain a result. Advance payment is required to prevent situations where a client withdraws an order after the valuator has partially or fully completed the necessary work.
Answer by: Kätlin Kuusalu, junior valuator, Uus Maa Real Estate Bureau
What should clients take into account when ordering the valuation service?
To prevent excessive hassle and expenses when applying for a loan and ordering valuation services, it is useful to keep in mind the following points:
• Wait until the bank has made a positive decision on issuing the loan. This helps to prevent unnecessary expenses.
• Before ordering the valuation service, ask the bank to provide you with a list of accepted companies. Different banks often only accept valuations by certain real estate companies. This helps you to prevent unnecessary expenses.
• In some cases, a simple consultation regarding the market value of the property may be sufficient. This is also advisable before drawing up the initial loan application to prevent future misunderstandings regarding the market value of the object.
• Find out, which documents are required for valuation. Do not submit your order at the last minute to avoid delays and extra charges for express service.
• How long will it take to prepare a valuation report? The usual term for the handling of orders is up to two business days, taking into account the time required for inspecting the object and reviewing necessary source documents. Time is required for inspection of the object, approval of the results in a valuation committee, and drawing up a valuation report.
What are the main characteristics of a professional valuation report?
A professional valuation report should be as specific as possible, including a detailed description of the object and all assumptions and facts used as a basis for valuation.
The analytical process of valuation should be presented in an intelligible manner, with a clear and unambiguous specification of the valuation result.
What is the Estonian Association of Real Estate Valuators?
The EAREV is an organisation of valuators, consisting of natural persons, responsible for coordinating valuation activities in Estonia and dealing with matters pertaining to training and evaluation of valuators. With its extensive and professional activities, the association has won the recognition of banks and financial institutions. Members of the association are required to follow the Good Practice Code of the EAREV.
What are the features of a high-quality valuation service?
Based on the experience of Uus Maa Real Estate Bureau, the following three factors are seen as the most important by clients who order expert valuations:
• Speed – preparing a valuation report for residential property, from inspecting the object to drawing up the report, can take up to two business days.
• Quality – our valuations are accepted by all major financial institutions.
• Moderate price – we have established fixed service fees for valuation of residential property.
What is the difference between an electronic and hard copy of a valuation report? Do banks accept electronic valuation reports?
Both valuation formats are applicable on the same bases and have equal validity. An evaluated valuator can sign both a hard copy and an electronic copy of a valuation report. All major banks prefer electronic valuation reports. An electronic report simplifies the procedure for an individual, as he or she does not have to come to the office to collect the report and take it to a bank. Instead, after the invoice is paid, an electronic copy of the report is sent to the designated bank and to the client’s e-mail.
Answer by: Kätlin Kuusalu, junior valuator, Uus Maa Real Estate Bureau
Which certificates/licenses serve as proof of qualifications of a valuator?
Professional certificate/license is the primary proof of knowledge and qualifications of a valuator. Such professional certificates are issued by the Estonian Association of Real Estate Valuators after candidates pass the required examination. There are two types of licenses for valuators: licenses for residential valuators and licenses for general valuators. The holder of the first type of license can only valuate residential property, while the second type entitles the holder to valuate all types of property.
Another certificate of competency, which is still rarely used in Estonia, is the land valuation certificate issued by the Land Board. The main benefit associated with the land valuation certificate is access to the transactions register of the Land Board, i.e., a certificate holder can use an extensive database of past market transactions.
As the number of licensed valuators is quite limited in Estonia, it is not unusual for assistant valuators to communicate with clients and to visit objects. However, such practice should not be a cause of concern for clients, as long as preparation of valuation reports is supervised and the reports are verified by licensed valuators. Consequently, when choosing a valuation company, it is important to pay attention to the presence of licensed valuators among the staff, as this is one of the prerequisites of high-quality service.
Answer by: Kätlin Kuusalu, junior valuator, Uus Maa Real Estate Bureau
How to choose a real estate valuator?
The first thing to note when choosing a real estate valuator is to see which institutions accept the valuation reports prepared by this particular valuator. Then it is important to determine whether the staff of the valuation company includes employees with valid licenses. The higher the number of licensed valuators in a company, the more confident you can be that the company as a whole has sufficient knowledge to provide a high-quality service.
