Buying a property in The Netherlands

Unless you buy my book on this subject (which I have yet to start writing), you’ll just have to see what you can squeeze out of my CliffsNotes below. Here are answers to some of the questions we most commonly get.

Do I need a broker (makelaar)?

Nope. You can do it all yourself. But – and here’s the scary bit – then you can’t point at anyone if it all goes horribly wrong. If you are a first time buyer in The Netherlands, it’s probably prudent to engage a broker. There are various broker’s certifications (e.g. NVM, VBO…) but it is a so-called ‘open-profession’ meaning that any Tom, Dick or Harry can wake up one morning and declare to the world they from now on they are also a broker. Look around, chat with several, get a recommendation.

What should a broker do for me?

The good ones should do (more or less) the following: track down properties matching your spec, arrange and accompany you on viewings, identify areas for negotiation, help you avoid great big holes that otherwise you might tumble down. Hopefully your broker also has access to insider information and can help you review properties that are not yet in general circulation. Some cities in The Netherlands are over regulated meaning that there may be additional rules to check. You’d feel a little miffed, for example, if you bought a property only to discover that you were not entitled to live in it. Yes – this does happen.

Are there rules relating to negotiation?

Once you’ve found a home that fits within your budget and meets your requirements, it’s time to begin negotiations. Your broker typically takes the lead in negotiating with the seller’s real estate agent and acts on your behalf throughout the whole process.

The rules of negotiation are strict in the Netherlands and may differ from those in other countries. Some of the more important aspects of negotiation are included below:

1. When am I in negotiation?
   You are only considered to be ‘in negotiation’ when a seller reacts to a bid you have made with a counter-bid or when the seller’s real estate agent formally states that they are in negotiation with you. The act of you making a bid is itself not enough to be considered in negotiation, and you cannot demand to be in negotiation. You are also not in negotiation if the seller’s real estate agent only offers to discuss your offer with the seller. Only a counter-bid or a formal statement means you are in negotiation.
2. If I am in negotiation with a seller, can viewings on the property continue?
   Yes. Because negotiations do not necessarily lead to a sale, a seller can continue to view the property and accept bids. If another bid is made, the seller must first conclude negotiations with you before reacting on the new bid. All bids are kept confidential to prevent tactical out-bidding.
3. Can a seller revise the asking price during negotiation?
   Yes. Both the seller and the prospective buyer have the right to increase or decrease their asking price or bid during the course of negotiation. The bidding process typically involves several rounds of bids and counter-bids between the seller and prospective buyer. Once a counter-bid has been made, the previous bid lapses. An agreement of sale occurs if the seller accepts a bid or the buyer accepts a counter-bid.
4. If I bid the asking price, is the seller obliged to sell?
   No. There is a great deal of misunderstanding surrounding this point. The Dutch courts have stated that the asking price for a property is merely an invitation to bid. Alls bids – whether they are more, less or equal to the asking price – are treated equally. Upon receiving your bid, the seller can decide to accept it or make a counter-bid.
5. If I am in negotiation with a seller, can the selling process change?
   Yes, the process can be changed. At any point during the process either the seller or prospective buyer has the right to discontinue negotiation. Once negotiation has been stopped, the seller can change the selling process. If a seller breaks off negotiation, he (or she) must honour any obligations that have arisen during the bidding process. An example of when this may happen is if it is difficult for the seller to determine who the most interesting buyer is. The seller may then instruct his agent to stop negotiations and change the process. The seller may then decide to go with a bid registration process, enabling him (or her) to review all bids before deciding who to enter into negotiation with.
6. Do I have preference over other prospective buyers if I am the first person to request a viewing, view the property or make a bid?
   No, being the first person to express interest in any form does not entitle you to enter into negotiation before other prospective buyers or confer any rights whatsoever. The seller has the right to define the process for the sale of his or her property. The seller’s real estate broker is required to tell you what the process is and you have the right to request the status of your bid if you are interested. If the seller’s real estate agent confirms that he or she will provide an update, he or she is required to provide one.
7. When is a sale considered final?
   A sale is considered final only once the buyer and seller agree in writing on the key elements of the transaction. This agreement typically includes elements such as price, date of transfer of ownership, conditional financing and any other conditions allowing either party to back away from the deal. In Amsterdam, the notary is responsible for drawing up the terms of sale into a purchase agreement (koopakte) describing the agreements made by the seller and buyer, and detailing all escape and penalty clauses. In other parts of the country, the seller’s real estate agent is responsible for drawing up the purchase agreement.Note: Be aware that your bid must explicitly include a clause for conditional financing (onder voorbehoud) if you want to be able to escape from the deal if you cannot secure a mortgage. Once the purchase agreement has been signed, you have a 3 day reflection period, which gives you the right to annul this contract within 3 days of signing (bedenktijd). If you decide to go ahead with the purchase, the property transfer will take place before a notary on the agreed date of transfer.

8. What is an option?
   The seller has the right, but not the obligation, to grant a prospective buyer an option during the course of negotiations. An option provides a prospective buyer with an agreed amount of additional time during which he or she can, for example, explore financing options or verify the property can be used as intended. During this time the seller will not begin negotiations with another party. Options are more common for newly constructed properties than with existing buildings. You can always request an option, but the seller is under no obligation to grant one.

For more information on the buying process, feel free to contact Johan Grijzenhout of Perfect Real Estate.