How to save money when buying and selling real estate

Buys real estate for dollars

Anyone who has ever faced the sale of real estate or just a simple inheritance, knows that any such procedures are associated with considerable financial expenses. Here we are talking about the amount of taxes, fees, duties and other mandatory payments, as well as the price of the services of realtors, real estate appraisers, notaries, technicians private bureau of technical inventory and other interested persons.

Of course, there is a completely reasonable question: and as much as possible to reduce the expenses in re-registration an apartment, garage, residential building, land plot and other real estate. To get an answer to it, let’s discuss each article of expenses separately. And see where you can significantly save.

Realtor services

Have you ever thought that the services of realtors are most often the most expensive item of expenditure both in the sale and rental of real estate?

According to the analysis conducted by the agency Ocenka.UA and described in this article «generally accepted» value of brokers’ remuneration is such:

  • When buying or selling real estate (apartments, garages, houses with land, non-residential premises) the size of the so-called «commission» is from 3 to 5 percent.
  • For long-term rentals of apartments or residential buildings, the customer pays the broker most often half from the full monthly rent.

Next, we will analyze other items of expenditure when re-registering the property at the notary. However, looking ahead, it can be noted that in most cases, this 5% realtor «commission» – the lion’s share of all expenses of the procedure.

We often quote the word «commission» when it comes to the remuneration of brokers. While this definition is generally accepted, it is not entirely clear what it means in the event of a sale or lease of real property. However, let’s not get distracted.

So, in most cases, without the services of intermediaries can be quite done. Moreover, if we are talking about the sale of ordinary apartments, for example, in the Kyiv, the brokers are more harm than good. If you are planning to sell an apartment, but have not yet decided whether you need the help of a realtor, we recommend reading this article. It details how intermediaries prevent you from selling an apartment and how to deal with black realtors, brokers and other real estate scammers.

On the topic of all possible problems and risks associated with the frauds of realtors, on the site of the appraisal office Real Expert ( RealExpert.UA ) there is a very good cycle of articles. Read here – it is useful and interesting, materials go one by one with links below to each other:

  1. Fraudulent schemes and deception of realtors when buying an apartment.
  2. 5 signs that the house rents a swindler.
  3. Selling an apartment – how not to fall victim to the deception of brokers.
  4. Schemes of deception of brokers when renting an apartment.
  5. Eight traps that you can get into when renting an apartment.
  6. Black realtors and apartment raiders – how to protect yourself.
  7. The deposit, the advance and the preliminary contract – what’s the difference?

We again repeat – in most cases without the services of intermediaries you can do well. And not only save money, but also avoid problems!

Notary services, taxes and compulsory payments

Counts and transfers dollars

Regardless of have you applied to the real estate agency for help or not, suppose that the buyer and the seller have found each other and need to prepare documents for re-registration with a notary. What is there to pay attention to?

Notary expenses for re-registration of real estate consist of two parts:

  1. Taxes and mandatory payments. Namely: income tax, military tax, pension fund.
  2. Services of the notary himself. For drawing up the contract and registration of the transaction in the State Register of Real Property Rights.

It would seem, what can be saved here? The interest rate of taxes depends on several main factors: the type of property, the term of ownership and the type of transaction: sale or gift. For example, if the apartment is given to the nearest relative and at the same time the owner is a citizen of Ukraine, the tax rates are zero. If the property is sold by a foreigner, the total amount of taxes may exceed 20%.

The nuance here is that in some cases the legislation is written ambiguously, that is, it can be interpreted differently. Of course, if the notary is not your acquaintance, he will interpret the rules of the law in his favor. To take more taxes from customers, and actually pay them to a smaller budget.

Based on this, it is reasonable approach to collect all the documents necessary for the transaction and to bypass several notaries. Everyone should be asked to calculate the total expenses of the transaction and compare the results. The difference can be quite substantial, so there is a good way to save.