In addition, it is worth checking whether the particular valuator is a member of the Estonian Association of Real Estate Valuators or not. If the valuator is a member of the association, his or her activities are subject to monitoring by the EAREV, and the association can be used to discipline the valuator in case of any problems.
Answer by: Kätlin Kuusalu, junior valuator, Uus Maa Real Estate Bureau
How does a valid rental contract affect the market value of property?
The impact of a rental contract on the market value of property is strongly linked to the terms and conditions of that contract. If the conditions of the rental contract are inferior to the market’s average (e.g., rental price below the market level) and the contract also has a long term, such a rental contract would reduce the market value of property. A rental contract without a fixed term, which can be terminated by an advance notice of 3-6 months, generally does not have a significant negative impact on the market value.
Sometimes, rental contracts can also have a positive influence on the market value of property. In particular, this applies to commercial property that generates cash flows (e.g., shopping centres, rented office buildings, etc.). The market value of cash-generating property is directly linked to the amount of cash flows generated and the quality of rental contracts (the business sector and reputation of the tenant, contract securities, term, options for early termination, etc.).
Answer by: Kätlin Kuusalu, junior valuator, Uus Maa Real Estate Bureau
How does a free personal usufruct affect the market value of property?
A free personal usufruct has a significant impact on the market value of property. Generally, a free personal usufruct (or a similar right of use contract) creates a situation where the market value of property is marginal compared to a situation where such a free personal usufruct does not exist. This is caused by the fact that property encumbered by a free personal usufruct cannot be used by the owner and, consequently, it is worthless both for the owner and for potential buyers.
Answer by: Kätlin Kuusalu, junior valuator, Uus Maa Real Estate Bureau
What are the stages of the valuation process and how long does it take?
The valuation process includes the following stages: acceptance of a valuation order, inspection of the object, analysis of documents, application of valuation methods to obtain a result, approval of the result by the valuation committee, communication of the result to the client, finalisation of the valuation report and, at the client’s request, forwarding the report to a bank (if the object valuated is a loan security).
In case of residential property, the valuation process can generally be completed within 1-3 business days after inspection of the object. In case of commercial property, the valuation process can last up to one month, depending on complexity of the object.
Answer by: Kätlin Kuusalu, junior valuator, Uus Maa Real Estate Bureau
Which documents and information should a client supply when ordering property valuation?
To valuate property, a valuator needs to review the proof of ownership (extract from the Land Register) and documents describing the building (design documents, plans, explications, building permit, permit for use of construction works, etc.). Furthermore, any valid use contracts, rental or usufruct contracts, etc., are very important for determining the market value of an object.
Answer by: Kätlin Kuusalu, junior valuator, Uus Maa Real Estate Bureau
How is the market value of apartments established during valuation? Are the results based on the asking prices published in real estate portals?
The comparative method is almost universally used for the valuation of apartments. It means that the valuator compares known transaction prices of similar objects with the property being valuated, adjusting the value as necessary with relevant correction factors. In order to find comparative information, the valuators can use an internal database of the company and information collected by other estate agencies. Furthermore, evaluators certified by the Land Board can use the transactions database of the Land Board. The valuators do not use asking prices to determine the market value, i.e., the asking prices published in real estate portals or elsewhere are not used as the basis of the market value, because the actual transaction price can differ significantly from the asking price.
Answer by: Kätlin Kuusalu, junior valuator, Uus Maa Real Estate Bureau
Why is the market value determined by a valuator different from the transaction price?
Valuators rely on actual transaction prices and their own experience when determining valuation results. As property market is not a fully efficient market, it is quite normal that the amount paid by a buyer differs from the market value established by the valuator. The difference between the valuation result and the transaction price is often caused by emotions and buyers with a particular interest are often prepared to pay more than is customary in the market as a whole. In addition, differences between the valuation result and the transaction price can also be caused by specific features of the property in question – lack of homogeneity, low efficiency of the market, etc. The market value is an estimation of the value of the property as at the date of valuation, made by a valuator according to valuation standards. The differences between valuation and transaction amount can also be caused by rapid changes in the market situation, because valuators rely on past reference transactions. This means that during a fast market growth period, the transaction information available to a valuator does not enable to take into account the fast price increase in the market.
Answer by Kätlin Kuusalu, junior valuator, Uus Maa Real Estate Bureau
How to find a good estate agent?
