Getting Our Houses in Order
Now is the Perfect Time to ‘Declutter’ Your Property’s Paperwork and Prepare Your Asset for Sale.
Getting Our Houses in Order
The intent here is provide a bit of insight into the settlement process to shed light on what needs to be in order in for a successful transfer of ownership to occur with minimal detours. A clean path to settlement helps both buyers and sellers to achieve their objectives without unnecessary delays, so whether you are buying, selling or just looking, our aim is to provide everyone with one or two nuggets of information of which they may not have been previously aware so that there are no unexpected surprises.
Clean Title & Term
Whether the property is held under a Hak Milik, Hak Pakai, HGB or Hak Sewa title, both buyer and seller are best served by knowing:
- Hak Milik : Have the annual Land & Building taxes been paid? Providing the proof is a time saver.
- Hak Pakai/HGB : Are the annual taxes all paid up? How much time is left on the initial term and what exactly is the mechanism to extend the paid-up term either before or after settlement?
- Hak Sewa : Land & Building taxes paid? What is the exact end date for the lease and what are the terms and conditions for extending the lease? Are the landowners willing to extend the contract even though there still may be 10 or 15 years left on the initial term? If so, it may be possible to get a clear understanding of the expected price so that both the seller and the buyer can agree to a price for the initial term which is reflective of the upcoming or imminent cost to extend.
- A good notary, in the course of his due diligence, will report back about tax payment status and encourage the landowner to pay any back taxes and provide proof. If we can assure that all Land & Building taxes are paid in full (typically fairly ‘small money’), then we have saved time and aggravation as settlement approaches.
Lease extension conversations vary from property to property. Many local landowners have gotten quite wealthy and may not be in need of a cash infusion when the villa ownership is transferred. In fact, the lease extension payments are often seen as ‘money in the bank’ for the next generation. On the other hand, some are very willing to extend outside of the standard timetable if the family has pressing financial needs such as school fees, holidays, cremations and the like. Our request to extend the lease term outside of the norm may very well be influenced by our relationship with the landowning family. We have always believed – for a number of reasons both cultural and in this case, financial – that developing a good relationship with the landowning family is always a very good idea.
Your Financials :
In this Age of Information, buyers expect that the agents will have a wide range of financial information at their fingertips. Operating expenses, staffing and their salaries, body corporate/common area fees, management fees to name a few. These answers are fairly readily available; however, they are not likely to all be in the same place at the same time when they are needed. Why not prepare them, so that the agent can represent the property with all of the tools needed to create a successful and easy-going transfer of the property?
- OPEX : Electricity, water, TV & Internet, garbage, banjar fees, household/pool cleaning supplies and chemicals and maintenance costs.
- Staffing: Who is on the staff and for how long? What do they earn? Is healthcare provided? Are there allowances for transportation and food?
- Profit & Loss : To transfer an investment property, a complete P&L just may help to seal the deal. A proper P&L that includes all management fees and taxes may not put the brightest shine on your property, however transparency has got a value that cannot be monetized, but neither is it ignored when it comes time for the buyer to choose on which villa he or she will make their offer.
Last week we discussed tidying up the front of the house – the villa itself; staging, decluttering and addressing the big and small maintenance issues. Taken together with this week’s suggestions, your property – whether it is the one that intend to sell or to buy – will be as ready as possible for a smooth and successful handover, and it just may have the competitive advantage needed to sway the buyer to choose your property over the range of options they have considered. While this information may appear to be directed towards the sellers in our market, it is our intention to show our investors what they can expect and how high the standards can actually be here in our market.
For more information and detail about the above dynamic, please contact Patrick on handphone or Whatsapp on +62 817 973 3031 or [email protected]