Using An Estate Agent

[paperplates]

Hi, I am interested in buying a townhouse in BKK. It's 7 years old and cost 2.7 million when new. There are a few in the complex for sale and the prices now range from 4.2-5.5 million baht depending on how many alterations the subsequent owners have done. It's pretty central - about a 10 minute drive from an MRT, just off Rama 9. Is that a realistic price given how much they were when new? We are using an agent and he said that if we want to approach a bank about a mortgage we have to pay him a fee to get a contract saying we are prepared to buy and the seller is prepared to sell. Is that above board? And if so, how much is the going rate? We then have to approach banks who charge us to send a surveyor. We just and only just have enough money to put a 20% downpayment on 4.2 million, but we're then quite dependant on the surveyor valuing the property at 4.2 million or there will be a shortfall to pay too. Does anyone know if the bank surveyors have a tendency to under value properties or are they pretty fair? I also wondered about the fees. I guessed that the fees overall might mount up to about 150,000 baht including insurance and all the things that are listed on the banks' websites - is that right? Finally, I wondered if Thai's with foreign guarantors tend to get 80% mortgages, or are 70% the standard? Oh, and can you use the survey supplied by the first bank to take to other banks until you find the best deal, or do you need to go through the whole process with each bank you approach?

Apologies for asking such simple questions - I am a first time buyer in a foreign country and am totally clueless by my own admission!

Edited November 6, 2008 by paperplates

[midas]

Hi, I am interested in buying a townhouse in BKK. It's 7 years old and cost 2.7 million when new. There are a few in the complex for sale and the prices now range from 4.2-5.5 million baht depending on how many alterations the subsequent owners have done. It's pretty central - about a 10 minute drive from an MRT, just off Rama 9. Is that a realistic price given how much they were when new? We are using an agent and he said that if we want to approach a bank about a mortgage we have to pay him a fee to get a contract saying we are prepared to buy and the seller is prepared to sell. Is that above board? And if so, how much is the going rate? We then have to approach banks who charge us to send a surveyor. We just and only just have enough money to put a 20% downpayment on 4.2 million, but we're then quite dependant on the surveyor valuing the property at 4.2 million or there will be a shortfall to pay too. Does anyone know if the bank surveyors have a tendency to under value properties or are they pretty fair? I also wondered about the fees. I guessed that the fees overall might mount up to about 150,000 baht including insurance and all the things that are listed on the banks' websites - is that right? Finally, I wondered if Thai's with foreign guarantors tend to get 80% mortgages, or are 70% the standard? Oh, and can you use the survey supplied by the first bank to take to other banks until you find the best deal, or do you need to go through the whole process with each bank you approach?

Apologies for asking such simple questions - I am a first time buyer in a foreign country and am totally clueless by my own admission!

paperplates why is this estate agent trying to get you to pay his fee.

And when you say you are " using " an agent it would be more accurate to say you were

introduced to the property by an agent i.e. the vendors agent because this is the person

the estate agent should be working for and therefore who should be paying the fee.

When you go to travel agent you do not say we are using a travel agent

and they get their commission from the airline. I don't see how the estate

agents are any different and the certainly don't deserve to be paid by the person

that ultimately they're trying to get the better of any way - i.e. YOU

Yuck people in the property business here are so slimy

[paperplates]

Well, I did think exactly that so that's fine, if they want to go ahead I won't pay a fee for the contract. We're meeting him again for a second viewing this weekend so any replies before then gratefully received.

[Moonfruit]

Hi, I am interested in buying a townhouse in BKK. It's 7 years old and cost 2.7 million when new. There are a few in the complex for sale and the prices now range from 4.2-5.5 million baht depending on how many alterations the subsequent owners have done. It's pretty central - about a 10 minute drive from an MRT, just off Rama 9. Is that a realistic price given how much they were when new? We are using an agent and he said that if we want to approach a bank about a mortgage we have to pay him a fee to get a contract saying we are prepared to buy and the seller is prepared to sell. Is that above board? And if so, how much is the going rate? We then have to approach banks who charge us to send a surveyor. We just and only just have enough money to put a 20% downpayment on 4.2 million, but we're then quite dependant on the surveyor valuing the property at 4.2 million or there will be a shortfall to pay too. Does anyone know if the bank surveyors have a tendency to under value properties or are they pretty fair? I also wondered about the fees. I guessed that the fees overall might mount up to about 150,000 baht including insurance and all the things that are listed on the banks' websites - is that right? Finally, I wondered if Thai's with foreign guarantors tend to get 80% mortgages, or are 70% the standard? Oh, and can you use the survey supplied by the first bank to take to other banks until you find the best deal, or do you need to go through the whole process with each bank you approach?