For both buyers and sellers, the best way to find a good estate agent is to ask recommendations from friends or colleagues. Make sure to ask them whether they would use the services of the same estate agent again in the future.
A good estate agent works in a full-time position and should have more than one year of professional experience.
If you are a seller, you should interview at least three estate agents and they should make a sales presentation, incl. a comparative analysis of local market prices in your residential district. The estate agent who suggests the highest asking price for your property is not always the best choice. It is advisable to analyse the marketing plan presented by the estate agent and consider the prospective of cooperation with that particular agent (personal compatibility).
Interviewing an estate agent
Questions you could ask in an interview with a potential estate agent:
What is your level of education and professional experience?
How familiar are you with the area where the property is located?
Prefer an estate agent who is specialised in your particular area. Naturally, you should interview the estate agent who has mediated the most transactions in your neighbourhood.
How many other sellers are you currently representing?
What is the average sale period of an object?
How many objects have you sold within the past 12 months?
Can you provide me with information on recent sales in this area?
The optimal term of a contract with an estate agent is two or three months. If you are satisfied with your estate agent, you can always extend the contract.
How and how quickly can an apartment be sold/bought?
If a buyer has been found for the apartment, there are several items to be agreed in addition to the main condition, the sale price. First: who pays the notary’s fee for formalising the transaction? According to good practice, the notary’s fee is divided equally between the buyer and the seller, while the buyer usually pays the state fee for entering the new owner in the register. Second: when can the buyer be given possession of the apartment? The average period of vacating an apartment has been one month, but this period can be shortened or extended with mutual agreement. After an agreement is reached with regard to all items, it is time to go to a notary who will formalise the transaction. A suitable time should be arranged with the notary’s office at least three days before the transactions. To prevent any future problems, the seller should give the buyer a statement of payment of all utility bills, telephone, electricity and gas bills, before going to the notary. It is also advisable for the seller to delete his or her address registration in the population register, presenting the respective certificate to the buyer before going to the notary.
How to sell residential property?
Owners who prefer to sell their own property, without hiring an estate agent, usually do so for one single reason – to save money. The main drawback, in this case, is the time required to sell a house/apartment. Owners who sell their house/apartment independently have to handle both advertising and marketing. They should also be present to demonstrate their home to potential buyers and be able to communicate with the buyer’s estate agent. For those reasons, it is advisable to cooperate with an estate agent. By choosing an estate agent from your own area, you can be confident that you are represented by a professional who has a detailed overview of market developments and who is able to provide you with good advice during negotiations over transaction conditions.
– Determine a price for your home
Most people have very strong emotional connection with their homes. They have spent years on renovating and designing their property. It is also possible that they have raised their children there and have many memories associated with this place. However, it is important to regard one’s property as a utility asset and to understand that the price will depend on the market situation. To determine the correct price, ask three estate agents to provide you with comparative analyses. A market analysis includes assessment of the following factors: the value of the asset with any improvements/additions, comparison of your home with other properties in the same area, the average price per square meter in this area, and the average duration of the sale period of real estate in this area.
– Greed is the most common mistake of sellers
As a rule, sellers’ asking prices are 5-8% above the actual value of the property. You can reduce the sale period and earn more from the sale of your house/apartment if you specify a realistic market price as soon as possible. The majority of potential buyers visit the property within the first 30 days after it is put on sale. This is the period when you will be contacted by the best potential buyers. If you overprice your property you will lose the best buyers. You can be sure that they will not call you even after you lower your asking price.
– Market your residential property
1. To allow potential buyers into your home, you have to give it a ‘presentable appearance’. It means that your house/apartment should look tidy, clean, fresh and pleasant.
2. Focus on the first impressions. Nicely mowed lawn, neatly trimmed shrubs and a clutter-free porch welcome prospective buyers. A freshly painted, or at least washed, front door is also useful. If it is autumn, rake the leaves. During the winter, clean any access routes from snow. The fewer obstacles between potential buyers and the true appeal of your home, the better.
3. Tidy your closets and storage rooms. The better organised the storage rooms, the larger they appear. This is the right time to pack away any unwanted clothes and to donate them to charity.
4. Make your bathroom sparkle. Bathrooms sell homes, so let them shine. Check and repair any defects and remove unsightly caulking from tubs and showers. Display your best towels, floor mats and shower curtains for added allure.
