You finally decided you want to buy a property in The Netherlands. You’ve probably already heard about the tense state of the housing market right now and after speaking to your agent or mortgage advisor you know that in many cases you will need to seriously overbid to be successful. Independent Expat Finance runs you through the things you need to consider before bidding to ensure your bid is successful.
Calculate how much you can spend on a home
Most people will need a mortgage to finance a home. So before placing a bid, it's smart to check how much you can spend. A quick online scan of your maximum mortgage capacity can give you an indication, but it is not nearly as accurate as checking with an advisor.
Some common misconceptions are that buyers think allowances, such as a mobility allowance, can be included, or that a 30 percent ruling greatly impacts how much you can borrow. Also, quick scans are mostly based on a standard mortgage setup, with the interest fixed for 10 years, whilst in fact, your advisor will know some alternative setups which can allow you borrow more.
Decide how much you want to spend on a home
Rather than just looking at your maximum mortgage amount, it is also a good idea to think about what kind of mortgage expenses per month you would like to have. If, for instance, your partner is planning to stop working or you are expecting a child and your other costs will therefore increase, it would be smart to stay a bit below your maximum.
Another good way to look at is if you're renting right now, how do you feel about your current rental costs? If it is already difficult to manage, then don’t put down an offer which will lead to even higher monthly costs.
Take a possible lower valuation into consideration
For most mortgage applications you can borrow up to 100 percent of the property value. Once your offer gets accepted, you will have to hire a licenced appraiser to conduct a valuation. If the valuation is lower than what you offered, you will have to pay the difference. To give you an idea, we see that when clients are overbidding 100.000 euros on a property, on average the valuation is 30.000 euros lower than what they paid for it.
Having sufficient savings is the best way to cover this risk. However, if you include a financial clause in your offer you can protect yourself against a low valuation by placing your financial clause on the limit of what you think is acceptable. If you're a bit puzzled by this, you can talk to an advisor.
Always gather information on what you think the property is worth
The listing price can be misleading. Often selling agents put properties on the market below what they think it is worth. By doing this they are creating more demand. Check with your agent to see what they think the home is realistically worth.
You can investigate this by yourself as well. Find out what similar properties have been selling for on the website of the land registrar Kadaster and see how it compares to the original asking (this costs 2,95 euros). Alternatively, you can check if you can download a Calcasa value report (which costs 25 euros) to give you an accurate value.
Hire an agent
More important than ever, get yourself an agent. In the current market, sellers will always prefer an offer coming through an agent rather than yourself. It shows an experienced agent is guiding you, and that you are taking it seriously and are willing to pay for it. We think this is even more of a necessity for expats that are inexperienced in the customs of the Dutch housing market.
An agent should cost no more than one percent of the purchase price so, when in doubt, collect quotes from different agents. In the end, the one percent you are paying should help you close the deal for a better price than you could have done yourself.
Place an offer with appealing terms
We get so many questions on this from our clients as this plays an important role for the seller. This is how to increase your chances:
- Drop your financial clause (beware of the risks involved)
- Shorten the height or duration of your financial clause (discuss with your mortgage advisor)
- Drop the technical inspection (discuss with your agent)
- Show that you are flexible with regard to the transfer date
If you really want to take a chance and drop the financial clause, make sure you have discussed this with your mortgage advisor. Understand it is not just your employment situation that determines if you will get a mortgage, but also your residence permit situation, credit history in the Netherlands or abroad, current outstanding loans (also private lease cars), and the property itself that your planning to buy. If you end up withdrawing from the deal, you run the risk of a 10 percent fine.
Let the seller know who you are and why you want to buy this home
When you place an offer always give some extra information on yourself: your family situation, where you are from and what type of work and contract you have. Also, what do you think is nice about this home or area? Being on good terms with the selling agent also helps so make sure they remember you.
Ask the selling agent what they hope to get for it
Are you a first-time buyer and is the property being sold under the condition that every potential buyer may place one final offer? Use your inexperience to your advantage and just ask the selling agent what they are going for. Usually, they will give you a very optimistic amount so try to stay below it.
Are you planning on bidding for a house and want some expert advice on what you should do next? Get in touch with the people at Independent Expat Finance for personal and reliable advice regarding buying a property and taking out a mortgage.