Worried you’ll be lost in translation searching for a home? An expat couple’s trick to shopping like a local: use a local.

BUYING a house in your home country can be a daunting task. Adding the complications of a new language, new market and a new economy can make things much harder, as one couple trying to make Finland their permanent home found.

“We’re living in Finland for the long term,” says Shawn Condon, an American expat living in Jyväskylä. “So it makes more sense to buy, or at least it did.” When looking for a more permanent dwelling, Condon was stymied by both financial hurdles as well as communicative ones.

“I found it easier when I was in New Jersey, where there was more help for a buyer,” Condon continues. “There’s not as much hand-holding here, we’re left to figure things out on our own a lot more.”

“In general, in Finland, I would say realtors don’t provide very many services for buyers,” states Antti Asteljoki, CEO of Huoneistokeskus Oy. “That’s a real shame, and is something that should change in the near future. Normally, a realtor gets a property to sell, and then they start marketing it. Buyers will find a property themselves in the newspaper or online.”

Asteljoki described a retail market here in Finland mainly driven by realtors who represent sellers, and buyers for whatever reason choose to do their shopping solo. The representation is largely one-sided, home owning hopefuls being an untapped market. “In the US, there are a lot of services for buyers, where there is a realtor representing the buyer as well. Of course, in Finland, that is provided but people don’t demand those services as much. It isn’t the client’s fault, we – the realtors – haven’t succeeded in marketing those services.”

Condon states that had he wound up buying a home in Finland he would have used a realtor, but the apartment he finally settled on had hired one already who took care of the lease.

“I used a realtor to search for my home in the States and I would use one to search for it again,” said Condon. “I would never take the chance, especially with all the legal things surrounding a house.”

While a local may have been able to hold his own on the prowl for a new pad, he wouldn’t be a professional. As with anyone doing something outside of their speciality, there is a learning curve. Despite having lived here for a number of years, this would have amounted to an imbalance of power between the seller and buyer. While that might be all right when buying a new car, rolling the dice on a new home simply wasn’t worth the savings, especially not knowing the particulars of Finnish homes. The risks get pricey, such as the possibility of aged pipes that would need replacing at the buyer’s expense.

“Even when we wound up getting an apartment instead of a house, we were left to fend for ourselves a bit more than in the States,” Condon recalls. “Who to contact to get our power and water, the amount of time we needed to give to get different hook-ups, it was information that would have been useful. We did wind up getting help – from a friend at work.”

Condon didn’t give up on his quest for home ownership due to a lack of pamphlets and brochures with information, however. The nail in the coffin was at the bank, when he was expected to put more than twice the down payment he had provided at home. The news came with a simplified history of global economics as well.

“At the bank, we were told that it was our country that caused the financial crisis, and pretty much that it was an unofficial policy foreigners would need a bigger down payment,” Condon recalls, comparing the 25 per cent upfront cost that would be needed to secure his mortgage to the 10 per cent he had been asked for in the United States.

“The money is something negotiated directly with the bank, it has little to do with your realtor,” explains Asteljoki when asked about Finnish lending practices. He also offers some advice for those entering the housing market. “What many people do here in Finland is find out how much they can get first, then look for places. There are loans that are less than 20 per cent, or even 0 per cent depending on the situation, although it is not common.” If the bank isn’t comfortable allowing a low down payment, be it for reasons of the borrower’s finances or the economic situation, there isn’t much you can do about it, whether you have a realtor or not.

A nervous situation

Recent economic reports reflect a certain skittishness surrounding home sales. The Global Property Guide (GPG) released an annual of review of the world’s housing market in March, comparing 2011’s sales figures to those of 2012. It characterised a number of European countries as being in ‘the eye of the storm’ when it came to the housing situation. While Finnish, Estonian, and Swedish markets were showing moderate gains in home prices, there were just as many countries in the area that faltered. Generally, rising prices are an indicator of an improving real estate market, while falling prices characterise a weakening housing sector. Too much or too long of an increase, however, can indicate a bubble ready to burst.

Hong Kong and Greece are the most extreme examples of the sometimes volatile changes in valuation, with a 20 per cent increase from 2011 prices in Hong Kong, and a 14 percent drop in Greece, respectively. Currently, there are no major movements in the Finnish markets, both according to GPG’s report and as far as Asteljoki’s front line experience reveals.

“We are fairly stable, there are about as many transactions as in an average year,” said Asteljoki. “Typically, 100,000 sales in a year is normal.”

Finland has seen dramatic swings in the market in the past, with home prices doubling from 1987 to 1989, only to be almost cut in half by 1992. Since that bubble burst, the cost of homes in Finland over the long term has risen steadily, totalling nearly 250 per cent in just over 20 years, pausing only during the global credit crisis in 2009.

This notable rise in housing prices, coupled with the variable interest rates that make up the majority of mortgages in Finland have market watchers worrying about the repercussions of a crash. That being said, requiring a higher percent up-front when lending money would reduce the risk of default for lenders should things get volatile.

Settling for renting, for now

“So for now, we’re just going to have to rent,” sighs Condon. The plan now is to continue saving up, to get that 25 per cent to put down on a property. It will be a slower process though, due to the fact that he won’t be building any equity with his rent payments. Not only that, but rental prices are high as well. In the same time frame of GPG’s report, real estate agency Vuokratuva’s examination of rental costs indicates a 3.7 per cent increase across Finland in general, with a more pronounced spike in Helsinki and other major cities. So while they wait to get in the game, the cost of waiting is getting higher.

But that’s the double-edged sword of more cautious lending practices; it protects from those who would take on more than they could handle at the expense of those who could do more with it.

However, if there is a price correction down the road, it could be to their advantage. Saving up while costs are high and jumping in when things are low is something many people try to do. Attempting to time the market is done in both the stocks and property investments. Besides, if they didn’t have determination and a bit of a stubborn streak, they wouldn’t be here in the first place.

Adam Faber