5. Create dream bedrooms. Demonstrate the cosiness of your bedroom to potential buyers. Remove excessive furniture to create a spacious look. Colourful bedspreads, for instance, are always useful.
6. Demonstrate your home in daylight. Let the sunshine in! Open the curtains and blinds to enable potential buyers to see how bright and cheery your house/apartment is.
7. Lighten up in the evening. If you show your home in the evening, make it livelier by switching on all lights, both inside and outside. Lights add colour and warmth, making potential buyers feel welcome.
8. Avoid ‘crowd scenes’. Potential buyers often feel like intruders if they enter a house/apartment filled with people. Instead of paying attention to the property, they try to leave as soon as possible. Therefore, keep the number of people in your home to a minimum during demonstrations.
9. Supervise your pets. Dogs and cats are great companions but not when you demonstrate your house/apartment. Pets have a talent for getting underfoot. So do everybody a favour and keep your cat or dog outside, or at least out of sight.
10. Pay attention to noise. Rock’n’roll will never die, but it might kill a real estate transaction. Turn down the music or TV when you show your home.
11. Relax. Be friendly but do not force conversation. Potential buyers want to look at your house/apartment undisturbed.
12. Don’t apologise. No matter how humble your home, never apologise for its shortcomings. If a prospective buyer makes a derogatory comment about the appearance of your house/apartment, let your experienced estate agent from UUS MAA handle the situation.
13. Keep a low profile. Nobody knows your house/apartment better than you, but UUS MAA Real Estate Bureau knows its clients, what they need and what the want. It will be easier for an estate agent of UUS MAA to spell out the virtues of your home if you stay in the background.
14. Do not turn your house/apartment into a second-hand shop. When potential buyers come to view your house/apartment, do not distract them with offers of furniture that you no longer need. In this way, you may lose the biggest sale of all.
15. Trust the expert. When prospective buyers want to talk price, terms or other real estate matters, let them speak to an expert, your estate agent from UUS MAA.
How to buy residential property?
– Describe the home you are looking for
Before you start browsing property listings and driving between houses/apartments, prepare a list of criteria that you have always wanted to have in your home:
* How many bedrooms will you need?
* How many bathrooms will you need?
* How much storage area will you need?
* Do you need space to expand the house in the future?
* Do you need a closed garage?
* What should be the state of repair of your new home?
* If you buy a used house, are you willing to make the necessary repairs/renovations?
After drawing up this list of your wishes, prepare another list of ‘realistic’ criteria that you absolutely cannot live without in the next five years. Compare the lists and number the criteria in the order of importance.
– Find out the price level of homes that you can afford
You need to know exactly how much you can spend on your home, i.e., how much loan can you apply for.
The easiest way to determine your financial limits is to consult loans specialists of your bank. This is a fast and free service during which the loans specialists asks questions about your income, assets and debts, and calculates the amount of loan that the bank could give you. This does not bind you to use the same bank later in the course of the transaction.
– Choose an area
How far from your workplace would you be willing to live? Where is the current or future school/nursery school of your children?
What are the areas with rising or falling property prices? The answer to the last question is important if you plan to sell your new house/apartment in the future and it is related to the time period after which this can be done.
What are the safest places to live? Review statistical crime indicators of the area.
– Choose an estate agent
For most people, an estate agent is recommended by friends or colleagues in the same way as the recommend doctors and lawyers.
Find an agent who works in your area of interest, listens to your opinions and who you like as a person – somebody who will not hide the cold facts and will be honest with you.
Reasons to cooperate with an estate agent:
* They can analyse your financial status, helping you to determine a suitable price level of your new home.
* They are familiar with the procedures involved in buying a home and can explain them to you.
* They have access to information on property offered by other estate agents in your area of interest.
* They can agree viewing times for potential homes that you find interesting.
* They help you to prepare any required documents if it is time to make an offer.
* They help you to resolve any financial issues associated with the transaction.
* They are present at the conclusion of the transaction to answer your questions and make sure that everything goes smoothly.
– Prepare an offer
Never offer the same price, which is specified in the sales offer. Offer 5-10% less than the maximum price you are willing to pay.
Before making the first offer, think how much are you willing to pay for this property. This decision should be based on logic and reason.
You as a buyer have to create an impression in the seller that he or she can sell the property for the right price (with profit).
