Not a usual post but I thought this might help a lot of you out there looking to buy a property in China’s No 1 Cosmopolitan Jungle.
But all kidding aside, number one is really, really find a good broker, there is regulations and restrictions, and if you’re not best bro’s with your company superior and HR (for income statement), make sure you get the guys to make a check on what loans you can get.
Finding a house can be easy or tough, if you know what you want it’ll be easy, for newer place you’ll find stuff to compare but for rare pads such as old houses and super exclusive boutique compounds you may find that the one place you’re looking at is the only one for sale.
You won’t be able to compare it with different style housing next door or in the area in most cases as they vary so much.
The best way to find out that what you’re paying is right is to ask for previously sold places prices.
Increases are normal, and it’ll depend on the timespan but you can compare it with the general market and increases in more populous complexes.
Probably needless, but I’ll still put it out there, don’t take the asking price if you have other choices.
Negotiate, and maybe see if the landlord is willing to give you some incentives, like a new water heater, or other things that are small but a major improvement to the current state.
Often I’ve successfully negotiated landlord’s paying all or part of the other sides taxes, or sometimes the agency fee.
Making a downpayment.
Once you found your place, negotiate price and terms through the broker, and if needed checked that you can get an adequate loan on the place (emphasized because of importance!), it’s time to make sure that there won’t be some evil twin of yours to snatch this place away, make a downpayment.
Unless you’re with SHPlace “A Place in Shanghai” the best brokers on the planet , you should not take the broker’s word for having negotiated the terms successfully with the landlord.
In all cases, ask to make the downpayment directly to the landlord, and sign the agreement at the agency.
If that’s not possible there is another way.
In many Agency’s downpayments are made to the brokerage company.
They will sign an agreement with you.
Make sure it states in the agreement when the landlord will sign this too, 3 days is good rule of thumb for the seller to consider agreeing and picking the money up at the agency.
Of course there are special occasions and you should use your better judgement to give more days to somebody.
Look through the downpayment agreement.
-Make sure all negotiated terms are stated
including the price, contract sign date and payment steps.
-Get all the valid information before from the seller (prepare your own too).
-Check the breach, usually it’s just what you paid.
Say 50k downpayment, landlord decided not to sell or failed to sign contract at the agreed date they should pay you 100k in compensation. (50 plus 50).
Signing the contract.
You want to save time, and I suspect the seller and agent too.
So, have all your things ready and ask the agent to make an appointment with the loan banker too about 1 – 2 hours after the contract signing appointment to get everything done in one go.
As a foreigner you have to have a notary do a few things for you, so ask the broker to make this appointement a little before the contract signing, or the day before just to be sure all is done.
You’ll have to pay him a good chunk of money too, the notary fee for foreigners buying or selling is calculated in percentages and will be around 0.15% and there is a special commie party fee that is 17500 (which you’ll pay at the exchange bureau) for non-standard housing (luxury is non standard for example).
After all that is done get on to signing, if you don’t speak chinese yourself, have somebody there to look through the contract.
There is no such thing as a legal valid English contract (that would be illegal), they printed out in chinese by the exchange bureau by a network linked computer in the agency.
All is done, you signed, and the agent took the ownership from the landlord.
Now you should have three dates
first payment date, main payment date and last payment date you do after everything is handed over (which is usually a very small amount).
Please, make sure the dates are in line with the bank loan payments (which shouldn’t take long at all) and your getting your hands on cash.
Also check how much the breach is.
Most likely you’ll have to sign a “single” paper for the notary stating you’re not married.
It’s quite normal that you pay the broker after the contract is signed already.
When you make the first payment (after the downpayment) which is usually around 25% of the total have the agent bring a receipt he can co-sign (witness).
Also do this for the 2nd and final payment.
The Final payment is small amount you retain in case there are outstanding bills etc.
When all is ready you’ll meet at the exchange bureau.
Here you will sign over and pay your taxes,
usually, if not agreed differently or changed your taxes will be;
your biggest one will be the 3% property tax which is called the “Qi Shui” Qi meaning Lease, and Shui is tax.
then there is the exchange service tax which will be 2.5 Rmb per square meter.
The Contract tax will be 0.05% of the total
There will be some other small fees (couple of hundred each) and the Communist Party fee of 17500.
So you should expect a total of 3.2% in Taxes (3%+0.15%+0.05%) plus 2.5RMBxsqm, plus 17500 Rmb, plus 1% agency fees and maybe 2000 Rmb in other exchange related fees.
You should get your new ownership certificate after 20 days. Few days more
Use this to change the gas, water, and electricity in your name.
When all is good your ready to pay your retainer and enjoy your property in China.