There is so much misinformation and confusion about the buying process in Italy and the role of real estate agents that I thought I’d write a summary to hopefully, make things clearer.
Part 1 – The buying process…
So, you’ve fallen in love with a home and want to buy it.
Step 1: Do your research – Check the local market and compare prices. Do a viewing with a geometra to check any irregularities and potential issues with the building (see ‘avoiding pitfalls’). This is similar to having a property survey in the UK. If you want a detailed report (not standard practice here) they will charge a fee but for a quick walk through they don’t usually charge (in our local area) as it often creates goodwill and leads to future work for them if buyers want to make any changes.
Step 2: Make an offer. The agent will contact the seller and let them know the offer and from there, if you’re lucky it will be accepted, if not there will be some back-and-forth negotiations. This is all done via the agent.
Step 3: A price is agreed.
Step 4: To secure the house and avoiding gazumping, we recommend a preliminary agreement should be drawn up. This can be done one of two ways.
Option 1 is for the estate agent to write a private contract which will then be registered with the tax authorities. This provides a high degree of security and should the seller also agree a sale with a third party, whichever party registers their preliminary agreement first, has the right to move forward with the sale. The other party however can pursue the seller for the return of any funds paid and damages through the court system.
Option 2 is to pay a notary to draw up the preliminary agreement which costs more but as well as being registered with the tax authority it also becomes a published public act meaning that in the event that the owner tries to sell the property to someone else, the notarial preliminary agreement will be flagged, and the sale will not be able to go through.
A time frame is usually added to the contract to allow time for the buyers to arrange finance and the sellers to ensure that all the required documents are in place ready for the sale to go ahead.
At this point a deposit is usually given. This can be paid to the seller, held by the agent or, and we tend to recommend this to our clients, paid into the notaries deposit service. Most notaries offer this service and there is a fee involved but it provides the most security to a buyer.
The time between signing a preliminary agreement and completion – the length of time between the signing of the preliminary agreement and completion can be agreed amongst the parties (up to 12 months) and it is during this time that the geometra’s report is prepared if it hasn’t already been done. If any documentation is found to be missing the seller gets it prepared at their sole expense. The agent will coordinate the gathering of all required documents and check that everything is correct.
Once everything is in order it is time to move on to completion.
Completion – this is the exciting moment when you actually become homeowners. If you are unable to attend in person (or cannot speak Italian), you can give power of attorney to someone to sign on your behalf. Whenever possible it’s good to be there as it’s a fascinating process to go through. Ordinarily the sellers will also be in attendance, along with the real estate agent and the notary. The notary will read through all the property details and sale contract, marking up any changes that need to be made. Once all the details are agreed, he will leave the room to give the changes to the secretary who will quickly produce the final edited document. The document will be signed by both buyers and sellers.
The purchase funds must either be paid and cleared into the seller’s account or the notary’s deposit account or a buyer can use banker’s drafts. These are like guaranteed cheques, they are made out to the seller but issued by the buyer’s Italian bank and are only issued if the funds are actually available in the account, after which they are earmarked for the seller and cannot be spent so it is a fairly secure payment method.
Once the sale contract is signed and cheques handed over you get the keys and head off to the nearest bar for an aperitivo and celebration.
Part 2 – Frequently asked questions and general areas of confusion…
Do you need to be licensed to be a real estate agent in Italy?
Yes, this usually involves attending a course organised by the Chamber of Commerce and sitting 2 written exams, one on tax and civil law, including conveyancing and the other on valuations. You need to pass the written exams with an average of at least 70% to be able to move to the next stage which is an oral exam which spans the subjects of the written exams and other technical areas such as the functioning of national building and land registry and the property market in general. Once the candidate passes the oral exam they can register as a Real Estate Agent within the appropriate register held by the local Chamber of Commerce and set up their own business or seek work with an established agent. There needs to be at least one licenced agent within any single real estate business.
Real Estate Agents in Italy are categorised as mediators meaning they bring buyers and sellers together in order to facilitate a sale and by law their commission is due once a binding preliminary agreement is signed by the parties. As mediators, they have an obligation to provide truthful, non-biased information to both parties and withholding such information can result in both a sale contract being annulled and suspension of the agent from the Real Estate Agents register. A good agent will follow clients up until the day of the sale contract at the notary’s office and may even defer payment (fully or partially) to this date so make sure you ask beforehand just so that everything is clear. As the agent acts for and is liable towards both parties, both parties pay a commission to the agent.
What does the agent do?
Agents can act as property finders – looking for the perfect property on your behalf and saving you time by searching online and potentially contacting other agents and viewing properties to whittle down the options to a final selection, ready for you to view. We don’t charge for this service, it’s a ‘no sale no fee’ system so at least you know we are highly motivated to find you a home. Agents work in different ways and services available vary but this is what our agency offers.
Once you’ve decided on a home, our work really begins:
- We’ll advise you on a reasonable value for your initial offer
- Submit a formal written offer to the owner
- Negotiate the purchase price on your behalf
- Help you get your Italian fiscal codes (codice fiscale)
- Prepare the ‘compromesso’ preliminary agreement or liaise with the notary if you opt for a notarised preliminary agreement
- Walk you through all aspects of the sale process
- Ensure all the documents are in order and check the legality of the property
- Help you set up a local bank account, if required
- Support you through the sale itself at the notaries office
Who pays the agent?
