Expert Warns: Selling Land Over the Phone Can Cause Unintended Damage
According to Igor Habal, a board member of Uus Maa, Estonia's largest real estate agency, sales calls have not disappeared where offers are made to buy vacant properties, but often these offers are many times lower than market prices.
According to Igor Habal, the real estate market has become significantly more transparent over the years, but sales calls from companies dealing with land mediation and "fishermen" have not disappeared. "Intermediaries find landowners from registers, google their contact information and make direct offers to people. The problem is that while people can more or less predict their apartment price, land plots usually lack experience and a comparison point, which gives speculators a favorable opportunity," Habal explained.
"The price of the same land plot can differ up to ten times due to various factors – depending on the land's intended use, related restrictions and building rights. For example, if a cadastral unit's intended use is currently designated as agricultural land, i.e., essentially farmland or forest land, but according to the municipality's comprehensive plan it could be made into commercial or residential land, then this significantly increases the property value," said Habal.
"Such 'interested buyers' are very well aware that private individuals may not have knowledge of their land's market value. When parties like the state or entrepreneurs, i.e., so-called informed market participants, conduct transactions with similar land plots, the prices are at a much higher level," Habal said.
"Fortunately, people sometimes seek advice in such situations. Based on a recent example, a company engaged in telephone sales initially offered a person 8€/m² for land, but after a negative response, raised the offer to 15€/m². Meanwhile, the price level for a transaction concluded between informed market participants would have remained in the range of 20–30€/m²," Habal described.
"In a situation where comparable offers or transactions are rare, the legal framework is complex and the market is therefore more opaque, it is reasonable to order a neutral property valuation. It is customary that, for example, the quick sale price of real estate is 10%–20% lower than the usual market price, but this difference should not be two or three times due to ignorance," Habal added.