Apologies for asking such simple questions - I am a first time buyer in a foreign country and am totally clueless by my own admission!

paperplates why is this estate agent trying to get you to pay his fee.

And when you say you are " using " an agent it would be more accurate to say you were

introduced to the property by an agent i.e. the vendors agent because this is the person

the estate agent should be working for and therefore who should be paying the fee.

When you go to travel agent you do not say we are using a travel agent

and they get their commission from the airline. I don't see how the estate

agents are any different and the certainly don't deserve to be paid by the person

that ultimately they're trying to get the better of any way - i.e. YOU

Yuck people in the property business here are so slimy

What are you talking about? It reads as though the agent is asking for a FEE for paperwork preparation. Whether this is correct or not is debate-able, but it certainly isnt the commission he is trying to get from the buyer.

For you to say "Yuck people in the property business here are so slimy " is rediculous and shows what a narrow minded and unknowledgeable (in this instance at least) person you are. There are good and bad in all businesses throughout the world!

Additionally, it is normal in many countries for the buyer/tenant to pay the commission on a sale or rent. Singapore is a prime example nearby.

In answer to the OP's question, i do think it is a bit dubious for the agent to be asking for a fee to prepare documents for submission to the banks to be honest. I bet if you told him you wouldnt pay that fee, he would still prepare the documents anyway as his real payment will come from closing the deal obviously.

Edited November 6, 2008 by Moonfruit

[paperplates]

What are you talking about? It reads as though the agent is asking for a FEE for paperwork preparation. Whether this is correct or not is debate-able, but it certainly isnt the commission he is trying to get from the buyer.

For you to say "Yuck people in the property business here are so slimy " is rediculous and shows what a narrow minded and unknowledgeable (in this instance at least) person you are. There are good and bad in all businesses throughout the world!

Additionally, it is normal in many countries for the buyer/tenant to pay the commission on a sale or rent. Singapore is a prime example nearby.

In answer to the OP's question, i do think it is a bit dubious for the agent to be asking for a fee to prepare documents for submission to the banks to be honest. I bet if you told him you wouldnt pay that fee, he would still prepare the documents anyway as his real payment will come from closing the deal obviously.

Yes, you are right, it is a fee for preparing the contract, however, if I'm not legally obliged to pay it then I won't. That's what I was unsure of - whether or not it was a legal requirement or just this particular agent chancing his luck.

[Riley'sLife]

Paperplates, from your post I am guessing that you are British. You are not using an Estate Agent, I think the Estate Agent is "using" you !! Firstly, you don't need his assistance - just head for your Bank and see what they have to say. The Bank should be your first port of call, as this will give you definitive answers to almost all the questions you pose here. Do this BEFORE you meet the Agent again.

As for the value of the property it is impossible to get an answer on a Forum. I would remind you however, that, in The eyes of Thais, a second-hand home is far less desirable than a newly built one and as a result prices reflect this. It would not be unusual for a house to be sold for the same price or even less than its original new price of 7 years ago, all other things being equal. There may be added value because of location. I would not trust information given by any Estate Agent anywhere in the world, in Thailand I would assume that every word they utter is a total fabrication. Remember they are NOT on your side. Remember that, without a buyer, they don't get paid, YOU have the power here, not the Agent. Try to get information about the house for sale and evidence of local values by talking to local residents. Remember that prices asked are not the same as prices obtained. You do know that a foreigner cannot own a Townhouse here don't you? Not the ideal scenario for a seasoned Real Estate purchaser, for a first time buyer it sounds like a disaster waiting to happen!