In addition, you can negotiate the following issues: are household appliances included in the price, who will pay the transaction costs, etc.
– Let somebody check the condition of the property
Hire a professional to inspect your prospective home. Ask your friends or colleagues to recommend qualified real estate experts.
Make arrangements to conduct the inspection of the house/apartment during sunny hours in the daytime. This makes it easier to inspect the property and to discover any defects.
– Close the deal
Concluding the transaction is the final step before you become the owner of your new home. This is the process of transfer of the legal right of ownership.
Usually, your estate agent will make sure that all necessary documents for the transaction are obtained.
There are several costs associated with the transaction (loan fees, charges for extracts of proof of ownership, ordering a valuation report, insurance payments, taxes, etc.).
Inspect the property again immediately before the transaction to make sure that there are no new defects. Try to switch on household appliances and open all doors, making sure that nothing is broken. Verify that all the required items are present as agreed in the contract.
What are the significant and less significant considerations when buying a private house? Are there any circumstances where, for instance, an old renovated house is better than a new one?
All considerations are significant when buying a private house because it will be the buyer’s home, which should be pleasant and comfortable. The search for a home should start by finding a suitable location, which is the most decisive criterion. When looking for a location, significant factors to consider include the availability of infrastructures (roads, lighting, educational, cultural and service establishments), the surrounding environment (maintenance, landscaping, other buildings), and traffic intensity. The choice of location for a house is certainly influenced by the size of the plot, which can differ greatly in different areas, as well as by the availability of utility networks. Some people will also want to consider neighbours and their pets because a house is usually bought for many years.
The next issue to consider, after the home seeker has decided on certain main parameters of the desired house (size, architecture, material), is the condition of the house. From the buyer’s viewpoint, a used house will certainly require investment in renovation/modernisation/reconstruction to turn it into a perfect home. In this case, the size of this investment will have an impact on the price. The expenditure can be relatively high if there is a need to replace roofing or to reconstruct the heating system, for example. Some bad examples can be found among relatively new houses, built in a hurry in recent years, lacking sufficient insulation or having other construction defects, which are difficult to repair. Such defects can be avoided by buying a house that requires full renovation. High construction quality is an important consideration, especially in terms of running costs. In conclusion, it could be said that there are no insignificant considerations. All aspects are important and each home seeker characterised by a unique combination of desires, needs and resources.
Answer by: Kätlin Kuusalu, licensed valuator, Uus Maa Real Estate Bureau
What is included in the price of an apartment, or what will be left in the apartment?
The total package included in the price of an apartment is always a matter of agreement. According to good practice, the price includes sanitary ware and kitchen furniture with appliances. Built-in wall closets are usually also left in the apartments on the secondary market. Many sellers act according to the buyer’s wishes – if necessary, furniture can be left in the apartment for an extra charge, or it can be removed if the buyer does not want it. In the case of new apartments, the sale price includes sanitary ware and, furthermore, developers are increasingly offering free kitchen furniture and appliances as a bonus.
Answer by: Pille Tali, licensed consultant for the Eastern Tallinn area, Uus Maa Real Estate Bureau
How to make sure that I receive the money on my account after an apartment sale?
The use of a notary’s deposit account is the safest option for both parties in an apartment sale transaction. The buyer transfers the required amount to the notary’s deposit account by the date of entry into the contract. The notary transfers the money to the seller’s account within three days after the transaction. If a bank loan is used, the property is encumbered with a mortgage and the bank transfers the money directly to the seller’s account within three banking days after entry into the sale contract. The amount of own financing has to be transferred to the notary’s deposit account, from where it will be transferred to the seller after the transaction is formalised. To protect the interests of the buyer in case of possible cancellation, it is not advisable to transfer the money to the seller’s account before the transaction is completed. For the seller, it is not advisable to agree to a money transfer after entry into the sale contract.
Answer by: Pille Tali, licensed consultant for the Eastern Tallinn area, Uus Maa Real Estate Bureau
Is reservation of property in an estate agency a fee-charging service?
A reservation fee is applicable to property reservations and it should be transferred by the buyer to the account of the estate agency or the seller. The usual amount of reservation fee is 10% of the value of the property in question. Property can also be bought without reservation. In this case, the buyer agrees the terms and conditions of the sale with the seller and the parties immediately enter into a real right sale contract.