In addition, a competent notary can offer options for re-registration, which will minimize expenses. For example, if an uncle (mother’s brother) wants to give his nephew an apartment, it is often much cheaper to make two gift agreements: first on his own sister, and then she on the son.

In any case, the tax rates are calculated from the so-called estimated value of the real estate. So let’s discuss how legislation can reduce it as much as possible.

Real estate valuation – how to save

In order for a notary to be able to calculate the amount of taxes for the re-registration of real estate, he needs an expert evaluation. It can now be of two types: a free certificate from the state register or an independent appraiser’s report.

Of course, the question immediately arises: if you can take a free certificate, why apply to appraisers and pay for their services? However, in fact, a free certificate is often not the best option for buyer and seller, because the state register for some objects gives an explicitly inflated cost.

For example, you sell an apartment for 2 million UAH. and specify this amount in the contract of sale. And the registry for you forms a free reference for 2.5 million. Not everyone knows that both these figures appear in the sales contracts: the actual sale price and the estimated value of the property. And taxes are always calculated based on a higher value, that is, in our example from 2.5 million.

Let’s say you’ve owned an apartment for less than three years. Then when selling, the owner will pay 6.5% of taxes (income + military tax), and the buyer 1% (pension fund). In total, 7.5%. Since the estimated cost of the apartment is more than the actual sale price of 500 thousand UAH. overpayment on taxes will be 37.5 thousand UAH. (!)

It is clear that in this case, it makes sense to contact a real estate appraiser to bring the estimated value in line with the real market price. How much does a real estate valuation cost? According to offer of the company Valuation.Ukraine the price of the report on the cost of residential real estate for presentation to a notary as of 2024 is only 1000 UAH. Please note that prices depend on where the documents are submitted: cheaper for a notary, more expensive for court or bank.

So it turns out that appeal to the appraisal company gives the opportunity to save money. Pay attention to this! In our example, the savings will be 36.5 thousand UAH.

Technical passport – when it is not needed

Planning of all apartments on the floor of a high-rise building

Another little-known nuance relates to technical passports. Many owners of real estate believe that each time the title to the property should be issued a new technical passport. That’s not really the case.

In which cases you really need registration of technical passport? Here are the most common cases:

  • after a radical change in the layout of the premises;
  • when selling a part of a house or apartment as a separate real estate object;
  • at the very first purchase of an apartment in new buildings;
  • if the real estate documents are quite old and have not yet been entered in the state registers;
  • in legitimizing unauthorized or new construction.

So what happens now? It turns out that the presence of a technical passport in most cases is not at all mandatory at the re-registration of the real estate! Moreover, it is not always necessary to update the technical passport, if it has already been previously issued. And it doesn’t matter who the title deed says is the owner of the real estate.

If you follow our advice and before choosing a particular notary go around several offices, be sure to ask a question including the need to order a registration for technical passport for the transaction.

In total

In this article we showed that in the re-registrationing real estate there are options for significant savings at all stages:

  • Realtor. If you have a sale of a typical real estate, or you, on the contrary, are interested in buying, try to do it yourself. There is nothing difficult, and you can save a lot.
  • Notary. It is not only the prices for the formation and registration of contracts that differ from office to office. It is often that different lawyers calculate the amount of taxes and mandatory fees not in the same way. Visit 2-3 notaries and compare the total transaction costs.
  • Appraiser. There is in Ukraine exists a service of free real estate evaluation, in which any citizen with electronic keys can take a certificate of the estimated value of their (or any other) property. However, it is often more advantageous to approach appraisers, as the registry may be overvalued.
  • Technical passport. This document is often not mandatory for re-registration of real estate. When you will choose a notary, ask what the situation is in your case. Refusal of the need to re-register the technical passport will also save you several thousand UAH. Perhaps one notary will demand this document from you, as they say, «just in case», and the other will do without it on easy.

When it comes to real estate transactions, it is always comes with huge expenses. Know all details of your case! And do not pay extra.

The initial publication of this material, with the consent of the authors, was
on the Hromadske Radio website

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