Finding a place to live in a major Norwegian city such as Oslo or Stavanger can be an overwhelming and daunting task, not to mention expensive. Add into the mix all of the nuances that come along with buying instead of renting a home in Norway, and one might find themselves swirled into the perfect storm of confusion and frustration.
Mats Lundal is a real estate broker with DNB Eiendom in Stavanger and helps local expats and Norwegians alike find their dream home. I sat down with Lundal recently, and here is what he had to say about buying and selling real estate in Norway.
Can you explain, in simple terms, the process for buying property in Norway?
To begin the process, I’d suggest first meeting with your bank to find out how much of a mortgage loan you qualify to borrow from the bank. After you’ve established your financial standing with your bank, then you should begin looking at properties on the market online first and eventually, by going to open houses. This is the time to discover which areas of the city you like and what type of property you’d like to live in.
If you find a property you think you might want to live in, obtain the prospectus and carefully read though it so you can learn more about the structure of the house and the surrounding area. Pay special attention to the boligsalgsrapport, an explanation of the technical aspects of the house such as the drainage, foundation, roof and other areas of the house.
If you decide you want to make an offer to buy the house, you should be aware that the rules in Norway stipulate that the first bid has to be valid until 12:00 noon on the first working day after the last open house.
These same laws stipulate that all offers from each bidder be in writing. Bid offers in Norway are legally binding, and stiff penalties are levied if a potential buyer makes an offer on a house that they cannot afford.
And what about selling property in Norway? What does that process entail?
First of I would recommend finding a good real estate broker. You can talk to colleagues or check out www.eiendomsmeglerguiden.no for info about real estate brokers in Norway. This site has guides, reviews and references from brokers in different areas around Norway and is a good tool to use. When you find a real estate broker you’d like to work with, you normally meet them at your home for a viewing of your property. The broker then does a walk through valuation of your property to determine its value. If you like the broker and agree that you’d like to work with them to sell your property, you sign a written agreement with them in order to proceed in selling your home.
Prior to the house being listed on the market, you’ll need to fill out the energimerking form online and submit a written declaration form called an egenerklæring. These forms establish the energy efficiency of the property and provide notice to potential buyers if there are problems with the house. The broker will arrange a photographer and takstmann so the prospectus can be made and the property listed on popular real estate web sites. An open house is normally held 5-14 days after the property is first shown online.
What is the role of the real estate broker in Norway? Do the seller and buyer both have brokers working on their behalf during a transaction?
Under the law, we are all required to act in accordance with good real estate practices and be independent third party to every transaction. This means we are required to provide the seller and buyer information that is relevant to sale process. In other words its not usual to have one broker for both the buyer and the seller during the transaction but some people have a broker that helps them with everything from selling to buying.
There are different types of real estate agents in Norway, with the most common being eiendomsmegler, eiendomsmeglerfullmektig and megler.
Eiendomsmegler means that the agent has had three years of real estate education after high school and have at least two years’ experience. Eiendomsmeglerfullmektig means the agent has had three years of real estate school but less than 2 years’ experience. A Megler is someone who has worked in the real estate industry for a period before the stricter requirements in real estate law were adopted. Meglers have had to pass a special test approved by the Finanstilsynet.
How does the broker in the transaction get paid, and what fees can the buyer or seller expect?
The broker is paid on commission after the tax is paid. The amount of commission varies from sale to sale and broker to broker. The amount of commission per sales transaction is not mandated by law. Upfront, the seller normally only pays the takstmann upfront because they are contracted specialists and do not work for the broker. All other costs associated with the sale are paid when the transaction is completed.
Stavanger has a large expat community, many of whom are utterly shocked at the real estate prices here. Why is real estate in Stavanger so expensive?
Stavanger is an attractive area to live in where salaries are above the national average and the education level is higher than average as well. It is known for having access to great outdoor activities such as surfing, hiking, biking and some of Norway’s best beaches. Stavanger is also home to cultural events like the theatre and concert house as well as sporting events. Most of the industry here is related to the energy sector, which tends to have higher salaries, thus supporting a higher standard of living and higher house prices. Also, there is an increase in people moving to this area from all over Norway and the world for jobs, further increasing the demand for properties in Stavanger.
There has been talk in the media about property bubbles in Stavanger and in Oslo for years due to the high prices of real estate. Do you think a property bubble exists in the Stavanger area? Or in Oslo?
No, neither Stavanger or Oslo. The buoyant local economy in both cities plus the number of new houses, apartments and other residences is in balance to support the local economy. This means there will always be market for buyers and sellers.
What are the most common concerns you hear from expats about buying property, and your tips for overcoming these concerns?
Expats tend to focus a lot on price here, which is understandable as prices can be so much higher than they are used to back home. As the energy sector is currently reducing its work force, prices may stabilize more or drop slightly for a period of time. Industry indications show that the real estate market is stable and should increase by 2-4% each year.
What words of wisdom can you offer first time buyers who may be from another country?
I have not sold anything in the US or the UK yet but I do know a thing or two about buying real estate in Norway. My advice is set your must have list and try to find a property which suits your lifestyle. Do not try to find a “bargain” or a property that you think you can flip just to make money. Think long term not a quick investment. I’d also recommend expats contact a broker and tell him/her what they are looking for so the broker can guide them to the house/apartment that's best for their lifestyle. This is not a standard thing to do but I have at least 5 regular customers that use me for finding both homes and investments for them in the market. I don’t charge anything for this but providing this extra service helps me with referrals.
The Norwegian Financial Services Authority (Finanstilsynet) updated a law a 2011, which means that banks are no longer allowed to grant 100% financing to borrowers for purchasing real estate. How has the change in law altered the market for buyers and for sellers in the Stavanger area?
The local real estate market for smaller apartments has cooled down. This means it is harder for people to get on the property ladder, especially young people. — Are you looking to buy an apartment or house soon in Norway? What part of the process did you find most challenging? How is buying property in Norway different than buying property in your home country?