Buy or rent ?

Buying or renting are for me the consequences of different strategies which are dependant of what you expect for your future.

Everybody has its own situation that there is not a unique solution for all.

I am proposing here below a table listing what I consider Benefits and Disadvantages for Buying and Renting.

Buy

Rent

Benefits

Once your home found, the property value should increase Once your home found, the property rent is fixed for the contract duration
You can make refurbish your home at your convenience provided you are following the urbanism and construction laws Flexibility = Good enough if you expect to stay at least 2 years in Luxembourg
You can sell your property in the future to buy another (bigger) one in the future without loosing purchasing power You can rent a property you might not be able to buy
Good if you know you will stay more than 2 years in Luxembourg

Disadvantages

You need to bring enough cash for the loan down payment Not quite easy to refurbish your home
loan on a long term basis 2-3 months rent given cash to your landlord
You need to stay at least 2 years in your home if you are beneficiary of the Bellegen Akt You are dependant of your landlord : if the landlord die or his selling to someone else, you could be asked to leave your home asap (law says that you have the right to stay 6 months and renewable 1 time)
You could have to pay huge penalties if you want to payback your fixed loan before the end of the contract If you want to change home, then you will probably see the rent increasing
Be carefull with the inventory of fixtures when moving in/out
You might not be able to buy a property you could afford while renting Sometimes, contract contrainsts as for example yearly visit of the landlord, declaration of number of people living in the property
You pay rent, but the money is gone forever

 

You are seeking for a personal advice, a support in your home search, then this solution could make your life easier…

Is internet the only way to find housing classified in Luxembourg?

Today, I would like to talk about the ways to look for a new home.

Internet is of course mandatory, and setting up alerts on all the different websites will keep you informed immediately when a new offer is posted.

This is really important in order to make appointments.

However, there are several other techniques which will allow you to get appointments to visit homes before all other potential buyer.

Do you have your preferred area?

I invite you to pass by and have a walk or a ride often in these streets. Alternatively, you can drive also your car or take the bus if the quarter is wider. The aim of this is to be able to watch each building, looking for real estate agency sign board.

Why doing this? Because there are some private owner putting their own side board in front of their house, and some real estate agencies doing the same without publishing anything on internet.
In my experience, I have spotted a house few meters from my previous home and was looking for more information on the internet before booking a visit. No success, this house was not on internet.

When I was talking to the agent during the visit, he told me he put the board sign a Friday and few days after  (if i remember well, it was no later than the following wednesday), he had collected enough call to fulfil his visit planning. Note that this house was located in the middle of a residential dead end street.

This house has been sold within a month.

Most recently, I have two other cases of houses put in sale by owners. One installed a big board sign (2m x 1m) and the other one, asimple white A4 printer sheet. The first one removed the sign after one week, I assume there were enough visits and maybe the deal has been concluded. Regarding the second case, I visited the house last week. Although it seems that there has been a significant number of visits already, I think it will last longer than the first case, because owners are asking too much. I have used Nexvia property evaluator software, and the asking price is EUR 200,000 above the Nexvia’s algorithm valuation.

You are seeking for a personal advice, a support in your home search, then this solution could make your life easier…

Home appraisal methodology in Luxembourg

achat appartement, achat maison, prix immobilier luxembourg
achat appartement, achat maison, prix immobilier luxembourg

What are the home appraisal methodologies ?

I would say that there are as appraisal methodology as there is home seller in Luxembourg…. This is a joke, however, like in Finance, there are several home appraisal methodologies.

Let’s have a look at them :

Firstly, the STATEC and the « Observatoire de l’Habitat » (Housing Minister), are issuing quarterly reports and other periodic publications about housing pricing, by sub regions, communes. In order to make the average square meter prices comparable, the government asked to clean the data and exclude the impact of parking lot, garage, cellar, plot size in order to get a pure square meter average price.

