Tuesday, 6 July 2010
BULGARIA - The Hype, False Urgency and Exaggerated Returns
Did you see the episode of the BBC2 program 'How to pay off your mortgage in 2 years'. In this episode the man of the family travelled to Bansko, Bulgaria looking for an investment property. I am not sure of how much he had to spend but he was taken to view a number of properties by an agent from an 'un-named' agency and charged a whopping 1000 Euros for the privilege of doing so. Now this in itself should have started alarm bells ringing.
Many agencies in Bulgaria, both Bulgarian and British owned charge a viewing fee. Some charge a set fee for a day's viewing while some charge per mile you need to drive to view properties. Now why should you pay for the privilege of looking at properties you are considering buying. The reasoning behind this practice seems to be that there are so many time wasters just viewing properties when they have no real intention of buying anything. But how true is this? Most foreigners going to Bulgaria have at least some interest in investing in property over there as they have all been bombarded with the same hype over the last couple of years.
So this guy I mentioned above settled on a couple of properties that were of particular interest - a new build apartment and a house in a village about 5-10km away from Bansko.
The guy was told by the agent that these types of houses hardly appear on the market and that the one he was interested in would be sold within a couple of weeks so he needed to find the deposit and put it down to reserve the property straight away.
To clinch the deal the agent told the guy that if he bought the property now he would make a profit of an unbelievable £175,000 in a couple of years. Something along the lines of a 200 - 300% increase in value!
Well the guy fell for it, hook, line and sinker. If he had had the thousands of pounds for the deposit in his pocket, he would have handed it over to the agent straight away.
Luckily he didn't and so he flew back home and after discussing the matter with his family, he had second thoughts and decided not to pursue the house in Bansko. In fact I think he went on to buy a house for renovation in the UK.
However, this is so typical of the tactics used by unscrupulous agents in Bulgaria and other countries to try and get you to part with your hard earned cash.
They will try and make you think properties are in short supply, that they will be snapped up by another buyer almost immediately and talk of totally unrealsitic gains. You can avoid being taken for a ride by doing your research and not rushing into anything.
There are plenty of properties available, yes prices are rising a little but is it not better to end up paying a tiny bit more for taking your time and finding out the facts first than rush into something you may regret later.