Also inform the agent that his fees are payable by the SELLER not the BUYER. You can obtain a contract -like the one the Agent wants to charge you a fee for- from most bookshops at a cost of a few baht..less than 20baht for sure. It will be in Thai of course.

The only fees that are justifyable for you to pay are the Bank's Valuer's Fee and your Legal Fees. You are getting a lawyer aren't you? You are in need of one I think especially in Thailand and especially as you are a First Time Buyer.

Remember BUYER BEWARE - never more true than in Thailand.

Personally I think what you are attempting to do is a non-starter if you are a foreigner. Even if it's possible you would be well advised to educate yourself about the legal problems and the implications of a foreigner "owning" a house.

So, step 1. Bank Visit

step 2. Lawyer

step 3. Armed with information from the above, meet Agent again, at which time you can tell HIM what the deal is going to be!- and make an offer of say 3m Baht. or maybe 2.5m Baht if you are happy with the answers from the Bank and the Lawyer. DO NOT, in any circumstances, pay any money to the Agent.- and make sure you meet the seller.

Good luck!

It is quite common in Thailand for the Agent to be ripping-off the seller too. For example, the Agent may not be (actually -almost certainly will not be) working on a percentage. Say the vendor wants 3m Baht net in his hand, so the Agent can sell for as much as he can get- maybe 4m .. and he gets the extra 1m.The buyer gets their 3m and you have just paid 1m more than you needed to.

[ray08]

In regards to valuations ,banks always value conservative , and second hand 7 years old ,i think would be even more conservative ,what is of interest is the value ,since you state the complex has other units for sale from thd 4.2m to thb 5.5m forget about the asking price ,but try and find what other units have been sold for ,asking prices mean nothing , it is comparable sales that are closer to the real value

[paperplates]

Paperplates, from your post I am guessing that you are British. You are not using an Estate Agent, I think the Estate Agent is "using" you !! Firstly, you don't need his assistance - just head for your Bank and see what they have to say. The Bank should be your first port of call, as this will give you definitive answers to almost all the questions you pose here. Do this BEFORE you meet the Agent again.

As for the value of the property it is impossible to get an answer on a Forum. I would remind you however, that, in The eyes of Thais, a second-hand home is far less desirable than a newly built one and as a result prices reflect this. It would not be unusual for a house to be sold for the same price or even less than its original new price of 7 years ago, all other things being equal. There may be added value because of location. I would not trust information given by any Estate Agent anywhere in the world, in Thailand I would assume that every word they utter is a total fabrication. Remember they are NOT on your side. Remember that, without a buyer, they don't get paid, YOU have the power here, not the Agent. Try to get information about the house for sale and evidence of local values by talking to local residents. Remember that prices asked are not the same as prices obtained. You do know that a foreigner cannot own a Townhouse here don't you? Not the ideal scenario for a seasoned Real Estate purchaser, for a first time buyer it sounds like a disaster waiting to happen!

Also inform the agent that his fees are payable by the SELLER not the BUYER. You can obtain a contract -like the one the Agent wants to charge you a fee for- from most bookshops at a cost of a few baht..less than 20baht for sure. It will be in Thai of course.

The only fees that are justifyable for you to pay are the Bank's Valuer's Fee and your Legal Fees. You are getting a lawyer aren't you? You are in need of one I think especially in Thailand and especially as you are a First Time Buyer.

Remember BUYER BEWARE - never more true than in Thailand.

Personally I think what you are attempting to do is a non-starter if you are a foreigner. Even if it's possible you would be well advised to educate yourself about the legal problems and the implications of a foreigner "owning" a house.

So, step 1. Bank Visit

step 2. Lawyer

step 3. Armed with information from the above, meet Agent again, at which time you can tell HIM what the deal is going to be!- and make an offer of say 3m Baht. or maybe 2.5m Baht if you are happy with the answers from the Bank and the Lawyer. DO NOT, in any circumstances, pay any money to the Agent.- and make sure you meet the seller.

Good luck!

It is quite common in Thailand for the Agent to be ripping-off the seller too. For example, the Agent may not be (actually -almost certainly will not be) working on a percentage. Say the vendor wants 3m Baht net in his hand, so the Agent can sell for as much as he can get- maybe 4m .. and he gets the extra 1m.The buyer gets their 3m and you have just paid 1m more than you needed to.

