How does the apart­ment pur­chase process work?

Buying property is a major step, and many people save for a long time to afford the down payment. But what happens after you've saved enough?

Credit Assessment and Finding Your Dream Property

The first step is to get a credit assessment from your bank to confirm your borrowing capacity. Once this has been confirmed, it's time to find your dream property. This process can take varying amounts of time, but it's important to choose carefully and find a property with most of the features you're looking for. Most people have clear ideas about what kind of apartment they want and what requirements it needs to meet, but it's good to keep in mind that you might not find a property that fulfills all your wishes. When buying your first property, you often need to prioritize features and choose the one that checks most boxes if you can't find a property at the right price that meets all criteria.

Making an Offer

Once you've found the property, a process begins that the real estate agent will guide you through. With the agent's assistance, the buyer makes a formal offer on the property, which includes all information about financing and other buyer requirements. Here you include the amount you're willing to pay, how the purchase will be structured (i.e., how large the down payment is and how much you plan to borrow). The offer also specifies how payments to the seller will be made. Typically, payments are divided between signing the purchase agreement, taking possession of the property, and the final payment is usually made when signing the deed. You can also include various conditions, such as passing the credit assessment and a property inspection. It's important to include all necessary conditions since an accepted offer is binding. You cannot withdraw or cancel an accepted offer unless conditions that were included are not met.

Negotiations and Offer Acceptance

Sometimes multiple people bid on the same property, and the real estate agent must carefully balance the interests of all parties. The agent cannot disclose the amount of other offers during the process, which can make it difficult to know how much to bid. It's important never to offer more than you're willing and able to pay. The seller may not immediately accept your offer, though this sometimes happens. Often, the seller rejects the offer but makes a counteroffer, which the buyer can choose to accept. If the buyer doesn't accept the counteroffer, they can either withdraw from the purchase or make another counteroffer. When buyer and seller agree on price and terms, the accepted offer is signed and witnessed.

Taking Out a Loan and Registration

After completing this process with the real estate agent, the buyer applies for the agreed-upon loan. This is done by opening the credit assessment that has already been completed. If the credit assessment process hasn't begun at this point, it can be done simultaneously with the loan application. With an approved credit assessment and an offer that reflects it, the loan process should generally be straightforward and quick.

Once the loan is approved, the buyer receives documents to sign, and after signing, these are sent to the real estate agent. The loan documents are then signed at the purchase agreement meeting, and a document is prepared specifying how the bank loan should be disbursed. The real estate agent then registers the purchase agreement and loan documents, and when they're ready, returns them to the bank so the loan can be paid out.

During registration, stamp duty must also be paid. These are fees imposed by the government on documents registered for property purchases. When a purchase agreement or deed is registered, the property transfer itself is taxed with these fees. Usually, the purchase agreement is registered first, but sometimes the deed. The stamp duty amount for individuals is 0.8% of the property's assessed value, but for first-time homebuyers, a 50% discount is given, making the fee only 0.4%.

Payment and Deed Transfer

The payment from buyer to seller is typically made in three parts: one portion when signing the purchase agreement, another when taking possession of the property, and the final payment when the deed is signed. The deed is a document that officially transfers ownership from seller to buyer and is usually signed several months after the purchase agreement when all parties have fulfilled their obligations. As mentioned above, it's good to have the final payment take place at the deed signing in case any hidden defects appear in the property or if the seller has not fully met their obligations. It's important to set aside the amount needed for the deed payment so the buyer can make the final payment.

Once the deed has been registered, you become the registered property owner.