If you have always dreamt of purchasing a house in Italy, you may have started looking at real estate listings, imagining your new life in the Bel Paese. However, many potential buyers, especially foreigners, feel disoriented when they approach the Italian real estate market for the first time. We at Italian Real Estate Lawyers are here to help you overcome any challenges and avoid any potential financial losses. This article will describe the most frequent pitfalls that buyers often encounter and the most common mistakes to avoid when purchasing a property in Italy. In addition to this, the article will outline a few recommendations in order for you to fulfil your dream of purchasing a property in Italy.
The first mistake that many people make is overlooking investment property guidelines. Without an understanding of the real estate market, many assume that housing prices in Italy are constantly on the rise as in the U.S. However, it is worth pointing out that real estate prices in Italy often remain stable for many years. In order to make an informed decision you can research statistical data regarding the area where you intend to purchase a property. The website of the National Institute of Statistics (Istat), for example, is an excellent source which provides extensive analyses and publications on a wide variety of topics, such as demographics, urbanism, economy, education and any other relevant factors related to a specific area in Italy. Another useful website is the one of the Agenzia delle Entrate (Revenue Agency), which publishes news about real estate investments. Finally, we also recommend you analyze and compare selling prices by viewing real estate listings posted online. By doing this, you will become more familiar with the range of prices which are offered in relation to the property’s characteristics, such as square footage, location, condition and amenities.
The second most common mistake that people make is choosing the wrong real estate agency. It is advisable for potential buyers to check if the real estate agency offering the housing listings is legit, reliable and reputable. Regrettably, it is not uncommon to find fraudulent real estate agents. The best piece of advice we can offer is to check online reviews about real estate agencies which are located in the area of your interest. On the other hand, if you choose a property which is owned by a private seller, you will not need a real estate agency and thus you will save money on the real estate agent’s commission fee. However, as a downside, you will need to communicate directly with the seller, unless you have a real estate lawyer by your side. Thus, choosing the right real estate professionals is a pivotal step in the journey towards purchasing a house.
The third most common mistake is failing to carry out due diligence and overlooking residency requirements. The current owner may have debts or an ongoing mortgage; on the other hand, if there is a lien on the property, the ownership rights might be limited. In addition to this, you need to verify the property’s status from both an urbanistic and cadastral point of view. In fact, there are properties which cannot be used to reside or to live in. This is the case for apartments which can only be used as office spaces, for instance. Similarly, when buying a plot of land, you will find that there are various types; some plots of land are destined to agricultural purposes only, for example, and thus do not allow construction works. Therefore, it is highly advisable to reach out to a real estate lawyer to check the status of the property or the plot you are interested in in order to avoid any unpleasant surprises.
The fourth mistake that many buyers make is overlooking additional purchasing costs and taxes. As a matter of fact, we strongly advise to take into consideration extra fees and to calculate them in advance. Please bear in mind that if you do not pay taxes, you will risk paying heavy fines. When you purchase a house, you will need to pay several taxes, such as the notary fees, the real estate agency fees, VAT (if the house is new), the registration tax, the cadastral taxes, and the mortgage insurance, if applicable. Overall, these taxes are usually around 10 percent of the total purchase price, but the exact amount may vary depending on multiple factors. Furthermore, taxation will vary depending on whether you purchase the property from a private owner or a construction company. Taxes may also be calculated depending on the region in Italy where you purchase a property. Finally, you should also consider after-sale expenses, such as the ones related to renovation works, furniture, utilities and other fees we outlined in our previous article. Therefore, you should not underestimate additional expenses when you purchase a property in Italy.
As far as mortgages are concerned, it is important to study the advantages and disadvantages of mortgages featuring either fixed or variable rates. While the former involves a fixed, yet often higher amount of payment which does not change over time, the latter is unpredictable as it fluctuates depending on current interest rates. Although the variable option may be appealing, it can become extremely risky when interest rates rise to their highest. Therefore, it is advisable to consider your variable mortgage fees at their highest in order to make a fair prediction of your overall expenses. Secondly, we suggest you choose a mortgage that is spread over a limited period of time. In fact, a mortgage that is longer than 25 years may cause you to pay high interest rates. Thirdly, we recommend you choose a bank carefully based on the best mortgage they can offer. In fact, you can save a considerable amount of money by choosing the lowest and most competitive mortgage rates.
Finally, the fifth and final mistake is accepting a price without negotiating. In Italy, the common percentage of negotiability is around 10 percent and the margin varies depending on the property’s conditions. If a property remains unsold for several years, for instance, you may be able to negotiate the asking price. On the other hand, if the house features highly desirable characteristics in terms of square footage, position and amenities you might not be able to negotiate the price. When the property features an extremely quality-price ratio, the demand is higher and thus the seller may not be willing to sell it for less of its original value. Therefore, you should not be afraid of negotiating and you should also take all the time you need to evaluate both the advantages and the disadvantages of buying a specific property.
If you are thinking of purchasing a property in Italy and you would like to learn more about the potential mistakes one can make throughout the purchasing process, feel free to contact us at info@italianrealestatelawyers.com.