Thank you for your reply. I know I am not very experienced with these matters but I'm not a complete muppet! I have had a work permit in Thailand for the last nine years, worked for the same company for the same length of time, earn a good salary and am married to a Thai who also earns a good salary and we have a 20% deposit to put down, have a credit history in Thailand (bought a car, motor bike, have Thai credit cards etc.). I don't know why you think it's a complete non-starter?

One of the things that confused me was one of the banks my husband visited told him we needed the contract to buy/sell as part of the documents to submit, but I thought, as you say, that it should be bank first, then contract to buy sell.

Edited November 6, 2008 by paperplates

[paperplates]

So, do you think it's sensible to say to the owner (who has come to the property with the agent) that we will pay the amount that the surveryor values it at? Is that realistic or will the land department value it way below what a seller would be willing to accept?

Someone advised us on here to bribe the surveyor to put a higher value on it but that seems mad. Why would we want to pay more than it's worth?!

Edited November 6, 2008 by paperplates

[midas]

What are you talking about? It reads as though the agent is asking for a FEE for paperwork preparation. Whether this is correct or not is debate-able, but it certainly isnt the commission he is trying to get from the buyer.

For you to say "Yuck people in the property business here are so slimy " is rediculous and shows what a narrow minded and unknowledgeable (in this instance at least) person you are. There are good and bad in all businesses throughout the world!

Additionally, it is normal in many countries for the buyer/tenant to pay the commission on a sale or rent. Singapore is a prime example nearby.

In answer to the OP's question, i do think it is a bit dubious for the agent to be asking for a fee to prepare documents for submission to the banks to be honest. I bet if you told him you wouldnt pay that fee, he would still prepare the documents anyway as his real payment will come from closing the deal obviously.

I don't care if I'm narrow minded about this issue because it's definitely " Caveat Emptor " in this country !

You cannot compare Singapore to Thailand. Estate agents in Singapore have to be members of

the Institute of Estate Agents as well as being licensed byf the government. On top of that you have

the Commercial Affairs Department which is actually a part of the police force !!

Thailand has never shown the remotest interest in introducing any kind of professional standards

for people involved in the property business. Hence it attracts those who do what they can get away with !

Look at the number of rogues who are still flogging time-share to unsuspecting tourists fully realising

but by the time they get home after their holiday is too late to back out of any contracts they have signed

while here.

[midas]

So, do you think it's sensible to say to the owner (who has come to the property with the agent) that we will pay the amount that the surveryor values it at? Is that realistic or will the land department value it way below what a seller would be willing to accept?

Someone advised us on here to bribe the surveyor to put a higher value on it but that seems mad. Why would we want to pay more than it's worth?!

And people wonder why the Thai property market is so murky

[Riley'sLife]

Categorically, don't sign a contract commiting you to buy a property before funding is in place, notwithstanding any requirement from "one of the banks your husband visited", otherwise you would be more than a complete muppet!

You need a lawyer a.s.a.p. not advice from idiots like me on an anonymous forum.

Bribe the surveyor??? OMG..... NEVER.. Rather use the downvalued Valuer's report to reduce the price. - there are hundreds of thousands of townhouses for sale in Bangers, it's a buyer's market!

You've met the seller? Seen their Thai ID and seen the ORIGINAL Chanote too I hope.

Go to the Land Department and check the Government Value on the place. (Take a copy of the Chanote to make it easy)

Non-starter? - the mortgage is going to cost you 20-30kBaht/ month and you have only been able to save 7,000baht a month on average over the last 9years so unless you have been paying 20-30k baht per month in rent would the bank see you as a good bet? I was actually referring to your status as an Alien in this country and the law relating to your interest in this property that you will be contributing to!

[paperplates]

Categorically, don't sign a contract commiting you to buy a property before funding is in place, notwithstanding any requirement from "one of the banks your husband visited", otherwise you would be more than a complete muppet!

You need a lawyer a.s.a.p. not advice from idiots like me on an anonymous forum.

