I say there are two hardest part when buying a property. One is to actually find one and second is what we cover in this article – when to sign the Reservation contract with the agent or seller…
So when can I sign the reservation contract safely?
This is probably the hardest decision of yours in the process of buying a property. There are 3 possible scenarios (and one bonus), each one has its pros and cons.
Fastest way – Sign right after you identify the desired property:
- How long it takes: as soon as you get the draft of the contract from the Agent (preferably checked by a lawyer)
- Pros: you will secure that no one else will purchase this appartment
- Cons: you will not know if the bank agrees with the value of the property at asking price and if there will not be any special requirements for you individually
- Ideal client: someone who has very solid personal profile in terms of residency + income and has enough money to cover any potential valuation difference
Medium-fast way – Sign after bank valuation feedback:
- How long it takes: depending on the bank and method. Online valuation is a couple of days, physical about a week
- Pros: you will know what money to expect from the bank
- Cons: you might lose a week in the valuation process and still the bank didn’t there will not be any special requirements for you individually
- Ideal client: in case you have a specific budget you need to follow (10/20%) but your personal profile in terms of residency + income is very strong
Slowest but most secure way – Sign after full bank approval:
- How long it takes: depending on the bank, typically 2-4 weeks from the point when we have all the documents
- Pros: you will know there will be no surprises from the bank in terms of the mortgage whatsoever
- Cons: the full approval can take 3-6 weeks depending on the bank and during this time someone else might buy the property (incl. valuation time)
- Ideal client: someone who has specific profile, maybe tight on income and few banks to work with
Alternative way – official mortgage pre-approval:
- How long it takes: depending on the bank, typically 2-4 weeks
- Pros: you will do the full personal approval done by the bank officially and then you can go property hunting
- Cons: only 2 banks provide this and in case you do will not go with the selected bank there are some penalties. Also doesn’t solve the valuation question.
- Ideal client: someone who has complicated profile and you want to make sure you will be accepted by the bank before you start shopping for properties
We also strongly recommend to have even the Reservation contract checked by a lawyer prior to signing. We will always tell you our best estimate for likelihood of approval of your individual case depending on your profile and suggest the best scenario above. The decision will be always yours and it is not the easiest one in today’s market – anything we can do to help you with the purchase, we are ready to help.
For more information email robin@expatsfinance.cz or call 777877849.
Good luck with property hunting!