Buying a home is one of life’s most important decisions. It’s also a major stress point, right up there with divorce and losing a job! It doesn’t matter where you buy either, the home buying process has all the potential to push all the wrong buttons and turn everything ugly. Buying a home in Bali is no different. Some might say it’s more difficult than other places, but it doesn’t have to be. Most of the horror stories occur because rules aren’t followed and laws and regulations are misunderstood.

We hope the following guide will help you understand the process of buying a home in Bali better and make the experience more memorable and maybe even enjoyable!

1. Start Your Home Research

It sounds simple, because it is! The first thing you should do is research and get the information you need. In Bali, there are several ways to do this: local and expatriate newspapers have adverts and classifieds; Google has thousands of websites; social media has hundreds of groups and real estate agents have dozens of listings. Some have more than others and many share the same listing.

2. Take notes!

Sounds easy but how many of you just dive into Google and don’t write things down? Get into the habit of taking notes. Write things down. It will make things clearer in the long run. Compare areas, prices, and if you’re using agencies, compare service. This will give you a better feel for what, and importantly, who you’re dealing with.

Here’s a useful link to learn more about what the rules about owning property in Indonesia are all about.

3. Find an agent that you trust

If you decide to buy property through an agent, it will help to choose one that’s not only professional in the way they do business, but is also one you like, or at least feel you can trust.

The best way you can get to know the quality of an agent is to meet them directly and ask them questions. Don’t be shy! It’s your money on the line and you have every right to ask as many questions as you want. Here are 7 questions you should have at the top of your list.

You should also take the time to ‘research’ them on social media. What sort of things are they posting? Do they share your interests? Could you imagine meeting them and getting along? The most important thing is to feel you have a connection. Trust your feelings from the first time you meet. It’s also a good idea to ask around through your networks and connections for recommendations and experiences anyone has had.

It’s worth noting that most vendors in Bali are not exclusively working with one agent or agency. If you see something you like it’s worth asking the agent you like if they can help put the deal together for you. The best will be more than happy to work together with other agents or agencies to ensure your home buying journey is easier and you get what you want.

4. Plan Site inspections

When you’ve found a few options it’s time to go inspect. This is where using an agent is useful because they’ll have direct contact with vendors and can save you the hassle of trying to do this yourself.

It’s worth planning these inspections in advance. You don’t want to leave inspections to the last minute just in case the villa you want to see is occupied or under renovations or unavailable for whatever reason. If you can,  plan a couple of days ahead of time.

5. Negotiate and make a formal letter of offer

Don’t feel pressurised to make a rushed decision. It’s your money, remember!  When you find a property that ticks most (maybe all) of your boxes it’s time to negotiate. Again, working with an agent makes this part of the process easier and takes away unnecessary stress.

Any offer you make should be based on a sound understanding of the property’s market value. Your agent should be able to provide you with the prices of comparable properties in the same area as well as recent transactions. This is key to being able to negotiate properly. Good negotiations make the buyer feel they’ve got a good deal and make the vendor feel they’ve got a good price. Good negotiations are usually win-win scenarios!

One of the best ways to negotiate effectively is to work with your agent and submit a formal written offer. It shows your serious and that gives you an advantage in any negotiation.

Bear in mind there are taxes to pay!

Freehold properties are subject to 5% purchase tax while the vendor’s income tax is 2.5% on the value determined by the government. Leasehold properties are subject to 10% income tax for the vendor.

6. Down Payment/Deposit

It’s normal to release 10% of the purchase price as a deposit for a property. It’s also normal for this to be held in escrow by the notary of your choice. The notary will also then carry out Due Diligence to make sure all of the documents and taxes are in order.

If you should choose to pull out of the deal at this stage your deposit is not normally refunded.

7. Due diligence by notary PPAT

Due Diligence can take between 1 week and 1 month to complete, depending on the property/land. It’s a very necessary part of the legal process undertaken by a notary or a lawyer to ensure the vendor has the right to sell, all paperwork is in order and there are no disputes on the property/land. It’s worth having a look at theses 3 insights every buyer should know.

8. Deed of Sale and Purchase

After Due Diligence has been done and everything has been declared ‘clean’ it’s time to sign the Deed of Sale and Purchase (AJB).

It’s at this point in the process that full payments have to be made to the notary.

The Deed of Sale and Purchase is the transfer of legal rights of the property/land in the sense that the vendor formally signs everything over to you, the buyer for a price you have both greed upon.

Once this is done, you can open the champagne and celebrate owning your new home in Bali with minimal hassles, meaning the seller formally gives the land and / or building to you as a buyer in return for an agreed price.

For more detailed information and available properties email Lisa Comsatun from Seven Stones Indonesia via the contact details below.

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