The advantage of these publication, is that the data are precise enough for each commune, and you will find also the number of transaction by commune for each period, for existing building, or under construction. The inconvenient is the delay of publication (at least 6 months) because data are issued from the statistics of notary’s chamber.

Secondly, when you analyze the classifieds published on the several housing internet site, you can immediately set an average price per square meter asked buy the sellers. Then you have inside this price the impact of the « extras » linked to the property. I mean by extra, the balcony size, a parking plot or garage, the garden, the view and so on. People will valuate these plus or minus at a different when they will compare two or more properties.

Thirdly, when you talk to a real estate agent about valuating built property, some of them will speak about price per square meter which is affordable compared to market in certain case. And in another situation, when you argue that the price per square meter is expensive for the quarter, they might reply by telling you that valuation is not about price per square meter, but you have to take into account the potential value that a real estate developer can generate.

Let’s take an example to clear this point :

A house (semi detached or not) needing renovation, the real estate agent, will say that price has been calculated based on the size of the plot, the number of stages which are authorized in the street, a parking facilities. A 2 storey house with cellar and garage to fully renovated built on a plot of 3 ares could be valuated 3x EUR 100,000/are + 1 garage at EUR 35,000 + 1 cellar at EUR 5,000. If it is possible to build an additional level and increase the size on each floor by 20m2, then considering a price per square meter newly build at EUR 5,000/m2, we are coming to 3x(50+20)x5000 = 1,050,000
To sum up:
300,000 (land plot) + 1,050,000 (construction) + 35,000 (garage) = 1,385,000.

The bottom line of this method, is you thought you were buying a 100m2 house to be renovated, and the real estate agent is telling you will get a new 210m2 house (the old one will be destroyed for EUR 40,000 max). So, all is selling argumentation! Now it is your turn to ask you the good questions, for example, considering this project as a new house, what is then the construction cost per square meter today? Are these EUR 5,000/m2 realistic? Does a cellar really cost EUR 5,000? same question for the garage…
NB : this example is pure imagination. Any similarity with an actual case is unforeseen!

Lastly, another methodology, which not fully scientific, is about the use of an online valuation engine from Nexvia you can find it here.

This online valuation engine is picking up the data from the STATEC and chamber of notaries and then adjusted by real estate expert of the Luxembourg market.
The online simulator gives you a price range of the property after you validated a questionnaire supporting the precise definition of all the characteristics.

I think this evaluation method (which is currently free) could be used as a supportive basis for negotiation purpose.

To conclude this article, here below are the information to be used for your own property assessment:

  • Official statistics (Statec) which are providing an effective average sales price with at least 6 months delay. If you adjust by adding 5% to the price, then you should be close to the current market level.
  • Average sales prices asked statistics to be found on the internet sites.
    Pragmatic valuation methodology applied by real estate agencies and real estate developer, which shows the potential value of the property.
  • An hybrid methodology, the Nexvia valuation engine, based on the official statistics data and computed with parameters developed with the expertise of Luxembourg real estate professionals.

 

Are you struggling in your home search ?

Are you seeking for a personal advice, a support in your home search ?

What are currently your main concerns ?

How do you think your life will be in 6 months without any action ?

What could be you and your beloved life once you hve removed your current concerns?

Please let me know your thoughts,

David

david@achatimmobilierluxembourg.com

Buyers, are you dumbs ?

engel&volkers, agence immo, athome.lu

A couple of days ago, I found in my letter box this advertisement from a well know real estate agency belonging to an international network.

pub agence immo

If you are resident, I am sure you have already received a lot of mail asking if you are selling you home to contact the real estate agency for a free quote.

Some agencies do not hesitate to provide high level priced estimation (if not to say out the market price) to make the owner sign the mandate for selling.

When I read this ad, I immediately thought “that’s crystal clear! the buyer is THE dumb”.

The Luxemburgish residential real estate market is a “seller market”, this mean that the housing demand is much higher than the offer available on the market.

