How Do I Begin?
This is a brief outline of the the costs involved with property purchase in Budapest as well as how the procedure works. I trust this will give you a clear understanding of the entire process:
- A1 Real Estate has a 3% (+ VAT) commission charge based on the full property price for our services. This includes: consultations and negotiations prior to the purchase followed by attentive after sales care.
- The legal firm we recommend, Dessewffy, Belák and Partners, has a solicitor’s fee of 1.5% + VAT for drawing up the contract of sale and doing all of the legal work involved with the acquisition of the property.
- There is a 6% stamp duty that must be paid to the government, which is usually invoiced months after the property purchase so it is by no means an immediate cost.
- We advise forming a Hungarian corporation called a BT type company when purchasing property as a foreigner. The cost to form and register the company is €900 or the equivalent of that in Hungarian Forint. The process is quick, simple and hassle free and there are economic benefits to purchasing property this way.
When considering any property purchases, be sure to add-on 10.5% acquisition costs as outlined above to know what the total cost will be all taxes/fee's included.
• The process begins by viewing usually 6-8 properties that are in accordance with any criteria you have given.
• After a day of viewing's we would sit down and go through the entire list of properties eliminating those that would not be of interest and narrowing it down to 2-3 properties that you would consider purchasing. I would then give my professional opinion on those properties, weighing the pros and cons, until we have picked one that you are 100% sure is right for you and with which you would have no reservations in purchasing.
• We would then put in an offer that is realistic and within reason and we would do our part to negotiate on your behalf, trying to take as much off the initial asking price of the property as possible. We would fill out a Declaration of Purchase Intent form as well as leave 1% non-refundable reservation fee at our main office to secure the property and insure it is not sold to anybody else. This 1% has to be in cash and will also be used towards the total purchase price of the property. In the event that the seller does sell to somebody else (I can assure you this has never happened to any of our clients) then your 1% deposit would be refunded to you.
• The next step would be to visit the law office and begin the process of forming your company or applying for private permit, which can all be done within a day. I would also suggest giving the lawyer Power of Attorney to sign the contracts in your name, as there is a good chance that there will not be time to draw up the contracts and sign them prior to your departure back to your own country. Once the contracts have been drawn up the solicitor would send them to you via e-mail to read through and OK before they would sign on your behalf.
• Contracts are usually finalized in 21-30 days from visiting Budapest although I have had many clients in the past who have had the funds ready to go and chose to finalize contracts much sooner then that. In case of the private purchase the closing date is usually within 8 days after the receipt of the permit (6-8 weeks) It would also depend on the circumstance of the seller if they occupy the property they are selling, as they may need a certain amount of time to move out.
• Within 8 days of leaving Budapest 15% (minus the 1% you had left here) of the property price along with A1's commission and the legal fee would be sent to the legal firms escrow bank account and would only be payable once the sales contracts have been signed. Once sales contracts have been signed both parties are protected. If for whatever reason you should decide not to proceed with the purchase then you would forfeit your 15% deposit and the same applies to the seller who would pay you double your deposit if they chose to not go ahead with the sale.
• Within another 14-21 days (or sooner) the remaining 85% of the purchase price would be sent thereby concluding the transaction. You would then retain full title and deed of the property and maintain exclusive ownership. In case of private purchase this is 6-8 weeks from the signing, because of the permit.
A more detailed description of the purchase process.
1. The first thing that a client must decide upon when thinking about investing in property with A1 is how much money they want to allocate to this business enterprise. The relevant properties can be found in the “Property Guide” section on this web site.
2. After having decided to go ahead with this lucrative venture, your A1 agent will send you the relevant paperwork via fax or e-mail to start the buying process.
This will include:
• Documents to authorize A1 to work on your behalf.
• Account Opening Application Paperwork (4 pages) that need to be filled out by you to open your account with A1 .
• The Telegraphic Transfer instructions and Dessewffy and Partners' (A1's legal representation) escrow account details at
BNP Paribas Hungária Bank Rt.
3. For clients who do not wish to fly over to Budapest and would like to complete the buying process from their home country we ask the following: Due to the overwhelming demand for prime property by astute investors, A1 requires clients to make a €1000 deposit to secure their place in the queue.
IMPORTANT: If the client decides for whatever reason to withdraw from the buying process then the €1000 deposit will be considered a non-refundable fee to cover A1 expenses.
4. Upon receipt of all documents and facsimile of the telegraphic transfer, A1 will recommend the choicest properties available in the clients' price range. Since all boats rise with the tide, the appreciation is similar among all properties in the same category, giving the purchaser an opportunity to acquire real estate without the undue delay of having to select a very specific property.
5. At this point Dessewffy and Partners ' will send out the legal documents to initiate the establishment of your “Bt.” further info (the “Bt.” is the company registered in your name that will own the property and this has many advantages over owning privately.) and documents giving Dessewffy and Partners ' power of attorney to sign said papers in your place in Hungary, however if you wish to come to Hungary they may be signed at the legal firms offices and then no power of attorney is needed. The legal firm charges 720 euros plus VAT to establish the “Bt.” for the client. All documents must be signed in the presence of a notary or a similar individual that is empowered to establish the authenticity of the purchaser.
6. A 15% deposit must be made within 8 days into Dessewffy and Partners ' escrow account held in Budapest .
7. The outstanding 85% of the purchase price must be transferred within 21 - 31 days.
8. The acquisition of the property by the buyer is final when the full amount of the purchase price is transferred to the seller. The seller then transfers the keys to the property and the deeds are then translated from Hungarian to English and forwarded to the buyer.
9. A1 charges 3% plus VAT for the service it provides the buyer in regards to the purchase of the property minus the amount that the client has sent as a deposit if purchasing from abroad. A further 1.5% plus VAT for properties up to 160k euros and 1% plus VAT for properties above 160k euros is charged by the legal firm Dessewffy and Partners' to draw up the contracts. If the client wishes A1 to provide supplementary services such as renting, renovating, managing and eventually selling the property, then additional costs will apply. (Please refer to the “Services” page on our site for more information.)
* V.A.T. is equal to 20% in Hungary