Indonesia Expat
Business/Property Info for Expats Scams in the City

Charming Nest for Sale? Beware of Bad Eggs

Property for sale in Indonesia, aware of property scams

My wife saw an online advert for a joglo. The traditional peak-top Javanese homes are rare in East Java, so she called the agent’s listed number. Five dead calls later, a grumpy man answered. He said he couldn’t remember the property as he had so many listed.

The advert offered a safety selling point: it was next to a police station. It wasn’t. The joglo was about a kilometre away. The owner was surprised to get visitors but kindly gave a tour. He said it had been on the market for six months. We were the first to show interest but didn’t buy it. He was asking for Rp200 million (US$15,000) less than the agent’s advertised price.

In darker days, real estate salespeople were ranked alongside second-hand car dealers. The work paid commission, not wages. It was the job taken only when there was nothing better.No longer. In many nations, the business has been cleaned up by governments angered by dodgy practices and complaining consumers.

In New Zealand, agents have to pass a lengthy and costly course to get licensed. This has pushed practitioners to polish their skills. In short, they’ve had to turn pro. The first principle: They must tell the truth and warn potential buyers of all known problems with the property. They must help steer the purchaser through the legal labyrinth so every sub-clause is understood.

It’s similar in the US. The National Association of Realtors, which claims to be America’s largest trade association, says its 1.4 million members are obligated to treat all parties honestly under its ethics code.

Real estate agents’ offices in Indonesia have to be registered with the Ministry of Trade, with at least two directors certified as competent brokers by the Labour Ministry. That’s according to Rudy Sutanto, CEO of Asosiasi Real Estate Brokers Indonesia (AREBI) in East Java. The organisation has 1,200 members nationally.

However, Mr Sutanto told Indonesia Expat that individual salespeople don’t have to be licensed.“We are working to lift standards equal to those overseas, like Singapore and Australia, but this will take time, maybe five years or more,” he said.“We’d like the government’s help with laws that ban unethical behaviour. The public needs to be better educated about buying and selling homes and do thorough research on ownership of advertised properties.”

Realtors

Smart buyers will read developers’ plans and check repayment options, preferably using a lawyer. It’s common to see “For Sale” signs on houses which include “Tanpa Perantara” (“No Agents”).

Mr Sutanto explained, “Many sellers don’t want to pay a commission of between two and five percent. There’s little legal protection for buyers apart from going to the police, so best to use an AREBI member agent as we have a code of ethics.”

Another factor could be a lack of trust so sellers reckon they can do it themselves. Wariness is the watchword. Here’s how the joglo offer could have been handled. As any call on an agent’s phone could be Ms Keen Buyer flush with cash, every ring should be answered. If the agent hasn’t been fully briefed, they should promise to call back ASAP – and do so. A dozen online photos of the home and everyone shot with care and reproduced with clarity can help boost interest: “Two W/C, Three BRm” is a little inducement.

Aspiring agents don’t need to travel abroad to sharpen skills. Just Google Homes for Sale in any Western city and see how it’s done. Also, Bali and to a lesser extent Lombok, are areas where some entrepreneurs are pitching to the expatriate market.

It’s reportedly illegal for foreigners to own Indonesian land in their own names but sometimes may have hak pakai (right of use) rather than ownership. Best consult an independent lawyer. Marketing is now a serious business. In Jakarta and other big cities where developers are selling apartments and villas, TV commercials are often masterpieces of charm.  Decently dressed salespeople with well-rehearsed scripts explain the advantages – from location to security, from value to comfort. They don’t hand out smudged monochrome photocopies, but colourful brochures published on glossy paper. Most sellers’ key questions are: How much is my property worth? What’s the market like?

In Indonesia, few agents can answer with accuracy. Elsewhere, the gathering and processing of sales data have become so sophisticated agents need to understand statistics and economics to handle the information.The best will be in regular touch with the local government and know of town plans. Is the seller offering a bargain because a toll road is heading their way? Failure to disclose could lead to much distress.

In many Western countries, sales are recorded along with handy extras: How long was it on the market? How many visitors turned up on Open Days – and what percentage was not serious (what Americans call “tire kickers”)?

Were they young first-homers, investors, renovators, expanding families or oldies downsizing? Were they prospective borrowers or offering cash? Crunching the numbers builds a profile of who’s looking and what they want – then the promotion can be pitched to that market.It seems the greedy just think of a figure in Indonesia, double it and hope someone is daft enough to open their wallet. The rest ask neighbours and their WhatsApp contacts.

Someone will have a friend who knows a cousin who made a mint by selling their home for Rp1 billion (US$73,000), so that’s what should be asked. This is shooting in the dark. Well-established homes have often been renovated and expanded to suit the owner’s individuality, so unless the street is full of lookalikes built at the same time, one price won’t suit all.

Is the place on a through road or a corner next to a bus stop? What are the noise levels? Can commercial operators start a business next door? When these factors are put into the equation there can be a great gap between dream home and reality. Said Mr Sutanto: “Indonesia is still buyers and sellers beware.”

See: Blessing Scammers Busted in Bali

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