How to buy an apartment

How to buy an apartment

Most people are not familiar with the process of apartment sale. As a first time home buyers, they don't know what to expect. In this article, I will try to explain the process of buying and selling apartments and to give you heads up about all the essential details. Given that this is a significant decision that impacts the quality of living and your finances, you must understand every step of the way. Even if you are buying an apartment as an investment, it's important to analyze this entire process to secure a satisfying profit.

We can split the entire sales process into the following steps:

  • Setting up the budget and credit scoring
  • Property hunting on portals, via real estate agencies, and by direct recommendation
  • Finding an ideal property
  • Negotiations
  • If you are buying a property by getting a housing loan, then you'll need to choose a bank and get the documentation
  • Preparing documentation for preliminary and main contracts and certification of the documentation

How to get a mortgage loan

The first thing you need to do is to is check your credit scoring. It will help you to determine your budget. The main thing you need to take into account is your salary and total monthly income. Depending on the bank you chose, you may have an option to take a joint mortgage loan (with your married partner).

How and where to find an ideal apartment?

Once you checked your credit scoring and defined your budget, it's time to find an apartment.

Buying an apartment with the help of a real estate agency is one of the safest ways to find your ideal place. A good real estate agency will help you find a property very fast, while the best ones will do that and save you time and money. City Experts excels at that point, as it helps you find a perfect place online by showing property presentations - photos, 360 views of each room, video, floor plans, and information about expenses. City Expert online real estate agents manage the entire process and lead the negotiations process. You also have free legal advice and help with signing preliminary and main contracts of sale.

You've chosen the right real estate agency, found an apartment and now what?

The next usual step is to start the negotiation process. Usually, it's the plain old bargaining, and some people have the natural talent to lower the price. However, most people rely on the expertise of their real estate agent.

Real estate agents can not only help you to lower the price, but they can also help you with documentation and paperwork. They have been through this same old process many times, and they know exactly how they can help you. What's important is that they know how to negotiate with the property owners, and get you the best possible deal.

Once they reach an agreement about the price, and once both sides are satisfied with the term of sale, it's time to start chasing paperwork. This phase is something that causes most stress, and it's an absolute nightmare, even to us, who have been through this process many many times before. That's why I must state out how important it is to have help here, and how much City Expert can do for you in terms of dealing with administration.

This is the step where you'll fully realize how important it is to choose the right real estate agency. City Expert will save you time and money and eliminate the stress of dealing with documentation all alone. Before listing an apartment or a house on the website, City Expert team checks the following documentation:

  • proof of ownership
  • the number of shared owners if there are any
  • a decision on the annotation of real estate encumbrance

I would also like to point out that we only work with registered properties. This is the first and most important condition one property must fulfill to be eligible for our brokerage services.

If you're buying an apartment with cash, the entire process will go much faster. But getting a housing loan is not that much more complicated, especially if you are familiar with with the procedure.

Buying property with cash

You've found an apartment, you successfully negotiated the price, sorted out the documentation, and now it's time to prepare preliminary and main contracts of sale.

Preliminary and main contracts of sale are signed in our office and certified at a public notary.

The statistics show that the majority of apartments are bought by getting a housing loan, so I'm going to break out the entire process of buying an apartment by getting a mortgage.

Buying a property by getting a housing loan

Choosing a bank
The first thing you need to do, once you decide to buy a property, is to choose a bank. This is a very important choice as you will be paying off your mortgage for the next 20 or 30 years. City Expert real estate agents can help you with the decision and introduce you to authorized personnel, who have become our acquaintances during the past few years of doing business.

Calculating your credit score
It's best to check out your credit score before you start the sales process so that you can plan your budget. You can use the credit calculator on our website and to the preliminary calculations by yourself.

Interest rates
Interest rates are very low at the moment, and that's why 2018 and 2019 were and are the best years to take a mortgage loan. Please be careful here, and take into account that you will be paying off your mortgage for the next decade or so. Interest rates can increase over time, and it's important to be aware that your monthly rates will probably go up or even double in the future.

If you're getting paid in Serbian dinars, then you should choose Serbian dinars as your currency. Mortgage loans in Serbian dinars are generally a safer option. However, they only come with a fixed rate, which is usually higher than the floating rate.

How long do I have to wait for the mortgage approval?

There are two ways to get your mortgage approval. The first one is to get it approved by your bank, and that way is much faster. The other, slower way, is to get your mortgage approved by national corporations for credit insurance. The second type of mortgage is more secure and can help you get a better interest rate, but their service costs much more.

Preliminary contract of sale

Once you've chosen a bank, you will forward the necessary information to your real estate agent and your lawyer. With City Expert, there is no need to hire both, as you have our legal team at your service. The documents you need to deliver are, for property owners:

  • your ID card, if you're married, you'll need the ID card of your spouse
  • your birth and/or wedding certificate
  • you will need the proof of ownership
  • a letter of intent for your bank.

For buyers:

  • your ID card, if you're married, you'll need the ID card of your spouse
  • your birth and/or wedding certificate
  • deposit (usually 10% of the property price)
  • and the note about down payment (20% of the property price)

Once the draft of the preliminary contract is outlined, both sides need to double check it and to suggest changes. The preliminary contract must have notes about:

  • deposit (that counts as a part of the down payment)
  • deadline for signing the main contract (which is usually 60 days)
  • the name of the bank that will give the credit
  • credit amount.

Property evaluator
The bank gives the list of property evaluators to the buyer. The buyer chooses one, and then the evaluator visits the property and estimates its worth. The report is then forwarded to the bank and/or insurance company who will then approve the loan.

Lien statement
Assuming that the loan is approved, the bank notifies the buyer, prepares a loan agreement and a lien statement. A lien statement is a document compiled by the owner (in this case, the bank's lawyers make a lien statement on behalf of the owner), by which the owner unilaterally undertakes that if the debt is not paid, the bank has the right to sell the property, in the manner prescribed by law.

Sale contract
The buyer signs a loan agreement and after that awaits the verification of the contract of sale. Shortly before the contract is validated, the seller signs the pledge statement, followed by the certification and signing of the contract.

Public notary sends the request for signing the mortgage in the cadastre of immovable property. Within eight days, the cadastre is obliged to issue a decision on placing a mortgage and to inform everyone, including the bank, about that decision. Then the bank needs to notify the client that they will forward the money. Just before the release of the loan, the buyer pays the remaining part of the price. After receiving the money, the seller is required to issue a certified statement to the buyer that he has received the total amount of the real estate price. This statement is important as the buyer needs it for registration as the new owner of the property.

If you buy or sell a property for the first time, initially this entire process will seem complicated. That's partly true, as you need to be sure that you double checked all information and all documentation. To avoid any problems, I always tell future buyers that they need the right team that will help them overcome the obstacles and make this entire process as easy as possible.

Miloš Mitić
Head of operations