Selling property in Latvia
The process of selling Latvian real estate is rather straightforward, but at certain points requires paying a significant amount of attention to specific details that also require knowledge in fields other than property management. This is why it is advisable to hire a real estate guidance agency, so that it can find the best local specialists for these particular tasks.
In general, selling a Latvian property involves the following steps:
- document preparation
- determining the price
- preparing a presentation
- searching for a buyer
- transferring ownership rights
Document preparation is one of the most important stages of real estate selling process, as it directly affects almost all the other stages. It determines the time it takes to complete the procedures, the price that can be deemed reasonable, and, in certain cases, the actual possibility of selling a property at all. While the process is unique to each property and each buyer, and thus may require all kinds of documents, here is the list of those that are usually needed in every case:
- a Land Book excerpt
- A Land Book excerpt contains information on the ownership and legal status of a property, including thing such as easements and encumbrances. The data basically act as a proof to the fact that the property selling deal is legal and honest. This is why it is one of the most important documents to be prepared, because it can serve to answer most of a buyer’s concerns.
- Notarized approval of the creditor
- If the property you wish to sell is a collateral for a loan (i.e. an object of a mortgage loan), a notarized approval of the creditor must be presented, otherwise the deal is not legal. A mortgage agreement between a loan taker and a creditor includes the description of the specific real estate that is being mortgaged, hence the need for the permission - without it, the agreement would be changed by one party without the consent of the other party, which would constitute a violation of the law.
- Notarized approval of your spouse
- If you are married, a notarized approval of your spouse is required, because it is assumed that the real estate in question may be his/her main place of residence. Additionally, if it has been acquired after the marriage, it is classified as ‘mutually-owned property’, meaning both spouses have equal rights to it, and thus any decision about selling that property must be approved by both of them.
- Technical and landscape documents
- The State Land Services provides a variety of technical documentation about any property, including building and land plans. Almost every buyer is interested in the building/apartment plan, especially if it is residential property you are selling. Naturally, for industrial and commercial real estate the surrounding land plan is almost essential, as their infrastructure often strongly influences the area in the vicinity.
- A tax status document
- The government services portal www.latvija.lv, as well as municipal councils, can provide documents about the tax status of a property. The documents indicate, whether all the relevant real estate taxes have been paid, and the property can only be sold if there are no tax debts. Otherwise, the deal is not considered legal.
- Documents on the cadastral value
- The cadastral value of a property determines the size of a number of taxes and fees, which is important to any property owner. This information can also be interesting to foreigners who wish to acquire Latvian property, because the cadastral value can help them assess its value in relation to the value of properties in other locations. The official cadastral value website www.kadastralavertiba.lv provides this information.
Determining the price
For a property buyer, the price of a real estate is weighed against its value to him/her, which means that determining a correct and attractive price is the question of making or breaking the deal. To set a correct price, it is advisable to follow certain principles:
- Do not set the price based on what is offered by others
- According to Latvian real estate experts from ‘Realia’ property agency, one of the most widespread mistakes in setting a price is looking at what others ask for their properties. It is important to remember: the price that sellers ask for their property (offer price) does not always equal what they eventually get as a result of negotiations (deal price). Deal prices are known to real estate agencies, and they usually are willing to share the knowledge with their clients, which is why it is advisable to become one.
- Order a professional appraisal
- Real estate appraisal specialists aim to determine an objective value, i.e. value that is most likely to be seen reasonable by most potential buyers. They use specific parameters, such as the quality of building materials and the surrounding infrastructure. While this value does not necessarily equal the price it would be wise to set for your property, it can serve as a valid starting point to further modify according to your needs.
Preparing a presentation
Before making a decision, buyers usually wish to take a look at the property in question, both in person and even before the visit. This is why preparing a good presentation is essential - it has a high chance of determining the first impression, which in some cases decides the fate of the whole deal.
First, a pre-visit presentation is necessary, as almost all real estate agencies include online advertisement in their marketing strategy, and that requires visuals, specifically photos, of your property. The following are some tips on how to make a good property presentation photos:
- remove personal belongings and objects that are not sold together with the property from the frame
- make wider, horizontally positioned pictures that include at least three walls, or at least as much horizontal space as you can - this helps understanding the real appearance of the space
- take the photos at the level of human eyes, so that the potential buyers can have a better feeling of the premises
- do not forget to show all the vital parts of the property, including as many internal spaces (e.g. rooms in an apartment) as possible and auxiliary property that is sold together with the main one (e.g. land, parking spots etc.)
When employing the services of a real estate guidance agency, you usually do not need to worry about good photo presentation, as they hire professional photographers to do the job. So, if you want to save time and ensure high quality, it is advisable to hire an agency.
The preparation for a client's visit is somewhat similar to preparing the premises for taking good photos, and follows the same principles - exclude anything unrelated, include everything related, make it understandable for the buyer. If it is impossible to remove personal belongings, try to place them in an orderly fashion. If the piece of real estate is big, prepare a building plan, so that any buyer is able to understand which part of the property is what. And, once again, do not forget to demonstrate auxiliary and common property, such as basements in apartment complexes.
Searching for a buyer
The best way to search for a buyer for your property is to hire a real estate agency. Their marketing strategies usually combine all the most effective methods, both digital and offline. Even more so, agencies have their own client database, which is a source of information unavailable anywhere else. Provided that the property in question does not have any critical flaws and the pricing is adequate, such an approach is almost guaranteed to yield good results and find you a number of potential buyers.
When acting on your own, the most viable option is to use various online advertisement portals, including ones not necessarily specializing on real estate. Social media marketing is also viable, but without special knowledge will mostly be limited to posting in thematic real estate groups.
Meeting with potential buyers and negotiating is the step where all the previous preparations start paying off. One should be prepared that the buyers can be people of all kinds - some are only be interested in taking a look at the property, others will be skeptical form the very beginning, others will neutral or optimistic. Same with the time of visits - it may be very random, and will need to be adjusted to each buyer individually. Once again, hiring a real estate agency negates the necessity to meet with buyers personally, as a specialized professional will handle the job instead.
Transferring ownership rights
Transferring property ownership rights is the stage when the real estate is exchanged for money, and the deal is closed. Sometimes sellers consider this step to be the essence of selling a property. However, it is not entirely true, because, without all the prior steps executed properly, it is unlikely that any person will be interested in buying the property, unless he/she specifically needs this real estate and not anything else.
In order to transfer the rights to a property, you will need to perform the following steps:
- prepare a purchase contract, including the details of a property, the obligations and liabilities of all parties, as well as the procedure of the actual transfer of rights and money
- in case it is needed, prepare a promissory note (a.k.a. letter of intent) - a preliminary agreement between the buyer and seller of real estate, in which they declare their intentions to complete the transaction and to fulfill certain obligations
- discuss the contract with the buyer and sign it
- wait for the buyer to complete his/her part of the deal, that is, transfer the payment
- supply the buyer with all the necessary information and object related to the property (i.e. keys, auxiliary building accessibility information etc.)
- pay the respective href='http://propertyguide.lv/en/finance/taxes/income-tax/' title='Income tax for selling real estate'>income tax
There is a number of ways to receive the money from a buyer, and you are free to choose the one that suits you best. The most common ones are:
- escrow account
- paying at the moment of signing the contract
- paying at the moment of signing a Land Book application (an application via which a buyer transfers the ownership rights to him/her) in the presence of a notary
When all the steps are completed, the money is at your disposal and all the related taxes and fees on your side are paid, the deal can be considered closed, and you have successfully sold your property.