Bribe the surveyor??? OMG..... NEVER.. Rather use the downvalued Valuer's report to reduce the price. - there are hundreds of thousands of townhouses for sale in Bangers, it's a buyer's market!

You've met the seller? Seen their Thai ID and seen the ORIGINAL Chanote too I hope.

Go to the Land Department and check the Government Value on the place. (Take a copy of the Chanote to make it easy)

Non-starter? - the mortgage is going to cost you 20-30kBaht/ month and you have only been able to save 7,000baht a month on average over the last 9years so unless you have been paying 20-30k baht per month in rent would the bank see you as a good bet? I was actually referring to your status as an Alien in this country and the law relating to your interest in this property that you will be contributing to!

I pay 33 for my house and 9 thousand to get from it to work and back every month and get my kids to their school, whereas this house is walking distance to both. I would imagine a bank would lend us considerably more than 4 mil, it's more the difference between what it's valued at and what they're asking that worries me because we don't want to put down more than 1 mil down payment. Anyway, your advice is sound - thank you for taking the time.

[quiksilva]

Bank values tend to be low. They usually rely on 'firesale' values which without exception will belower than open market value. If you can get a vendor to agree to transact at the bank's value, then you are doing very well indeed, good luck with that.

As for the "agent". Did he find this property for you or did you contact the owners directly? Has the agent ever asked you for fees before? I ask because usually vendors pay commissions, and its not ethical to seek fees from both sides. If thats the case tell him to swing his hook.

The only time that you (as a buyer) should even pay an agent would be if you have expressly retained the agent to identify premises and negotiate the deal on your behalf, in a written agreement.

You should also not have to pay an agent extra for a contract, it should ideally be prepared by your own lawyer.

An agent may have an old agreement that could be used as a template for your transaction but it should not be relied upon 100%, and you should not have to pay for it. If they provide a template get your lawyer to check that it protects your interests, the agent's role here is to ensure that the agreement mirrors the intention behind the clauses. That's it.

Remember agents are not lawyers, and they certainly don't get paid as much, and most of the time they are getting paid by the other party in the transaction.

An MOU spelling out the sales terms should be made before the contract, this could be used, But make sure that its made 'subject to contract' it indicates the intention to sell, and whilst you are it include a clause that makes it subject to financing and final measurement too.

[paperplates]

Bank values tend to be low. They usually rely on 'firesale' values which without exception will belower than open market value. If you can get a vendor to agree to transact at the bank's value, then you are doing very well indeed, good luck with that.

As for the "agent". Did he find this property for you or did you contact the owners directly? Has the agent ever asked you for fees before? I ask because usually vendors pay commissions, and its not ethical to seek fees from both sides. If thats the case tell him to swing his hook.

The only time that you (as a buyer) should even pay an agent would be if you have expressly retained the agent to identify premises and negotiate the deal on your behalf, in a written agreement.

You should also not have to pay an agent extra for a contract, it should ideally be prepared by your own lawyer.

An agent may have an old agreement that could be used as a template for your transaction but it should not be relied upon 100%, and you should not have to pay for it. If they provide a template get your lawyer to check that it protects your interests, the agent's role here is to ensure that the agreement mirrors the intention behind the clauses. That's it.

Remember agents are not lawyers, and they certainly don't get paid as much, and most of the time they are getting paid by the other party in the transaction.

An MOU spelling out the sales terms should be made before the contract, this could be used, But make sure that its made 'subject to contract' it indicates the intention to sell, and whilst you are it include a clause that makes it subject to financing and final measurement too.

So, when buying a house you need to make sure you have the downpayment required by the bank, plus the shortfall between the surveyor's valuation and the open market value of the house - is that right? And how do know the true market value of a house? Some people here suggested speaking to neigbours but that's not particularly easy. The complex we're interested in has houses ranging from 4.2 mil to 5.5 - the only difference being the amount of add ons they've done and how much they've spent on the decor, which the chances are the buyer wouldn't like and would rip out and replace anyway. I found a new village not far from the second hand place today, and it's a slightly smaller plot (4 rai smaller), same number of rooms, brand new with more facilities and is selling at the same price as the seven year old place. The old one is actually better located for us and the extra space would be useful, but the price is veering me towards the new one.