Answer by: Eve Kaunis, head of the Central Tallinn residential team, Uus Maa Real Estate Bureau
Should I sell my old apartment before or after buying a new one? When buying a new apartment, is it more advantageous to first sell the old apartment and then buy or to buy a new apartment and then sell the old one?
As the sale periods have become longer, it is advisable to offer the old apartment for sale in the same period when you are looking for a new one. The market is being increasingly dominated by buyers and, consequently, it is not certain whether you can receive the desired price for the old apartment. Even though finding a new apartment can also take time and even if a buyer is found for the old apartment before you can locate your new home, the buyers are usually willing to agree a postponed date for the transfer of possession of the old apartment.
Answer by: Siim Tarvis, estate agent, Uus Maa Real Estate Bureau
What is the benefit of a notarised pre-contract for the seller?
A notarised pre-contract should provide the seller with assurance that his or her property definitely has a buyer and that it will be sold for the agreed price. The seller can count on the amount to be received in the future. If a party withdraws from a pre-contract, the other party has a legal right to claim a contractual penalty in an amount specified in the notarised pre-contract.
Notarised pre-contracts are used in cases where entry into the main contract is delayed for some reason or the required conditions of sale have not been achieved (approval of a detailed plan, transformation of movable property into immovable, etc.).
Answer by: Jaanus Laugus, Chairman of the Management Board, Uus Maa Real Estate Bureau
What is the estate agent’s fee for property mediation?
The amount of the agent’s fee is fully a matter of negotiations between the seller and the estate agent. Generally, it is about 3-5% of the final transaction price. In case of multi-million property sales, the mediation fees start from 3%; in case of a sale priced around 32,000 euros, the fee is 5%. The mediation fee is negotiable in case of objects priced under 15,000 euros.
Answer by: Pille Tali, licensed consultant for the Eastern Tallinn area, Uus Maa Real Estate Bureau
In addition to the sale price, what additional costs should I expect when buying an apartment?
If you plan to buy an apartment, you should certainly be prepared to pay other potential costs in addition to the sale price:
– Valuation report – banks generally require a valuation report as a precondition for granting a loan and establishing a mortgage;
– Loan agreement fee to the bank;
– Notary’s fee, which varies in case of each transaction depending on the final value of the transaction;
– State fee for a registry entry;
– Notary’s fee for establishing a mortgage (if a bank loan is used);
– Estate agent’s mediation fee – this is usually paid by the seller and, as a rule, it is included in the sale price.
The amount of all those fees and charges depends on the value of the transaction.
Answer by: Pille Tali, licensed consultant for the Eastern Tallinn area, Uus Maa Real Estate Bureau
What conditions should be included in a rental contract to ensure compensation in case of damage?
Requiring a security deposit is always advisable. According to established good practice, the amount of the security deposit is the rent for one month. This ensures that the apartment owner receives at least partial compensation if any damage is discovered at a later date.
What should I do if my off-road vehicle is too large for the parking space of my new apartment building?
It can happen that the parking spaces created at new apartment buildings are not always fully usable, despite being of equal size (no room for manoeuvring, not enough space for a large car or minivan, etc.).
Unfortunately, there is nothing much you can do, because parking houses and parking spaces are designed according to specific minimum standards. Therefore, before buying a parking space, find out the positioning and size of the particular space, making sure that it is suitable for your vehicle.
Answer by: Pille Tali, licensed consultant for the Eastern Tallinn area, Uus Maa Real Estate Bureau
Why do companies advertise reserved apartments in real estate portals?
There are two different types of reservations. Firstly, there are various oral reservations, which are valid for two or three days (depending on project and seller), giving the buyer time to think and resolve any financial matters (apply for a loan, raise the required amount for down payment, etc.). This means that the apartment is reserved by oral agreement but there are no binding contracts that require discontinuation of sale efforts.
Secondly, there are reservations in writing, which means that the buyer is certain in his or her decision, has entered into a pre-contract and made the first down payment, which can be up to 20% of the sale price (this could depend on project, but an average down payment is ca 10% of the sale price).
If an estate agency sells an apartment reservation, this can be done for several reasons. The buyer may have bought the apartment to earn profit on price increase or something may have changed in the buyer’s life situation, rendering the intended purchase unnecessary.
