A Look Back How We Got Ourselves into This

While searching for something else, I came across the first email Kevin sent that proposed that we build new rather than buy an existing house and improve it.

This email came as we were trying to firm up what houses we’d see on our June 2016 trip.

He eased into it …

Thinking about this completely differently.

Then he proposed his alternative. He was right that we were expecting that we’d have to do some work, but we weren’t looking for a complete restoration …

Instead of spending all or most of the budget and given that you are open to a project requiring some work, we approach this completely differently.

Here’s the pitch …

Attached is an article set to appear in ITALIA MAGAZINE. The subject is right-sized houses. Places that are done in a smaller overall volume but deliver all the beauty and function of larger houses, WITHOUT the cost and maintenance. There’s a house, CASA IDEALE, with great views, privacy, proximity to town, an open plan architecture and three spacious bedrooms, all done in a roughly 140 sqm format for around €300k. It’s even designed so if it’s just two people, they can live entirely on the ground floor. Projected construction time is 10-12 months. I attach the designs.

And his close …

This sort of approach could be excellent.

magazine article about a small Italian house
Advertorial
Click to Enlarge

Now, it turns out that the “article” was really advertorial, but the idea was a sound one. I was trying to keep the size of the house and the cost down.

Since our spec list really focused on buying an existing house in pretty good shape and doing only minor improvements, I might have rejected the idea out of hand if I hadn’t worked with Kevin in 2015. I felt he had a good sense of what we wanted and what was available.

The size and floorplan referred to in the article aren’t very close to the plan we are building today, but we did bite on his concept. And here we are, not with Casa Ideale, but our own Casa Avventura.

Source:
Image: Copyright © Our Big Italian Adventure

Contract Signing Trip

Kevin and I had a Skype call this morning to iron out a few details of my upcoming trip. The main purpose of the trip is to sign the final documents and to get the property transferred into our names.

He also wanted to just recap the project budget.

We started with a basic schedule. I plan to depart Chicago on the evening of Sunday, October 23. Rather than flying to Rome and driving 3 1/2 hours across the mountains, I’m going to fly into Ancona, on the coast about an hour from the property.

buon-viaggioAlso, when I looked into flights, surprisingly to me, only American has a nonstop to Rome this time of year and it’s very expensive. So I’d have to connect somewhere, so I might as well connect and go to Ancona. My plan is to use United miles and connect through Munich to Ancona. That gives me a 9:20pm departure, 5:00pm arrival in Ancona on Monday evening, October 24.

Then Tuesday we’d walk the property and decide where to place the house and discuss related issues. Late in the afternoon we have an appointment at a windows and doors place. Apparently, we have to make some decisions about these early in the process. I need to figure out a way to get Anne’s input in a timely manner. .

Wednesday, the atto (closing) is scheduled in the afternoon. Kevin also wants to discuss flooring, so I assume we’ll visit a showroom of some type.

Kevin made a great suggestion. He’s planning on having us visit some completed houses to focus on windows, doors, and flooring.

On Thursday, I think we’ll get into some details about project timing and planning. He’s then leaving that afternoon to go out of town.

I can come back on Friday, but it seems if I gone over there I should stay a bit and accomplish a few more things, but this is all TBD at this point.

But I haven’t yet booked the trip yet. The plan for today, after the call with Kevin, was to complete the wire transfer and then book this flight. But the call went differently than either of us expected.

We began to discuss the project budget and we both were surprised and confused.

More to come.

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Let’s Play Hide and Go Seek, Italian Style How Buying Real Estate in Italy is Different From the US

It’s not as easy to identify potential houses in Italy as it is here in the US. We have a “multiple listing service” or MLS, where essentially all properties for sale are in one big database. It doesn’t matter who the selling agent is. If it’s on the market, it in the MLS. And from that, on Zillow, Trulia, realtor.com, etc.

This makes it easy for a buyer. You just access this data and see what you can find. It’s all there. You can also see what has sold for what price. All this leads to a pretty efficient market, in economics-speak.

Needles in Haystacks?

Not so in Italy. There is no equivalent system. It does matter who the selling agent(s) are, because it only shows up on their websites(s). And you have no history or way to compare prices.

imageNote that I’m saying it might be agents, plural, not just agent, singular. The same property can be listed by multiple agents. It all depends on the seller, and it’s generally in the seller’s interest to have multiple agents on the job. (Twice, on my original trip, I was taken to see a house that, when arriving, I realized I’d seen with another agent. The descriptions and pictures were different, so I thought it was just two houses in the same general area.)

So to identify properties you need to identify agents. As you expect, you do this by web search. You can search for “Marche real estate”, for example. You’ll find a number of agents and you’ll discover the portals, Gateaway.com and Rightmove.com. (These sites take what I believe are paid listing from agents and kind of simulate an MLS system. But not very well.) From the properties listed, you identify agents. Then you go to the individual websites and see what they have for sale.

There is another way to find a house, but it’s not easy. You try to identify a house on your own, offered by a private seller without an agent. If you have good connections in the expat community, you might find a house another expat wants to sell. Or, if you’re fluent in Italian and lucky, you might hear about a house by asking around in local villages.

It’s Gonna Cost Ya

The total real estate commission on a sale is similar to the US, usually somewhere in the range of 4%-6%. But, instead of all being paid by the seller, as is our practice, it’s split by the buyer and seller, with what you pay based on the rate charged by your agent. In our case, our agent Kevin charges buyers 4%, with a minimum commission of €7500. (Also, on the commission you pay the IVA value-added tax of 22%.)

I’ll admit to not being fully aware that Kevin’s rate was above average when we started working with him last year, so we didn’t try to negotiate the rate. Maybe he wouldn’t have negotiated, anyway, since we would have been in a weak position: say “no” to his rate and then we’d not have access to his listings or have to work hard to identify another agent who had the properties. And of our list of 39 properties last year, Kevin represented more than any other agent, about 8 if I recall correctly. So, we might have missed out on some good choices.

What Will It Take To Put You In This House Today?

Finally, when evaluating prices and what you “should” pay, you’re in the dark without knowing what similar properties have sold for. Your data is just the houses you’ve seen and the asking prices. And asking prices seem to be all over the map. It’s not uncommon for a house to be reduced dramatically in price, by fifty, a hundred, two hundred thousand euro all at once. Is it now a good deal? Or if they were off on the price by that much before? Are they still too high?

(When I was getting a feel for the market at various price points last year, I saw a house in Tuscany listed at €750,000. I liked it, but told the agent it was at least €200,000 too high for us. She then asked, “If I can get them to sell it at €550,000, will you buy it?” I think she thought that it was a real possibility that they would take that price.)

So, with “hidden” inventory, buyer commissions, and “shot in the dark” prices, you could say the Italian free-for-all system makes it harder on a buyer all around.

Image source: www.pixabay.com License: CC0 Public domain. Free for commercial use. No attribution required.

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