A write-up on my search for a dwelling, briefly signalled in October…
If you are not under pressure to move out from where you currently
reside, have specific budget constraint and defined expectations towards
location, layout and age of your property, at the stage of seeking you can
easily filter out those which meet the pre-defined criteria.
The most popular place where one can find property advertisements are
numerous Internet sites which, thanks to presence of filters, facilitate the
look-out. The conclusions one can reach upon frequent searching is that:
1) most properties have been out for sale for several months, if not
years,
2) most ads are put up by estate agents.
The first observation bears out the secondary market for properties in
Warsaw has been in a standstill for a few years now. It is not the case no one
is willing to buy flats (though buyers recently tilt towards brand-new
dwellings) or no one can get a loan to buy a property. The fault, I guess, is
with vendors unwilling to get down to earth in terms of their price
expectations. Nearly any flat (except for those with dreadful drawbacks) would
sell, provided the price is reasonable and it has to noted if a seller really
wants to dispose of a property, they will nail down the deal within a month or
two. In practice turnover of flats has been very low. Week after week you see
the same flats put up for sale.
The second observation leads to my precious piece of advice: avoid
agents like a plague. I do not want to denigrate the profession, since many
professional estate agents do their job very well, but the majority of them
work hard to earn this profession the label of overpaid spongers. This has been
confirmed by my two high school friends who had episodes of being agents in
golden years of 2007-2008. As they have told me, the job is lousy and produces
little value added. Unless you have no time to search for a property and have
no notion on legal and technical intricacies related to the purchase and the
very property, paying up to 3% plus VAT for an intermediary who will match you
with a seller is probably the biggest rip-off I have seen in life (except for
those seen at work as a bank employee of course)!
In general agents:
- put up outdates advertisements to attract clients and insist you
sightsee another flat,
- put up advertisements without seller’s knowledge and after you call
them, they need to call the seller or another agent to arrange sightseeing,
- often cannot answer basic questions regarding the property (rent charges
and what is included in the basic rent, history of the flat, whether it is
mortgaged, or not, etc.).
The only good thing I can tell about them is that they are punctual and
rather polite (though some astonishingly reticent).
Big thanks should go to Mr Gowin who in his de-regulation craze freed up
access to the profession. While I watched Mr Gowin opening the way for
so-called ‘restricted’ professions to laymen, I thought he was cracking down on
cliques of rent-seeking cronies and breaking their monopoly. Then came the day
when I found an ad of a flat I was interested in, put up by an estate agent
(one of the biggest brokers in Warsaw) who had exclusivity agreement for
carrying through the sale process. I thought it was clear if the agent was
remunerated by the vendor, he would be representing his interest, while I would
be representing myself. The next day I pulled up to the site, met the agent,
but outside the building before we went inside to see the flat, the agent (sly
guy aged around 20, as later evidenced by his LinkedIn profile) asked my to
sign an agreement with the agency he represented. I resisted his hastening
remarks and read the whole paper, which included the obligation to pay the
agent 2.9% + VAT of the purchase price if I bought the specific property. I
kindly asked why should I pay the agent anything if I found the flat on my own,
contacted the agent as the representative of the seller. The lad replied it had
been the business model of the agency for 20 years and it had functioned well. Slightly
worked-up, I reformulated the question. I asked what service would I get from
the agency in return for 2.9% plus VAT, since in the normal market if you pay,
you get a service in return and emphasised I would handle all formalities on my
side on my own. His response was that I was paying him for creating the
opportunity to buy that very flat. I told him he had been employed by the
vendor to find the buyer and should be loyal to him and if he did not show me
the flat, he would be acting to the detriment of the seller, because he was not
maximising efforts to sell the flat and asked whether he would show me the
flat, if I did not agree to pay the commission. After a firm refusal, more than
annoyed, I walked away…
Then I carried out my own investigation. The estate agency said it was
their policy indeed and as long as the seller agreed for charging both parties
the commission, they can do that. Checked it out online – it any party agrees
on a conflict of interest, charging both parties 3% plus VAT of transaction
price is permissible! Jaw drops open. And then I found this firm statement of
Estate Agents’ and Managers' Federation according to which what the agent was trying to
coerce me to was unlawful – if the agent has the exclusivity from a vendor to
run the property sale process, they had no right to condition showing the
property upon signing the agency agreement by a potential buyer. If they do so,
they violate the duty of care and loyalty to their principal (seller). I got in
touch with the Federation and was informed on my rights and how I can file a
complaint on an agent and what steps they can take. The only problem that in
fact since the agent did not hold a licence (after Mr Gowin’s deregulation he
does not need to), he is not subject to any code of ethics, code of conduct,
integrity principles or whatever rules the Federation sets out to licensed
estate agents and I could do nothing.
