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Buy, Hold or Sell?

With the global credit crisis, some Bulgarian property owners are questioning whether it would be better to keep their current property or whether it is better to sell. Buyers are also wondering whether now is the time to bag a bargain property in Bulgaria. In a perfect world owners would sell when the prices are at their highest and buyers would purchase when prices have slumped.

Unfortunately, some owners bought with high mortgages and are now finding it difficult to repay them at home, thus are selling.


In the main there is nobody to blame but human nature; the greed to take now and pay later through greater and greater credit has in the most part caused this situation.

Today, we do not have the perfect world, so what are the benefits and drawbacks to buying, holding or selling in this market?

Looking at whether to hold on to what you have or whether to sell, a careful approach needs to be taken and finances weighed. The impact of the credit crunch is far reaching on those who need or want to sell their property, however crazy rumours that the value of your property is about to drop like a stone are exaggerated. There is no shortage of buyers but they may not want to buy at the price you expect or want to achieve.

Can you wait until prices go up again? This is probably the first question to ask yourself. If the answer is yes, improve what you have and weigh up the costs and hassle against the value this will bring to your home.

What if you can't wait? Fortunately in Bulgaria, the slowdown is far less abrupt but nonetheless there are homeowners who are struggling to find buyers. This is particularly true where there has been an over-supply of new build property as the developers can afford to slash their prices to make their properties much more competitive compared with resales. Quality and true frontline properties, those next to the gondola and rural homes are still selling. Talk to agents and tell them if you are prepared to have a "priced to sell" approach. Even though finances are tough in many countries, there are still buyers out there who are looking for a holiday home or a permanent move to Bulgaria, particularly as this country maintains cheap property prices and cost of living.

Who is likely to buy your property? A house in an isolated rural spot with difficult access is hardly going to appeal to young professionals who want nights out. Similarly, an apartment in the busy resort of Sunny Beach is not going to pull in the retired set. Consider the location and condition of your property and ask yourself what kind of people are going to be potential purchasers. Be prepared that buyers will negotiate hard, feeling they have the upper hand right now. There are plenty of buyers looking to purchase who don't need a mortgage and they have the power.

Get the best estate agent you can find with longevity and knowledge of the Bulgarian market. Private property sales are often preyed on by investors who are looking for cheap property to flip. A good agent will usually get you a better sale price and so worth any commission you have to pay in the end.

If you decide to do some major or minor works to your home before putting it on the market, then the question becomes one of whether you will get the money you invest back on the sale. Kitchens and bathrooms make the biggest impact. If the work requires planning permission, this can be a lengthy process - can you wait that long? There is always a "ceiling" (highest price) that a similar property sold for you your area. This price is hard to beat when times are good, so in today's market it would be pretty impossible to beat this now. If the works you are considering would take your property price over this limit, it would be unwise to go ahead.

Capital gains tax also needs to be given some thought. If you are resident in Bulgaria and this is your one sale during the financial year, then there is no gains tax to pay. However, for those still resident in the UK, then the CGT situation needs to be calculated to determine how much, if any, of the profit you may potentially make, you will lose.

Creativity! Why not consider throwing in some "perks". In effect these are a discount but can be disguised in other ways and can be very enticing. So much better than the property languishing on the market for months, which will only make you cut the price anyway. You might offfer a car you have and no longer need or sell the property fully furnished. The list is only as limited as your imagination. Don't appear too over-eager as the purchaser might start to question your motives. If you can do it, as finance is such a difficulty for some buyers, you could even offer to cover their first three months mortgage payments?

Until recently, if your property wasn't getting enough viewings, then it was probably just over-priced. Nowadays, it may not only be the price, it is also likely that a buyer may not be able to finance the purchase. Lenders are pulling in their horns and are imposing stricter terms on clients they are prepared to offer mortgage deals to. Potential buyers who come along and have a mortgage agreed by a lender are of course preferable. Those who have cash and no chain behind them should be grabbed immediately. The key is to make sure your buyers are properly "qualified" so you know that they can buy.

Ensure you are ready and able to move quickly when you get your buyer. This could make all the difference and will ensure a quicker sale, plus the buyer is less likely to back out once you are moving out of the property.

Be reaslitic, research and be ready when you get a buyer.

Hold and don't sell if you can. Not so much a question of Bulgarian property prices going down, rather that it is more difficult to find a buyer now than it has been.

Those who are keeping their homes are starting to rent them out to maximise income which may well be required in today's financial constraints. If you can time the rentals for the right period, then this can pay some if not all of a year's running costs on the property. Just because there are scary stories about the property market does not mean that this will affect your ability to rent your property. Renting doesn't suffer in the same way during a downturn as property prices because with all the doom and gloom people definitely want a holiday. Indeed, families who tend to feel financial difficulties the most, will turn away from hotels and save money by taking a self-catering rental.

The Bulgarian property market is far from collapsing with more Brits than ever wishing to buy a foreign home - but it is changing. Research from Savills shows that 18% of people are buying for retirement with vast numbers of over 45's. These people have a lot of equity in UK homes, so most won't need to borrow at all. For them, this is an excellent time to buy and Bulgaria is an attractive location with low prices and low living costs. The question in their mind is whether Bulgarian property prices will reduce. Nobody is psychic and who knows. Bulgaria is well placed to weather the storm of this credit crunch, no doubt it will be affected but not on the scale of other countries, such as the UK and Spain.

According to research carried out by Cater Allen Private Bank last month, the UK credit squeeze has caused more potential investors to look further afield, and three million Brits now say they are likely to buy a foreign property in the next two years.

Steve Dawkins, managing director of Real Estate TV, said that people were becoming "disillusioned" with the UK property market, adding, “Overseas bargains become more appealing at times like this and people are beginning to realise that there is investment potential out there, it just may not currently be on their doorstep.”

HiFX currency exchange specialists, also revealed that record numbers of Brits are thinking of emigrating, with the numbers of people seeking advice rising by 30 per cent in the first half of 2008.

There is already a shift in Bulgarian property purchasers from holiday home owners to those who are wishing to move permanently to the country. These buyers cite the "nanny state, cost of living, ever increasing prices and violence", amongst their reasons. Those who are buying holiday homes are buying for lifestyle, rather than buy to let.