This whatever we are talking about renting or selling. That’s why prices are keeping growing up quarters to quarters.

Currently, sellers are temporarily benefiting a lower level tax when they are selling: the margin they are making is taxed twice less than usual, this was applicable from last year first of July and till December 31st 2017.

The purpose of this temporary tax rate change is to make the market lore liquid by bringing new buildings and plots in the market and make the average selling price increase slower than the previous years. The future will tell us if this brung a benefit, although this measure does not bring new buildings at once.

To come back to the advertisement, dear friends, potential buyers, you are now informed! Better to prepare your argumentation before entering to negotiation!

Also prepare your financing scheme in order to be quicker at reacting when an opportunity pop up just in front of you!

You are seeking for a personal advice, a support in your home search, then this solution could make your life easier…

The choice of area, overcome your limited beliefs !

Today, I would like to share with you a story.

A friend of mine wish to live in few quarters, close to Luxembourg city center (like Bel Air, Merl, Center). In fact, he wanted to be able to walk to his job, park the car in the garage.

I understood that he targeted three quarters where the average housing price per square meter was above his means and allowing him not to buy his home with the desired adequate surface.

At that moment, I suggested him ever to look for something smaller in the same area or to look at the same distance but on the other side of the city where prices were more affordable, telling him that bus connections are really good and it is also quite easier to park the car in the street compared to the city center. It took him few months to accept this idea.

Three months later, I informed him that a house for sale in Kaltreis quarter just popped up on the market. It was a private sale without a real estate agency.

Then after having looked at the localization, that could be fine except that he had to cross Bonnevoie center in order to go to the house. He was afraid of this, and stopped to think about other possible ways to go to downtown. I indicated him that there are alternative and more beautiful ways to use to go to work.

Now, he is looking for a new home for one year and half (maybe he is not looking so much). He roughly already spent 30,000 EUR in rents, although he could have moved in his home for six months already!

The bottom line is to let opportunities come to you even if there are from other areas you are primary looking for. These opportunities could be as pleasant as you could have imagined and they can do the job but somewhere else!

 

You are seeking for a personal advice, a support in your home search, then this solution could make your life easier…

Last read from Wort.lu/en : Real estate luxembourg property prices to grow apace, experts says

I have just read this article on Wort.lu/en :

Real estate luxembourg property prices to grow apace, experts says

This article relates that PwC’s thoughts that luxembourg real estate market will continue to be tight the coming years (at least till 2020) because of the increasing number of new comers in the country. So prices are expected to grow up.

So according this information (which is known by many resident who are interested in the real estate market), this is impacting YOU who are willing to buy your home soon or later. Be aware that you might loose purchasing power if your income is not following the same pace as housing market growth !

If you are expat and will relocated in Luxembourg after the end of your expatriation contract, then you might loose opportunities while your company is supporting your current rent. Strategies are possible to lock your property price in advance.

If you are wondering how to manage your home search and financing, if you are already struggling to find a home suitable for you and your and beloved, then you could contact me and expose your main concerns. I will be glad to answer your questions !

David

david@achatimmobilierluxembourg.com

The 3 steps to be done before signing the “compromis de vente”

Most of the people think that buying their home is really easy. They start visiting, then spend more and more time during lunch time, after works. Finally they find out a convenient property, go to their bank whom refuse to give the adequate loan. This is an example, it is also part of my personal experience.

So, what are the main steps to be done ?

The first step is : TRAINING and INFORMATION

As you are reading these lines, you have realised the step of information. Congratulations!You are laready more advanced than the average guy in the street.

Your information is indispensable because in order to optimze your search, you need to know the market structure, for example :

the most demanded geographical areas (where you will find more competition between buyers),

the most offered housing types (surface and number of bedrooms),

of course the asked price per m2 (classifieds) and sold ( chamber of notaries statistics and Statec with some delay)

 or the buyer’s income structure, I mean how many people are looking for a housing in the same price range as yours: there will be a lot of competition for housing in the range of EUR 500,000 to EUR 700,000 compared to the range EUR 1,500,000 to EUR 1,800,000.

