Buy a Dream House in Italy — THE PROCESS
If you thought buying a car in the US, used or otherwise, was complicated with all the dickering, pass off to sales managers, credit checks and eternal pauses for “Let me just check”, wait ’til you wade through the process that is the Gordian Knot of The BUY in Italy.
I don’t say this to dissuade any adventurer seeking a base for European, Asian, or African travel, or those romantic souls aching for a quiet haven among the hills and vineyards of this lovely land. It is simply that you need to be prepared for a bushel of unfamiliar minutiae and a system that was dreamed up by the architects of the 100 Days of Games at the Roman Colosseum over two thousand years ago. The information below is not exhaustive due to the myriad of little bits and pieces that constitute the sale, and it is always best to have an Italian real estate lawyer represent your interests and to ensure that any additional conditions for the sale are met.
CODICE FISCALE — The paperwork for buying a house in Italy starts before anyone makes an offer. In order for an American, or other non-Italian, to make a large purchase in Italy, the potential buyer has to obtain a codice fiscale. The codice is a government-issued card that assigns a tax number. Online forms for this card are posted on various consular websites. Italy has different types of diplomatic representation across the United States. There is the primary embassy in Washington, DC, as well as Italian Consulate-General offices in Boston, Chicago, Houston, Los Angeles, Miami, New York, Philadelphia, and San Francisco. Finally, there are many Honorary Consulates around the country, but these offices usually do not handle the processing of forms.
PRICING and VALUE- There is no shortage of empty or available homes to buy in Italy. The recession, migration of young people to cities, deaths and inheritance have all conspired to create a buyers’ market. From €10,000 (Around $11,500) and up, hundreds, thousands of casas, palazzos, ruins, apartments and everything in between are available for viewing. Real estate sites in Italy, called immobiliare, set prices according to both the hopes of the seller and the valore catastale or tax value. Value is based on location, condition, and floor space. In any case, the purchase price is almost always negotiable; certainly, a buyer can negotiate for a price lower than the one on the website. The house I bought was purchased at a substantial discount off the posted price. Never be afraid to negotiate in Italy. Ubiquitous as coffee or wine, dickering is a national past-time. You can find out more about real estate agencies in a previous article.
My own property hunt was several months long, beginning online where I checked out properties from the Alps to the heel of the boot, all from an easy chair in my Seattle living room. Ultimately, I settled on two primary provinces, Lazio and Abruzzo. Lazio has the benefit of being nearer to Rome and international flights, and Abruzzo has affordable homes nearer the sea. Over five days, I drove around those two regions looking at properties that variously qualified as ruin, repellent, reasonable, and even regal.
AGENCY FEE — Since demands for money can arise from several sources in the Italian real estate system, ask about agency fees before agreeing to work with a particular realtor: “How much will I have to pay you?” Both buyer and seller pay the real estate broker, so a buyer needs to be prepared for the additional cost of 1.5% — 4% plus 22% VAT on that cost. In my experience, the minimum agency for any housing purchase is €3500 , with the fee becoming a minimum 4% above €100,000; however, official sources offer the 1.5% — 4% range. Thus, on a house that costs €150,000, the real estate fee will be €6000 + €660. If the fee you are quoted by the realtor seems high, it is possible to negotiate or look for another agent, but often houses are held exclusively, so it may be “Pay or say ‘goodbye’”.
ESSENTIAL QUESTIONS — Another essential question to ask is: “What is included in the sale?” Many houses are sold inclusivo or arredato, meaning furnished, sometimes down to the linens. When viewing the house, for the second time if not the first, take lots of pictures, especially of pieces and furniture you like. Then, if you make an offer, stipulate that nothing can be removed from the house and require that this provision be part of the offer agreement.
Because it is a tell in so far as condition goes, also ask “How long did the previous owners live in this house, and, when did they move out?” Many homes have been essentially abandoned for years, if not decades. In those cases, wiring may be out of date, the plumbing not maintained, and appliances rusted out. A follow up question would be, “How much will it cost to have the house cleaned and painted?” These two tasks are inescapable in 95% of the houses I saw. If this is truly a house you want to buy, the €1000–3000 cost is a relatively small price for being able to walk in and feel at home.
GEOMETRA — When a decision to buy has been made, a qualified Italian surveyor will inspect the house, ascertain the size, the soundness of the structure, and the function of essential utilities. The cost for this service and the energy report that is produced runs 500–750 €. I received my copy of the report during the final signing, but the buyer has access to the details before hand.
COMPROMESSO — As in the US, making an offer on a home in Italy is a serious piece of business. It requires similar paperwork and a hunk of money. The compromesso, as the word implies is a promise to buy. If a buy later backs out, he or she loses the deposit that accompanies the paperwork. If the seller backs out, he or she has to pay the buyer twice the deposit or the caparra, so it behooves the seller to complete the process. The realtor will either send you the compromesso via email, if you are back in the states, or have you sign in person. The deposit, generally 10%-30% of the sale price is paid to the seller. On a €75,000 home, that caparra will run €7500–22,500. This can be handled by your bank with a wire or through a service such as Transferwise, which is handy and inexpensive. The balance of the purchase price is due at signing.
LEGAL AND NOTARY FEES — When I signed off on my condo in the US, the notary came to the house and handed over each paper for a signature as we sipped coffee. Cost $500. In Italy, where complex, Draconian, and antiquated bureaucracies provide department fund and income for many, the notary signing process includes a similar stack of papers, but with wrinkles. One of them is the steep cost of 2% -4% of the notary’s time, plus 22% VAT. Another is the reading aloud of every word of the contract which runs many pages. If the buyer does not speak Italian, the notary may hire a translator who will translate all the documents and have them likewise read aloud.
FINAL ACCOUNTING — Even with all the additional costs, a fantastic second home needn’t cost more than €75,000, and the benefits of location, location, location accrue to both the purchaser and anyone they know and love. My own purchase has inspired friends to either start looking or angle for an invite.
PURCHASE PRICE — ? €
DEPOSIT — 10–30%
SURVEYOR — 500 -750 €
REAL ESTATE AGENCY FEE — 1.5 -4% plus VAT (22%)
LEGAL AND NOTARY — 2 -4% plus VAT (22%)
Remember, the list above is not absolute. Ask a lot of questions and be sure to require an accounting for every € as you go along.
