We have broken down the buying process into 12 steps. Having an understanding of each step and the overall process is very important for mitigating risks and maximising the likelihood that you will be happy with your purchase. This is especially true as you are buying a holiday home and/or investment property in Thailand, a very different proposition to real estate acquisition in your country of residence.
STEP 1.
WHY ARE YOU BUYING THE PROPERTY?
Ask yourself about your reasons for buying the property. Is it your dream holiday home to enjoy with family and friends? Or, is it just a straightforward investment opportunity? Very likely, it’s a combination of the two. Once you’re clear on your purpose, you can make decisions about what type of property to buy, the location and proximity to services, how much to spend, how you’re going to finance the purchase and how you’re going to structure the deal.
STEP 2.
KNOW THE PROPERTY LAWS
This is of paramount importance because the laws for buying property in Thailand are very different to those of the your own country. There are stringent laws and regulations about the type of real estate foreign people can and cannot own and the ownership structures they can employ. One of the most important restrictions to be aware of is that a foreigner cannot register the freehold of land directly in their own name. We at Charlesdel have over 20 years of experience operating in the Thai property market and the expertise necessary to safely guide you through legal matters. We can clarify the laws, help you understand your ownership options and recommend professional legal firms with whom we have dealt extensively. Communicating with Thai lawyers isn’t overly complicated if you understand the basics. For an overview of the ownership options open to foreign buyers of Thai property, please see the following link: https://charlesdel.com/legal-and-tax-thailand/
STEP 3.
SEARCH ONLINE AND CHOOSE YOUR AGENT(S)
You want to be able to research and evaluate all suitable properties without dealing with too many agents. It advisable to decide upon one or two independent agents. Look for an independent agent with a diverse portfolio who is responsive, experienced and knowledgeable. By firing off some emails and assessing the timing and content of their responses, it will not take you long to see which agents offer the quality of service and guidance you require.
STEP 4.
BOOK YOUR INITIAL VIEWING APPOINTMENTS
Following your online research about the Thai property market and your dialogue with your agent(s) of choice, you will be a position to decide upon your initial shortlist of properties and schedule the first round of viewing appointments.
STEP 5.
VIEW PROPERTIES
This is the fun part and involves the physical viewing of properties when you actually arrive at your destination in Thailand. Seeing a reasonably broad selection of properties is advisable. Though it can be quite mentally wearing, this is the only way you will really understand the market. Every time you go on a viewing you are discovering more about the region and finding out about what you really want. Properties of serious interest will merit second viewings as you work towards a final shortlist.
STEP 6.
NARROWING DOWN THE SHORTLIST AND CHOOSING YOUR PROPERTY
Take time to compare and contrast the properties on your shortlist and weigh up what’s going to work for you. Properties on your final shortlist will be viewed two or maybe three times. Be objective and narrow down the list to decide upon a property based on your investment criteria.
STEP 7.
CHOOSE YOUR LAWYER!
Many people will view properties and even decide on a property and make an offer before meeting a lawyer. However, it is advisable to at least have an initial consultation with a lawyer(s) and decide which lawyer you will be engaging before committing to a property purchase. Most lawyers will explain the ownership options and give you some initial guidance before they have been officially engaged. Once you have chosen a lawyer, you will in a position to officially engage them and quickly move forward with a purchase.
STEP 8.
MAKING AN OFFER AND NEGOTIATING
Making offers and negotiating is done through your real estate agent. Remember, in Thailand people expect you to negotiate. Always stay calm, and, stick to your budget!
STEP 9.
PUT DOWN A DEPOSIT
When you have finally found the property you want and agreed on the price, then it’s time to sign a reservation agreement and pay a holding deposit. If you are buying in a development, the developer will normally have a standard reservation agreement. If you are buying a stand-alone property, you can use your lawyer to draft the agreement. Either way, the agreement should state that your deposit is fully refundable if, following the due diligence process, any legal reason is uncovered which indicates that you should not proceed with the purchase. By paying the deposit, you show the seller that you are committed to buying the property and in turn they take the property off the market for the period specified in the reservation agreement.
STEP 10.
DUE DILIGENCE
Before you actually complete on any property and take ownership, it is of course of fundamental importance that you get your appointed legal representative to carry out all the necessary legal checks, commonly known as conducting due diligence. The main areas of consideration for legal due diligence are the following:
- Does the property have legal right of access?
- Is the property unencumbered, i.e. free from any mortgages, liens or debts?
- Does the seller have the proper legal rights to sell the property?
- Does the property breach any regulations concerning Thai real estate?
- If the property is being sold with a company, does the company have any outstanding debts or tax liabilities?
Note, a lawyer’s due diligence only checks for any legal reasons why you should not proceed. You need to carry out your own due diligence to assess risk. For example, if buying from a developer, you should ask, how well funded is the developer and to what extent are they relying on sales to pay for construction? This is an indicator of their level of exposure to a downturn in the property market. Or, does the developer have a proven track record of completed properties in Thailand or elsewhere as reassurance for high quality timely delivery? Proper due diligence is essential for the purchase of any property, especially in Thailand; it is imperative that everything is in order and you are totally satisfied before you complete and take ownership.
STEP 11.
TIME TO COMPLETE AND SIGN ON THE DOTTED LINE
Once you are totally and utterly satisfied that due diligence has been completed and that there are no legal or other reasons why you should not proceed then you are ready to complete.
If you are buying a finished property, you would pay the balance in full at the same time as you sign the sales and purchase agreement. If you are buying an off-plan property or a property under construction, you would sign the sales and purchase agreement, a construction agreement and pay the first instalment as per the agreed payment schedule.
STEP 12.
PROPERTY HANDOVER
Finally, you can take possession of your new home. Reality usually hits when you are handed the keys. Don’t get too carried away in the moment though, make sure you are given all relevant documents and guarantees and that all fixtures and fittings are in place.
