When buying a property it is crucial to avoid the common mistakes that could end up costing you money and causing you unnecessary stress in the long run. Recognized as the fastest-growing economy in Southeast Asia, Cambodian real estate made remarkable progress in the last 22 years, with more than 61,000 construction projects approved.
However, this growing interest from both locals and foreigners to invest in real estate also poses a potential risk. In this article, we will discuss the current pitfalls to avoid when buying a property in Cambodia.
To avoid pitfalls when purchasing a property, pay attention to the following:
- Research the developer's background
- Verify the developer's sales and construction licenses
- Pay attention to the Sales and Purchase Agreement (SPA) and other legal aspects
- Consider finances
- Evaluate the neighbourhood
- Let the Agent Negotiate the price
- Have future plans and goals for the property
Research the developer's background
One critical aspect of purchasing a property is the developer's portfolio. Unfortunately, many homebuyers make the mistake of getting carried away by the project and its price, rather than carefully checking the developer's background. It is essential to prioritize the developer's past projects and reputation to avoid potential risks and ensure a sound investment.
New developers aren’t necessarily deceivers, but it is essential to verify their legitimacy with the relevant government ministries before handing in any form of payment.
All legitimate developers must have:
- a license for their development company
- a master hard title for the land on which they are developing
- a license for the development that includes a master plan from start to finish
- a construction license
If developers fail to submit all necessary documents when asked, it is best to visit other projects. Realestate.com.kh established a long-term partnership with trusted local and international developers in Cambodia. By taking the time to research the developer's credentials, homebuyers can make informed decisions and safeguard their investment in the long run.
Verify the developer's sales and construction licenses
A developer's sales and construction licenses are legal permits or documents that authorize them to sell properties and undertake construction activities. These licenses are typically issued by relevant government authorities, such as local building departments or real estate regulatory bodies, and serve as proof that the developer has met specific legal requirements to engage in these activities. The sales license permits the developer to market and sell properties, while the construction license allows them to carry out construction work.
Without proper verification, buyers may unknowingly purchase from unlicensed or unqualified developers, which can lead to substandard construction or even illegal buildings. In some cases, the developer may not have the legal right to sell the property or may be engaged in fraudulent activities. This can be done by requesting copies of the licenses and checking them with the relevant authorities.#
Pay attention to the Sales and Purchase Agreement (SPA) and other legal aspects
One crucial aspect to consider when buying a property is the complexity of the country's laws. Without proper legal guidance, buyers may encounter unexpected challenges, such as unclear ownership records, unresolved disputes, or legal restrictions on the property. A significant pitfall that buyers may face is failing to engage a lawyer and a notary.
It is recommended to request guidance from real estate agents, who are the most familiar with the process and transaction to follow when purchasing a property. Real estate agents will ensure important documents such as Sales and Purchase Agreements are up to the norms in the industry.
It is essential to have legal guidance throughout the buying process to avoid costly legal battles or even the loss of the property. When all legal requirements are met, the buyer's interests are protected.
Consider finances
If you are thinking about investing in Cambodia's real estate market, it's crucial to understand the payment procedures for purchasing a property. Therefore, to execute your property investment plan smoothly, it's imperative to know about the easiest payment options available in the Kingdom.
In addition, when buying a property there is more than just the cost of the property. Many first-time homebuyers overlook the additional expenses associated with homeownership, such as property taxes, insurance, and maintenance costs. These expenses can add up quickly and significantly impact your budget, so it is crucial to factor them in when calculating how much you can afford to spend on a house.
Read about the different taxes and fees when buying a property in Cambodia by clicking here
Evaluate the neighbourhood
The property you're considering may be beautiful, but it's essential to take a closer look at the neighbourhood before making a purchase. There are several factors to consider when choosing a property in a certain location such as noise pollution, amenities and security. Noise pollution is a crucial factor to consider when evaluating the value of a property.
Excessive noise can have a detrimental impact on the desirability of a property, which can ultimately affect its overall worth. Whether it's traffic noise, airport noise, bars and nightlife or industrial noise, excessive levels of noise pollution can lead to discomfort which can significantly decrease the appeal and value of a property.
Knowing what amenities are nearby, such as parks, restaurants, shopping centres, and medical facilities, can help you determine whether the neighbourhood is a good fit for your lifestyle. If you are someone who enjoys eating out, living in a neighbourhood close to the centre where everything is accessible is a perfect fit.
The crime rate in your neighbourhood can help you determine the safety of the area. High crime rates can impact your daily life and also lower the value of your property in case of robbery or criminality.
When choosing a property you'll want to make sure the neighbourhood is a good fit for your lifestyle and that it will hold its value in the long run.
Let your agent negotiate the price
Buying a house is a significant financial transaction, and it's essential to negotiate to get the best possible price. Many homebuyers make the mistake of assuming that the asking price is non-negotiable, but that's not always the case.
Reliable real estate agents and brokers know the market price and will help you research comparable properties in the area, and make an offer that reflects the market value of the property according to your budget. You may be surprised at how much you can save by negotiating, so do not hesitate to inquire with your real estate about the different offers available.
Have future plans and goals for the property
Considering that Cambodia is one the fastest growing economies in Southeast Asia, the chances of your property increasing its value will depend on the location, economic and market conditions, the state of the property, and the demand and supply of properties in the area. When buying a property, it's essential to consider your long-term goals and plan for the future.
Will the property meet your needs in five or ten years? Is it a good investment that will appreciate in value over time? Will your property deliver the rental returns you expect?
It is crucial to have answers to these questions in order to determine whether your investment will yield good returns in the long run. Seeking the advice of professional real estate agents who have a deep understanding of the current market trends can help you thoroughly discuss and address these questions.
If you are looking to purchase property in Cambodia, it can be advantageous if you proceed with caution and make informed decisions. Considering all these factors will definitely help you figure out the pitfalls to avoid when purchasing a property in Cambodia.
Realestate.com.kh is the ultimate source of information for property buyers and sellers in Cambodia who want to learn how to invest in real estate wisely and make a profit.
Visit Realestate.com.kh today to expand your knowledge and stay up-to-date with the latest trends and opportunities in the real estate market.
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