With signs of increasing interest rates and the first quarterly housing market decline in months, it might be a good time to buy a house. But there is still a worrying shortage of houses and so if you are lucky enough to find the house of your dreams, the question is how to win the bidding war that will surely follow.
Before you go out house hunting, be ready to move quickly if the property you want appears on the market - because a winning bid might snap it up, within days. The first thing to know is how much you can borrow.
A survey for The Economist showed that, out of 20 developed nations, the Netherlands has the highest ratio of residential loans compared with disposable income. While this means you should protect yourself from interest rate rises with a fixed rate, it also means your borrowing capacity is greatest here.
It’s key to be well prepared for your mortgage application, with all of the key documents on hand to prove your commitments and income (if necessary, over the last three years). Think ahead: the costs of a house don't consist of just the initial purchasing costs, but also the maintenance over the years (which in older houses in particular can be substantial).
“Have some reserves, either some money or a building reserve in your mortgage to fix things, and be aware that house maintenance will cost money,” advises Jansen. “Next year, you may need these reserves to paint the façade, maintain pipes and wiring, or replace the central heating system.”
Be aware that if you are intending to do a renovation with sustainable measures, you will be able to borrow up to 106 percent of the official valuation, thanks to a government scheme. (This may, however, have a higher interest rate).
You need to seem like a credible buyer and have the best possible advice on what price to offer the sellers. A sharp estate agent is absolutely vital: someone with expertise but also the instinct to go for the kill. “You need a really, really good buying agent - someone with technical skills but who is enough of a shark to get you the deal,” advises Jansen.
Although there are moves in place to make the estate agent business more transparent - and ministers, consumer organisations, agents and property companies have signed an agreement to make buying more open - the bidding process is different for every buy at the moment. Some properties have a closing date, with closed offers. But you might be able to win a property quickly if you offer a convincing amount right off the bat.
Barry Burgemeester, who runs Burgemeester Vastgoed estate agents, says the most important thing is to be realistic and understand that you will probably need to invest some of your own money. Equally, a professional agent can present you as a solid and credible buyer, making you more attractive to the seller.
“The most important thing is that you are prepared and realistic,” he said. “It all starts with the budget, and then you need to have an agent who is experienced and knows the market, to keep your feet on the ground. Of course, everybody wants their dream house but even with an unlimited budget, it is difficult because the housing market is limited and there are a lot of people who want to buy.”
“You need a substantial amount of your own funds to cover the costs (kosten koper) and the difference between the valuation for the bank and the final sale price.” Sometimes, he adds, a good agent will advise you that it’s not wise to offer more than a certain amount for a house because it is just not feasible.
There are always bidders with bigger pockets. However, more importantly, the total package such as the conditions, price and the way an agent represents the client, will more likely seal the deal.
When you sign a buying contract in the Netherlands, before the final exchange, you have the option of including several clauses to dissolve the contract without the usual 10 percent penalty. It is common to have a financial clause, to allow you the time to get a mortgage. Many people also recommend a clause so that you can do a professional survey of the house, to foresee large costs ahead, and ensure it is what was promised. However, says Burgemeester, it is common at the moment for buyers to accept an offer without clauses because it reduces their risk.
“You need to move quicker,” he says. “In the old days, it was common to go back and forth. If there is any sense that a house is a bit dodgy, you should have a survey done, but we can see if a building is in good condition. If a purchase is free of rules, it is more attractive for a seller.”
That said, we never advise you to buy without a financial clause before we have the consent of a mortgage advisor. It needs to be a safe and solid offer, or no offer at all. Jansen, also, does not recommend offering without a financial clause (unless you are making a cash buy) - this is a risk and things can go wrong. But it’s a decision you will have to take based on your financial situation.
You have three working days after signing a buying contract to “cool off”. Jansen advises springing into action to do as much as possible so that if a problem emerges, you can withdraw. You will need to organise an official valuation of the house (which you could schedule in advance of signing the buying contract). Although this is not a full survey, it will indicate if immediate costs for repair will be more than 10 percent of the value of the house.
A building survey can also be done in this time, generally costing around 400 euros and giving details about potential issues such as asbestos, exterior maintenance costs, and immediate repairs. A good surveyor is worth their weight in gold (and if you later discover any hidden breaches the buyer should have declared, doing a survey shows that you have put in the necessary research as a buyer and might be able to reclaim them from the seller).
Finally, this is the time to proceed furiously with the mortgage application, which - if you got all of your ducks in a row earlier - should be more straightforward. “It’s a difficult market, but I’m not negative,” says Jansen. “A property is still a good investment, and a good alternative to renting. We have a shortfall of 350.000 houses and it will go up to a million.”