Real Estate Matters | All you wanted to know about property investment – Property purchase step by step (part 4 of 8)

- Friday, September 11, 2015 - 9 years ago No Comments 3,788 Views

Juliet Risdon

Juliet Risdon is a Director of JML Property and a property investor.
Having established the company in 1994, JML Property offers Investment Property & Homes. It specializes in managing properties for owners and investors, and providing attractive and comfortable homes for tenants.

This is the fourth installment of an eight part series identifying the key factors in choosing the right investment property and putting your money to work.
Purchasing property in Macau is not a difficult process. However, before embarking on a property venture, it helps to gain a clear understanding of the steps involved.
The following information can clarify the process and assist your planning.
Once you have identified a target property, the next steps are:
1. Obtain the government registration document known as the “Busca”
You can obtain this Certificate at the Macau Land and Real Estate Registry Office (Conservatoria do Registo Predial de Macau).
This document is not only invaluable when sourcing a bank valuation, but it also provides property specifications (the actual useable area etc) as well as owner’s name, registered address and whether or not the property has an outstanding debt against it.
The information may also help you to identify any illegal structures.
2. Obtain a bank valuation on the property
Be careful here and note that the loan amount is based on either the bank valuation or the negotiated purchase price, whichever is the lower of the two.
Therefore we recommend that you should only make an offer on a property after you have obtained a bank valuation.
3. Obtain Finance
Interest rates vary from bank to bank, some banks will not loan to non-residents, so shop around.
Rates are still competitive, but the banks have a lot of requirements that must be met if they are to loan money. In general banks in Macau will loan you 50-70% of their valuation.
4. Check for outstanding tax and utility bills
You may have to go back several years because bills can mount up and accrue. Be aware that outstanding bills are accrued against the property, not the individual.
5. Do a comparative market analysis
Your agent will help you by providing the average price per square foot for apartments in that complex or for a similar property.
This will allow you to establish what price you want to offer the vendor.
6. Negotiate the price.
Prices are of course negotiable.
How much a seller will negotiate depends on many different factors such as the urgency with which they must sell, the terms and conditions and what they paid for the property.
7. Sign a provisional contract and pay a deposit
Having found the property that meets your criteria and completing the negotiation process – remembering to only make an offer on a property after you have obtained your bank valuation – a deposit must be paid.
In Macau the initial deposit amount is usually 10% – 20% and the timing for final payment, whilst negotiable, is normally 30 – 60 days from deposit payment.
The provisional contract is the initial contract signed by both parties to get the transaction underway.
Bear in mind that after paying the deposit, if you withdraw from the contract the deposit is forfeited. Likewise, if the seller withdraws from the contract, they must pay back double the deposit amount.
8. Complete a promissory contract
This is a contract drawn up by your lawyer.
It will include; full details of the vendor, your own details as the buyer, the agreed price, any special terms and conditions of the contract and the completion date.
You will have to make a down payment at this stage, usually 10%-20% of the purchase price, but this figure can vary according to mutual agreement.
9. Sign the sales and purchase deed
To complete the purchase of your property you must sign the Sales and Purchase Deed as well as the Mortgage Deed in person and in front of a Macau Notary Officer.
The official documents will be prepared in Chinese or Portuguese and a further copy will be made in English at your request. Your lawyer will be responsible to attend all post completion, stamping registration etc.
There are also fees and taxes to be paid which we covered in previous articles “Who is buying macau? And what are the costs of buying?”.