As a mediator, facilitating a transaction on behalf of both parties, both the buyer and the seller pay commission to the agent and because commission is payable by both parties it allows multi-agency cooperation which means that your agent can also reach out to other agents on your behalf to view their properties, however they can only do this if you have not already made direct contact with the other agent. In the event of a sale through a second agent each agent would receive the commission from their client, i.e. one would receive it from the buyer while the other would receive it from the seller. This potentially gives you a wider search net without needing to contact multiple agents, so that if you find an agent you particularly trust or bond with, they can act exclusively for you and contact other agents on your behalf.
Commissions vary based on the value of the transaction and even the location of the agency and property. For example, on the sale of a €500,000 property our commission would typically be 3% + tax.
What costs are involved in buying a property in Italy?
The purchase related costs, other than the actual purchase price, can be categorised as follows:
- Estate agent commission
- Property purchase tax
- Translator (if needed)
- Notary fee
The notary fee can vary if a dual language contract is requested (where available) or if power of attorney needs to be granted to an Italian speaking person to sign on your behalf. Under Italian law, you cannot sign a public contract if you do not understand the language.
As a broad rule of thumb but very dependent on the type of transaction, parties involved and numerous other variables, buyers should consider an additional 10% on top of the purchase price to cover the purchase related costs.
Do you need to get a survey done?
In UK it’s standard practice for a buyer to get a survey done. In Italy, the seller must commission a technical report called ‘Relazione Tecnico Urbanistica’ which sets out the history of the property from a permit point of view and shows the legality of the property itself (as long as the report reflects what is actually being purchased). So while it is not usual to commission an independent survey in Italy we do however recommend arranging a walk through with a local geometra just to check out anything that may be of concern. If you have any plans to remodel, they will also be able to tell you what is or is not possible based on local rules and regulations.
Do you need a lawyer/solicitor to buy a house?
This is one of the major differences in the buying process between UK and Italy. In the UK it is standard practice to use a solicitor to purchase a property. In Italy however, this is not the case as the preliminary contract is drawn up by the agent (or notary) and the final sale contract is always drafted by the notary who guarantees the legality of the sale and completes the registration formalities with the relevant authorities.
There are of course exceptions, if you are buying at auction for example, we would advise using a lawyer.
As a foreign buyer, if you are worried about the legal aspects of a purchase, you are better off investing in a translator and ensuring all documents are translated and you are happy with their content. Any legal queries and questions can be covered by the notary. So while you can hire a lawyer if you feel more comfortable doing so, ordinarily this would be an extra and largely unnecessary expense.
The role of the notary
In Italy, no public contract can be done without a notary being involved. To become a notary you first have to do a 5 year law degree followed by a 2 year apprenticeship under an established notary and finally pass the state exam set by the Ministry of Justice. They are experts in contracts and law and are the ones who ensure the seller has the legal right to sell the property before a sale goes through. Note that the notary does not check the legality of a property itself as he reverts to the surveyor’s report provided by the seller which should state this.
Since the buyer pays for the notary, they have the right to choose which notary they would like to use, within reason, meaning for example, that the buyer cannot elect to use a notary in northern Italy for the purchase of a property in southern Italy.
Your real estate agent should be able to indicate one or more notaries within the local area.
Use a local geometra – A geometra is a combinaton of sorts between a property surveyor and an architect. We always recommend a walk through of the property with a local geometra to ask advice on any areas of concern – cracks, illegalities, renovation possibilities, etc. It’s best to use local one as they will understand local rules as well as laws on renovating. We can’t guarantee it will be the same in every part of Italy but in our area, a geometra will usually do a walk through and offer verbal advice on the condition of a property, without charge as it will often lead to future work for them. If you want a more formal check or written report then there would be a charge.
Check the floor plans –If you look at a house advertised as a 3-bedroom house, but on the floor plans one or more of the bedrooms are labelled ‘soffito’ or ‘cantina’ or anything other than ‘camera’ or ‘stanza’ ask why? If it is not legally habitable space, then it has a lower value per square metre. Also, if you plan to rent your house out you can only rent out bedrooms that are legally bedrooms.
It’s the same with bathrooms, windows that have been added or walls that should be there and aren’t and any other changes that have been made. The floorplans you need to see are the registered Catasto floor plans (planimetrie catastali). While this does not provide definitive proof of legality it is a very good starting point.
Despite popular belief, Italy has quite strict planning regulations and illegalities incur fines. Especially in our part of Tuscany, the authorities recognise the responsibility they have, to ensure that the beautiful historic buildings are respected and maintained without changing the look too drastically.
If you buy a property with illegalities, should you decide to do some work these may come to light and as the new owner, you are responsible for any fines so be sure before you buy.
Extra costs and trusted sources
If someone is advertising themselves as a consultant or property finder, they might not be licensed so this can mean you end up paying an additional fee. As well as this, they are not legally required to disclose all information about a property in the same way that a registered agent is.
Key vocab to know
Deposit – Caparra and this can be ‘confirmatoria’ or ‘penitenziale’, your agent should be able to tell you the difference as they are quite important.
Notary – Notaio
Preliminary agreement – Compromesso or Contratto Preliminare
APE – This is the energy performance certificate for the property and the initials stand for ‘Attestato di Prestazione Energetica’
Floorplans – planimetrie
Geometra – There’s no direct job equivalent to this that we are aware of but it is a role that falls somewhere between a property surveyor and architect.
Take a deep breath and start planning your renovations. Another blog for another day…
Thanks for reading our blog
We hope you’ve found this info helpful. If you have any specific questions feel free to contact us and if you have yet to find your dream home, don’t despair, send us an email with your wishlist including budget, location, style and size and we will do our best to gather some options.
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