How to buy a flat in Russia

So you are considering purchasing an apartment in Russia.

There are several ways to to that, the most notable is buying a newly built or under construction flat directly from the developer. This is relatively safe procedure as there is a special law number 214-FZ aimed to protect the investors. Another popular way is getting a mortgage on a new or used apartment. In this case the bank will aid the investor with comprehensive checks on the purchased property. The most risky way is direct purchase from the owner, without bank or developer involved. So I’ll try to outline the main steps you have to follow if you chose this option. The first and most important. You are not one man army. Even locals fail to know all if any specifics of Russian property legislation, and almost always hire a real estate worker, who is also called a realtor in Russia. As in any business, a good realtor doesn’t advertise him or herself much: the contact is passed between friends and acquaintances, and he is never out of work. It is really worth your time to spend every effort on finding a perfect real estate person: ask your partners, seek recommendations and so on. If you hired the perfect realtor, but don’t expect relaxing while he or she does all the work for you. Remember that any hired worker is imminently interested only in getting the biggest payoff for doing the smallest amount of work. He won’t waste too much effort to find a perfect match for you. Nowadays most offers are published online. There are a few most popular sites with Russian apartments. Get familiar with them and set up automatic notifications when new ads fitting your criteria are posted. As soon as you get the notification, immediately make your realtor contact the seller. There’s no real point of you calling personally, for a few reasons, price being the biggest. Normally, similar apartments in the same neighborhood are priced roughly the same, depending on the current square meter average for the area. But some are cheaper. That is not an indicator of the other sellers being greedy bastards. Cheaper offers normally have the following flaws, in the order increasing dickishness. They may be already sold long, long ago or never even existed in the first place. Such ads are kept on the site to attract customers who keep calling the seller, who is also usually a hired realtor, saving the trouble of making cold calls. During such conversations they state that the apartment is sold, and try to determine if you are a customer or another realtor. If you are a buyer, they try to promote their current offer to you. This normally doesn’t work with realtors, and they quickly hang up. That’s one of the reasons it is your realtor’s job to call up those ads. Another reason is a different situation: the apartment is still on sale, but has some troubles with documents. The building may be scheduled for demolition in the current decade, or not all registry papers are ready yet, or there maybe an underage who could potentially sue the seller when he reaches legal age for acting against the child’s best interest, and so forth. A skilled realtor can see all those caverns just by talking to the sell side, so it his job to make the call. And the last of the common and most dickish moves is when the apartment is on sale, and papers are ok, but the lower price attracts buyers like shit attracts flies. In fact, the cheaper the apartment and the shittier it is, the more buyers zoom around it. The realtors rarely have the dignity to employ the FIFO principle, so they just start an auction. As the price goes past the average for the given location, the buyers realise they can buy any other shit in the neighbourhood for the money, and retreat. And the “lucky” one is left in decision to buy the property for the suddenly inflated price tag or also retreat. I urge you to avoid playing sell side games to help eliminate this practice altogether. But don’t get scary. Find several offers that fit your expectations and price range, let the realtor help you arrange visits and go see the property. Once you made up your mind, make your realtor to contact the seller to commence purchase. This is a several step process in itself. Your first step is to sign an advanced payment agreement. The advance payment does not correlate with the property value and normally is below 1000 USD. The agreement states that in case you fuck up, the payment is left with the seller. But if the seller receives a better offer while dealing with you, he will return you the money. So in the end the seller will land with more money, another buyer – with the apartment you like, and you are stuck with that miserable grand. As I said, buy side is the least protected in the wild property market. But anyway, advanced payment agreement is a good chance to see some of the papers for the apartment, and it is a good tradition to leave copies for the buyer to study. After the agreement is signed and the advance money changed hands, both the seller and the buyer have a lot of work. The first thing to do is to apply for state registration in a multifunctional center, which registers all deals with property. They normally book you 14 days from current. In these two weeks the seller continues to gather all necessary documents, while you should focus on getting the cash. Yes, in Russia second hand apartments are commonly paid for in cash, which is an exciting experience giving the ever skyrocketing property values. Money exchange is done through a bank deposit box with special access schedule. Each of the sides can have access to the box only once. Buyer puts money in and take the key. To access the box, the seller must present the key from you and that deal state registration papers. So the money is freezed in the box for some days until the deal is completed. Of course letters of credit are also available, but far less popular and about 5 times more expensive than special access safe. To minimize risk of getting robbed, it is a good idea to select a bank with special access deposit boxes and wire your money to it, and then order the required sum in cash for the day of money deposit. Beware the commission though: some banks charge exorbitant fees for cash withdrawals beyond certain limit. There are ways to circumvent that, like opening a bank deposit and immediately closing it, but still, be very careful with choosing your bank. Also note that wire transfers can take several days to process, so start on the day you booked state registration. By that day, the seller normally agrees selling agreement with you. This can, but not required to be notary signed. Notaries play a vital role though: by the law they have to make sure both the seller and the buyer are in adequate state of mind and understand what they are doing. In unclear cases, especially when dealing with elderly people who are often targeted by fraudulent black realtors, a medical check may be requested. But again, this is just another safeguard. Besides, if the property is sold not by the owner but say his relative by a letter of attorney, these letters are also signed by notaries, who also check the sellers state of mind. So you may or may not go to the notary. In either case, the next steps are the same for both ways. You meet with the seller in the bank, where you withdraw cash and immediately deposit it to the safe box. The seller should be present during this process to make sure correct sum is in the box. Then you close the deposit box and keep the key. After that you sign the contract in 3 copies and go to the multifunction center. The registration fee can be payed right there through 2 terminals – one takes its own fee for the operation, the other one does not. The staff accept your application. In certain cases, like when some papers are missing or not valid, the seller must bring them in as soon as possible. You get a receipt and a tracking number, which could be entered on the website to see your application status. Normally the deal is registered in 10 days or so. You and the seller go to the multifunction center the next day to collect the papers. After you make sure the papers are OK, you provide the seller the key to the bank deposit box in exchange for hand-written certificate of receipt, signed in your presence. This should be handwritten because this enables handwriting expertise as another safeguard, just in case. With state registered deal confirmation and the safe key, the seller departs for the bank to collect the money. The agreement may give the seller extra days to move his shit out of what is now your apartment. When he is done, he gives you the keys to the apartment and both of you sign a copy of deed of transfer, which is a integral part of the deal. From this point forward, it is your place now. The complete process should not take more than 6 weeks from start to finish. Allow a couple of months for the new owner data to populate various governmental databases, and start to transfer property related accounts to your name: you normally have to visit electrical, phone and maintenance companies. Also note that Russian citizens may apply for a limited income tax reduction for property purchase. Currently, total lifetime deduction is 6250 dollars.

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