I checked then the acts (ustawy) and decrees (rozporządzenia) governing property management and
learnt all the points setting out requirements towards estate agents have been
revoked. I felt duped by the Polish state and stripped of protection of
unethical practices of cunning bastards.
My piece of advise – for most properties if you search carefully, Google
will find you (sometimes cached) an advertisement of a specific property placed
by its owner directly. Sometimes after a few weeks of futile search, owners
fall back on estate agencies and give them a free rein without exclusivity.
Given limited value added of an agent, it does pay off to take the trouble and
contact the vendor directly! If the vendor insist you get in touch with the
agent, make sure you will not pay the commission!
Back to my efforts – all people telling me finding the right flat was a
matter of months rather than days or weeks were right.
In October I found one dwelling which met my expectations. Not ideal in
terms of layout (bedrooms not much smaller than living room, while I wanted the
two rooms dissimilar in area), but passing muster, in good location, with price
slightly above my budget. The seller (found after a half-an-hour intense search
in an archived ad) had been trying to sell the flat for nine months. The flat
needed a refurbishment (wall-painting and some repairs) and from the legal side
needed conversion from co-operative right of ownership to regular ownership
(entailing notary’s costs), so I wanted to beat down the price (already
decreased by 15% from the first asking price) by PLN 20,000 more. It turned out
another buyer was willing to pay the seller without haggling.
In November and December the search was put on hold, since after I had
been relocated to another department at work and assigned new duties and
clients, I worked up 70 hours a week, including weekends, to get to grips with
the mess I had been entrusted. This took me two months during which I had
little time and energy to pursue the search.
In 2016, seeing supply of flats recently put up for sale is short, I
decided to screen out the primary market I had been sceptical about. What I
learnt is a bit staggering:
- times of buying a hole in the ground are back – supply of completed
flats is very short and their prices are exorbitant and actually despite not
being under huge pressure, I do not want to wait two years before I move in,
- the best locations have been developed some time ago and locations
offered now are either lousy or pricey,
- layouts of most flats are a crying shame. Architects excel in
squeezing possibly many rooms into limited space, design long halls, kitchens
combined with living rooms without windows and possibility to separate them,
the other menace are rooms shaped other than rectangle, moreover developers are
unwilling to rearrange flats as expected by a buyer, even if they are still
under construction,
- openness of developers for meaningful price negotiations is close to
zero, because sales are record-high, this is also why developers do not care
much about potential customers (one of them told me if I did not like their
offer, several other clients were waiting to buy the same flat, so why wasting
their time).
I called my friend who is in charge of residential property financing
department at one of the biggest banks and sees the market from the inside and
he confirmed by observations. Developers have no problems finding buyers for
their horrible products, however from his insight into gaps between asking
prices and purchase prices, the room for negotiations exists.
Another
piece of advice – before you talk to a property developer, familiarise with the
right the ustawa deweloperska gives you as a customer. Knowledge of
legal and technical rudiments (and even more) is a must if you go out into
secondary market as well.
Then I
returned to the secondary market, went around a few flats. None of them was
ideal, I seriously consider buying one of them, but I need to count up the
costs of all-out refurbishment (as my father rightly tells me, it may be more
costly than finishing a flat from a developer, since the cost of removing
bathroom fittings, kitchen furniture, wardrobe, floors, tiles, etc. needs to be
added and God knows what is hidden beneath it) and I need to try how long the
commute will take me from there (Włochy).
Visiting
other people’s flats (usually uninhabited) is also a psychological experience –
sellers attitude vary from total indifference (guy has been attempting to sell
an empty flat for a year but has not taken the trouble not only to tidy it up
but also to hide any defect – good for me) to aggressive hard-selling and
tale-telling on alleged advantages of a flat (playing me a fool).
The bottom
line is simple – it is better to spend a few thousand more and be satisfied
with the purchase (as you will stick with it for a while) instead of saving a
few thousand and regretting the decision, the same goes about waiting for a
good opportunity – one month or two will not save you. Less serious and easier
to unwind decision to change job two years ago involved six months of turning
down offers I found unsatisfactory and when the position lived up to my
expectations crossed my way, I took the decision swiftly and after nearly two
years with hindsight I see this was that very opportunity I was meant to grab.
