The Process and Pitfalls of Purchasing Property in Thailand
The Process and Pitfalls of Purchasing Property in Thailand
So, you visited Thailand recently and you found yourself asking the question, “wouldn’t it be great to live here?” You are not alone, out of the millions who visit Thailand every year, there are many who are so captivated by its charm and dream of staying on a more permanent basis.
Some travel from colder climates and live with weather that is not ideal. But in Thailand, no one worries about the weather. It’s almost always nice and never cold. The water temperate averages 84 degrees year-round.
And then there is the food. Everything is delicious. Fresh fruits and fresh vegetables. The flavors are plentiful with regional delicacies that can only be found here. By the end of your trip, you find a whole new world of food and you begin to acquaint yourselves with real local Thai spots.
You observe that the Thai people are extremely kind, positive, and generous. Friendships begin to be formed, relationships prosper, and suddenly, life gets easier and a little less lonely so far from home. You feel safe here.
For those who would like to visit Thailand more often or to settle permanently, purchasing a property is a logical option.
Buying a home or vacation home in Thailand just requires a little forward planning, time, and effort. There are a number of considerations to make beforehand and these include:
- The type of property
- The location of the property
- The reason for the purchase and the exit strategy
- The budget for the property
So, you’ve decided it’s time to purchase a property in Thailand. Awesome! Buying a second home or vacation home in a foreign country is a big step and these steps can make the buying process manageable and help you to guide you through the process of purchasing a property in Thailand.
Step 1: Determine the purpose of the investment and the exit strategy. This should always be the starting point because the answers influence the majority of subsequent decisions related to the purchase of property, including what to buy, where to buy, and how to structure the purchase.
Step 2: Conducting preliminary research. Achieving a fundamental understanding of Thai property law and what a foreigner can and cannot own. This enables the buyer to ask relevant questions and communicate effectively with their agent, and lawyer, and the seller. Part of the preliminary research should also be to narrow down the property search to the aspecific area.
Step 3: Find the Right Real Estate Agent and Lawyer. Bring in an expert to help solidify what you already know and make sure you are not missing anything. Nothing can replace the local expertise of an experienced agent. When all is said, and done, you feel confident knowing you made the decision that was right for you and your family. Appoint your own Lawyer. Typically, a local law firm will break their work down into three parts: due diligence, contract and contract review, and handle the proper transfer of title at the land office.
Step 4: Home Viewings and Inspections. Start viewing villas or condominiums within your budget range. Staying within your budget when buying a home takes discipline, so you must approach the home inspection process with care. Know what you're willing to spend, and refuse to look at homes listed above your budget. Narrow down the homes you viewed into a shortlist of 2 homes.
Step 5: Make an Offer. Have your Agent present an Offer to the seller and negotiate. Once both parties have reached an agreement on a price and terms, the next step is to make a reservation agreement (booking agreement) and pay a reservation fee (booking fee) to hold the price and terms and take the property off the market.
Step 6: Conduct Due Diligence. Your lawyer will conduct a Due Diligence on the property and issue a report for your review. You will discuss this report together and if there are any problems or issues, they will be discussed with the seller’s lawyer on how to proceed or not proceed.
Step 7: Sign the Contract and Pay Deposit. By this time your lawyer has reviewed the contract with you and made any changes necessary. The agreed deposit is usually paid at this time.
Step 8: Transfer of Ownership. At closing, you will sign any final paperwork required to complete the purchase and transfer at the land office. If you are not in Thailand a power of attorney is a common practice used. The final payment is delivered to the seller and you get the keys to move into your new home.
According to official statistics, more than one billion Thai Baht is invested in Thailand by international buyers each and every year. Unfortunately, some of these international buyers will rush forward with excitement only to get extremely frustrated with the home buying process. Later they will find out they made a mistake.
Many of the pitfalls can be avoided by following the steps above. Here are some pitfalls that can make your home purchase less than perfect. These can cost you tons of money, cause lots of aggravation, or both.
Not Fully Understanding the Costs Involved:The cost of living in Thailand is one reason many choose to live here but you must also consider closing costs, carrying costs, and moving costs. Make sure you fully understand the costs involved when purchasing a home in Thailand. Many times, home buyers overlook the costs that are above and beyond the purchase price.
Flooding: You might be viewing property when the sun is beating down – so the thought of what happens when it rains will be far from your mind. But when it rains in Thailand, it can really come down and this can produce flooding in certain areas. To be sure that you are not a victim of this, ask some neighbors if the street floods or view the home during or after a big rain.
Noise: When viewing homes be aware of how loud or quiet it is. Take your time and listen for street noise, neighbors, dogs barking, or a mosque nearby. Ask yourself, could live here, and would what I am hearing now bother me.
Termites: If it’s an older home you need to check for termites. There are companies in Phuket that will come out and inspect your home for termites, link here. Most modern houses and new developments will have termite systems installed. If the home has a lot of woodwork, do not overlook this possible pitfall.
Phuket Thailand has one of the fastest-growing property markets in the world with an increasing number of high-quality projects by internationally-renowned real estate developers. Infrastructure and services continue to improve at a fast pace.
Purchasing property in Thailand can be done safely by following these steps and working with a good agent and a good lawyer. These experts will guide you through the process to ensure no steps are missed avoiding any headaches and ensuring that your purchase is done according to the laws of the Kingdom.
Owning property in Thailand can be very rewarding and just takes some forward planning, time, and effort.