The consequence is that the tips to be used for example to book visits, or to negotiate will not be the same.

The lower your budget price range is (when I say low, everything is relative), the more it will be efficient to put in place routines and strategies I am sharing with you. However, when a property is proposed on the market at a market price, it can be sold at the first visit, or even by phone before anyone has visited it!

Your need for training/information is depending of your knowledge and your actual situation.

Your training could be related to « how to get your personalised financing », « how to face the banks and to sell your case during the conversation »,

It can be also about the art of negotiation (with the seller, with the various companies you will appoint to refurbish the property),

It can lead to develop your knowledge related to the « compromis de vente and the notarised agreement,

Or even it can be about the tax implication of the consequences of purchasing your home.

This remain an indicative list and I will do my best to support you following your needs.

Your training is important because the knowledge you have gives you a competitive advantage to the others when you will take your decision : the better you will be trained and informed, the quicker you will take the best decision and faster than the other people interested like you for the same property.

2nd step : Clean up your financial statements and stabilized at a satisfactory level.

Except the case you have plenty of income affording you to cumulate revolving credits (although this situation is not sustainable, you could as much as possible cut this kind of financing. When I say « as much as possible » but like me, the banker can also understand the need of making a credit to renew your car for example. However, if you are using your credit to buy a new flat screen, going for holidays, then the banker will not tolerate that situation. That’s why it is really important to clean up your accounts BEFORE going to the bank and present your project.

So, How to cut this bad debts the more efficiently ?

1 Read again the credit contract. You should find out the possibility to reimburse by anticipation or making majored reimbursements.

2 Asign a part of your monthly savings to the reimbursement of your credits (for example EUR 100)

3 Start to reimburse the credit which is costing you the more interests and fees every month. If you have a monthly cost of EUR 150 with a revolving facility at 18 % and a EUR 250 monthly installment of consumer credit at 5 %, start with the revolving credit. So in this example you will spend EUR 150+100 every month to clean up this debt.

4 Once the first debt cleaned, then assign the amount of this first monthly installment and your savings (150+100) to clean the next debt.

5 Of course at the same time, you have stopped to use your revolving facilities and consumer credit allowances, and you must put an end to this kind of credit card !

6 Once everything reimbursed, you assign the amount of the old installments to your savings (in our example : 150 + 250 +100 EUR). I remind you that EUR 500 monthly is enough to reimburse EUR 100 000 during a payback period of 20 years with an interest rate of 1.70%.

3rd step : The bank statement of account presentation.

Like the companies making « year-end window dressing » , this is also important for you to set up your statement of account properly.

Having perfect bank statements does not mean earning EUR 10,000 and more each month. Banks prefer prospects earning less but who are managing their account safely versus big earning pouring money down the drain.

You need to go to the bank meeting to ask for a loan with bank statements clean of bank charges during the last three months. The monthly statement positions will always be in the black.

You should show that you are able to make monthly savings (and you are doing it!). Even small amounts. 10% of your net income is a good start. If you can do more, it will be of course better. This will show you are a serious person and involved in your bank account management. If you clean up your debts following the above methodology then you will be on track.

What are currently your main concerns ?

How do you think your life will be in 6 months without any action ? What could be you and your beloved life once you hve removed your current concerns?

Are you struggling in your home search ?

Are you seeking for a personal advice, a support in your home search ?

Feel free to let me know your thoughts,

David

david@achatimmobilierluxembourg.com

The buyer’s mindset in front of a seller’s market

When you are discovering Luxembourg real estate market and you are from an area where the power of buyers and sellers is balanced, it is disturbing and you need time to adapt yourself when you are facing a seller market.

What is a seller’s market ?

A seller market is a market where demand is exceeding a lot the offer.