Answer by: Tiina Shein, communications manager, Uus Maa Real Estate Bureau
Which documents do I have to submit to a notary before a sale transaction?
– Proof of ownership: an extract from the Register of Construction Works (optional) in case of movable property, or an extract from the Land Register in case of immovable property;
– Passport details (copy of the passport) of the seller and his or her spouse, or a notarised consent of the spouse (if the spouse does not appear in person before the notary) and passport details (copy of the passport) of the buyer;
– A divorce certificate or a court judgment on the divorce, if the seller is divorced. A proof of the right of succession, if the seller has acquired the property as inheritance;
– The sale price of the property and the procedure of payment;
– Any other terms and conditions negotiated beforehand;
– The time, place and procedure for transfer of possession of the apartment;
– The procedure and method of payment of the notary’s fee. The notary’s fee is usually divided equally between the buyer and the seller;
– The procedure of payment of the state fee for the transfer of immovable property ownership. The state fee is usually paid by the buyer;
– The procedure for transferring the telephone number;
– The notary will register the transaction within 15 days in the Register of Construction Works or the Land Register, as applicable.
Answer by: Elari Tamm, head of the Department of Residential Premises, Uus Maa Real Estate Bureau
What should I demand from my estate agent?
After meeting a new estate agent, his or her business card will provide you with initial information. You can use this information to verify the accuracy of the estate agent’s details on the website of the estate agency. I recommend choosing a licensed estate agent or a member of the Estonian Chamber of Real Estate Brokers. You can always ask for a license certificate or a proof of membership of the Chamber in the estate agency. In addition, do not hesitate to ask questions about the length of professional experience of the agent. There is a difference between an estate who has been operating on the market for many years and an apprentice estate agent. If an estate agent starts to sell your property, I recommend requesting weekly feedback, otherwise, your property could be forgotten due to a large amount of incoming new information.
Answer by: Elari Tamm, head of the Department of Residential Premises, Uus Maa Real Estate Bureau
Is there room for bargaining in property prices?
In the current market position, buyers are in a stronger position than sellers. The number of offers is high and sometimes sellers are willing to make price concessions to secure sale. However, this is not a rule and many sellers stick to their original asking price, as they are not in a hurry to sell. Nevertheless, buyers have an opportunity negotiate and try to get a better price.
Answer by: Jevgeni Semjonov, head of the Eastern Tallinn area, Uus Maa Real Estate Bureau
How long is the sale period?
In the current market situation, the number of offers has decreased and the demand has increased in some regions. Nevertheless, price and location of the apartment, as well as the number of offers in that particular area, are significant determinants of the length of the sale period. The average sale period is 3-4 months in case of apartments, and at least six months in case of houses and land. If you urgently need to sell, you can find a buyer quickly by lowering the price.
Answer by: Siim Tarvis, advisor of the Central Tallinn residential team, Uus Maa Real Estate Bureau
Is the current state of the property market advantageous for the rental market?
In addition to clients looking for their own home, the current real estate market also favours those who want to invest in property. Apartments are often bought with the intention to rent them in the future. Therefore, we can confidently claim that the rental market will remain constant because, for various reasons, many people always prefer renting to buying.
Answer by: Kristina Sõmerik, rental agent of residential premises, Uus Maa Real Estate Bureau
Where should I invest in real estate, considering the prospects a couple of years in the future?
As with investment in general, investment in real estate is governed by the rule that areas of potential shortage are always the best places for investment. In the current market situation, the potential for shortage is greatest with regard to land, which is suitable for development. This applies to the city of Tallinn as well as other attractive regions. As the developments in the property market of Tallinn and Harju County will reach other Estonian regions with a delay of a few years, it can be assumed that the rate of price increase will be above average in smaller cities and their vicinity. In case of apartments, the Old Town of Tallinn can also be considered as a reasonable location for investment.
Answer by: Elari Tamm, head of the Department of Residential Premises, Uus Maa Real Estate Bureau
Are there any promising summer resort areas, which have not yet been discovered?
The summer houses on the islands, in Lääne County, Lahemaa and near lakes in Southern Estonia are quite attractive and can be regarded as an ‘undiscovered’ region. However, it should be noted that all scenic locations of cultural and environmental value have been discovered, as people are increasingly interested in having a ‘second home’. I have noticed that marketing activities have been quite limited in the region of Lake Peipsi, despite its beautiful nature and lake. Consequently, there may be some potential for discovery in the beach areas of Eastern Estonia. The prices will certainly increase there in the future, with growing settlement density.
Answer by: Tiina Shein, Uus Maa Real Estate Buraeu
If I have some disposable funds, is now a good time to invest in real estate?
Real estate is clearly a more reliable investment vehicle than securities. The question is, rather, when would be a good time to realise the investment. Today is a good time for investment, considering the low price level. Over the next five years, prices can be expected to rise by about 10% a year.
Answer by: Elari Tamm, head of the Department of Residential Premises, Uus Maa Real Estate Bureau
The decision to sell an apartment depends on whether the intention is to buy a new apartment or to realise the investment. Now is not the best time for selling investments, if buying a new home is not an issue, because the price of real estate on sale has decreased as well.
Answer by: Elari Tamm, head of the Department of Residential Premises, Uus Maa Real Estate Bureau
Is a procedure of use necessary for immovable property, which has not been divided into physical shares? Why?
Answer: A procedure of use is required for immovable property, which has not been divided into physical shares, because this regulates the use of rooms as agreed by co-owners, i.e., which owner can use which rooms. The best option in legal terms is to enter a note on the procedure of use in the Land Register, making the procedure also applicable to legal successors of the owner.
Answer by: Andres Hall
Answers by: Kristina Sõmerik, licensed advisor on residential premises, Uus Maa Real Estate Bureau
For whom would you recommend the rent option?
There is no single answer to this question. Tenancy can be used by a wide variety of people from all kinds ethnic backgrounds and age groups, as well as by embassies and businesses. It all depends on the person (tenant). Renting is a good option for everyone who has not made a firm decision to become a homeowner and has no plans to buy a new home. In the current situation, renting can often be a significantly more flexible solution than buying.
Which aspects are important to consider in a rental apartment?
Many potential tenants are looking at the distance from the required services – the nearest store, bus stop, workplace or educational institution; as well as available parking opportunities. They are interested in an Internet connection (also over WiFi), the view from the window, etc. Furthermore, utility costs are often the subject of questions and an important point of consideration. All these small details are combined in an overall picture, which is often decisive in decisions.
What should be the condition of a rental apartment?
My recommendation is that the apartment should preferably be renovated, using light colours, which add light, spaciousness and cheer to an apartment. Modern furniture should be preferred to furnishings from the Soviet period. A minimalist, original and well-considered style is preferable to excessive and random selection of furniture. Nowadays it is possible to give an apartment an excellent look by using simple and readily available means.
How long is the usual rental period?
Based on my experience, I can say that the average period is 6-12 months.
What is the level of rental prices?
As in March 2010, rental prices can vary depending on location and condition, but in Central Tallinn the rent of a 50m2 apartment starts from 350 euros. In the districts around Central Tallinn, rental prices of 50m2 apartments start from 290 euros. Potential tenants should also remember that utility costs (heating, water, electricity, waste disposal, management and maintenance) are usually not included in rental price.
Which areas are most popular among rental clients?
Central Tallinn continues to be a popular rent district both among Estonians and foreigners, with considerable demand also in Kadriorg, Kristiine and the nearby areas of Northern Tallinn. Recently, there have also been many inquiries about Kuldala residential quarter due to its child-friendly and green environment.
Why do people prefer to rent a home instead of buying?
Experience indicates that there can be a wide variety of reasons, for instance:
– no established desire or vision of one’s own home;
– not enough regular income to obtain a loan;
– changes in the place of residents or life arrangements;
– unfinished house construction;
– lifestyle.
What can I do to prevent tenants from damaging the furniture or spoiling the apartment?
Before conclusion of the rental contract, it is advisable to prepare a written statement of delivery of the apartment, describing the condition of the apartment and any items of furniture left in the apartment. You can also include the monetary values of the items (acquisition value and actual value) in this statement. Furthermore, do not hesitate to contact the previous lessor (if possible) and ask for references.
Is an estate agency able to handle the renting in my place?
An estate agency can provide a management service, i.e., to keep an eye on the apartment, but the agency cannot assume full control. It can only serve as a mediator. A rental relationship is a written agreement between a tenant and an apartment owner, specifying the rights and obligations of both parties.