There is a important competition between buyers (purchasing price offered, time to take a decision, purchasing conditions) and sellers are adapting themselves by increasing/decreasing their price to come to an agreement. The agreement price is very often the higher price offered by a solvent buyer.

In this particular market, the asking price is reflecting the value that « desesperate » buyers are ready to pay to satisfy their human primary needs : shelter and security. From an helicopter view, coming from abroad, asking prices seems crazy compared to the property quality, surface, environment.

That’s why some people do not want to accept these conditions and are seeking a property which has got the characteristics they used to know in their country.

If you recognize yourself in this situation, I think it is essential that you ask yourself the question if you really want to buy or rent. If you think you will stay more than two years in your home, it is currently more interesting to buy considering the actual population growth rate and expectation for the years to come.

Probability that Luxembourg’s real estate prices remain at least stable or increase is high.

If you are willing to buy, it is your interest to understand the market mindset. The more you wait for an “opportunity” or an hypothetic price drop, the most probable you will see rising prices and loosing purchasing power.

I think, in my case between 2012 and 2016, I have lost 20m2 or 100,000m2, I mean I could have bought in 2012 the same property I have bought in 2016 but EUR 100,000 less, or a property 20m2 bigger.

Once the little voice in your head tells you « this property is better than the other one » or « this property has got all criterias », then you are ready to propose your first offer.

To discover how to change faster your mindset, to get tips in order to save you time, money on purchasing fees, financing costs, renovation costs, then register here.

David

How I have lost 108 000 euros, how to find out the drivers which make you take your choice

How do you know what you want ? How to challenge your principal criterias in order to determine that you really want and sort these criterias.

108,000 euros, is the amount of all the monthly rents I gave to my landlord during all the time I have looked for my home.

I knew what I wanted : a house with at least three bed rooms, a garden and a garage. I wanted this home close to my office, and I had a limited budget compared to market price. So I was in the same situation like the average people looking for its home sweet home in Luxembourg.

Why did it take me so long (5 years) to buy my home? Several answers, but the main important one is that I did not challenged my criterias. How to challenge the criterias ? It is important that you know in the deepest part of your heart why you want x, y, z specific criteria.

Let’s see how to challenge these following criterias : “ I want a house with three bedrooms and a garage”.

1 I want a house. Why ? => I want a house in order to have an independent garden, why ? => I want to be able to have a meal , drink my coffee, have a rest outside in a green environment => Could a home with a terrace big enough in order to seed plantation be a good deal ? => probably YES.

2 I want three bedrooms. Why ? => 1 bedroom for the parents, 1 bedroom for the children. The third bedroomwill be used as spare room for home office and be used when family and friends will visit us => why ? The last third bedroom will be used in fact for 90% as home office => this bedroom is a kind of multi tasking room, could be smaller than the other ones, a convertible sofa will act as bed in case of visit.

3 I want a garage. Why ? => in order to park my car => Why ? I will struggle to find a parking spot in the street every day => in some quarters I am keen on, it is sometimes really not easy to park a vehicle. Could a parking lot (inside, outside) be fine enough ? ! yes when I want to park my car, but I wish I cold also use the garage as a spare room to store my stuff and to practice DIY => Could an attic, a big cellar on top of a private parkplace be ok for me ? => Yes

Starting from these three elements, you can understand that a place with two bedrooms and a small room, or a mezzanine big enough to put a sofa and set up a home office corner could be investigated. Outside, you could redecorate a 20m2 terrace with green plants and build you green cocoon. An attic and/or a cellar would be enough to store what you are not using really often in your home, in addition to a public or private car plot for your vehicle. All these new criterias could fit with your wishes.

Finally, these information shows your real needs and allow you to expand your researches scope. Moreover, if you could find a place with approaching characteristics of what you are currently seeking, you could also ask for the assistance of an interior architect.She/he will support you to design your next home, and to fit with your needs. I propose to discuss this point in a next post.

David

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You are seeking for a personal advice, a support in your home search, then this solution could make your life easier…