How does home buyer’s insurance work in Norway?

Av: Dato: English

Most people who buy a home in Norway, are offered home buyer’s insurance, through the Real Estate company. And it is usually a good idea to buy this insurance.

But what does it cover?

From the name, it may appear as if you as a home buyer are insured for all kind of problems that may arise after the home purchase. For example, if something about the home is not as you assumed it would be. Unfortunately, it is not that simple.

A lawyer’s insurance

The insurance is simply a lawyer’s insurance that gives you legal help if you discover something you think is wrong after the purchase But, if this is something you should have seen at the viewing or read about in the sales material, it is not covered by the insurance.

In other words, it must be a hidden error or deficiency or lack of essential information from the seller. This is due to the buyer’s duty to investigate, which you can read more about here.

If you submit a complaint to the buyer’s insurance company, they will first investigate whether the complaining issue is something the seller has disclosed by or if it is something you should have discovered before you bid. If the latter is the case, or probably neither a hidden error, they will tell you that there is no basis for taking the matter further with the seller. If they believe you have a case, they will take the case further against the seller. Or usually the seller’s insurance company. Most sellers have taken out home sales insurance.

And now we are at the centre of the matter:

When the seller has home seller insurance and gets legal help if there is a complaint afterwards, it will be difficult for you to be without buyer’s insurance. Then you must pursue the case, alone as a consumer, against a professional party. You must write all complaints yourself and follow up the case. It will be both time-consuming and exceedingly difficult.

That is why I advise all my clients to take out home buyer’s insurance. It is a one-off payment that is not very high – from approx. NOK 7,000 to NOK 10,000 which ensures you if problems should arise.

Many disputes in connection with the sale and purchase of property are resolved through these insurance schemes and lawyers associated with the insurance companies that offer this. It also happens that they hire other property lawyers to help them with the cases.

The process of complaining through the home buyer’s incurance company

If you make use of the home buyer’s insurance, you must contact the insurance company itself and register the complaint. You will then contact a specific lawyer at the proper time – if the case is taken further.  This is long an expensive process.

The estate agents you bought the property from will have an overview of which company you should adress the complaint.  First check in your purchase contract that you have taken out buyer’s insurance. It will state which company it was subscribed to, and you can contact them, or fill in a claim report online.

Having to use a lawyer in property matters, whether via the home buyer’s insurance or otherwise, is never pleasant. The best thing is to check the property so carefully before buying that you avoid problems afterwards. As you know, the best thing about insurance is avoiding the use of them.

Checking the sales material and help you to avoid complaints after the purchase is one of my main tasks as home buying consultant.

 

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Are there special bidding methods that can help you to purchase your dream home in Norway?

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Yes, there is.

Everyone who buys a home in Norway must go through a bidding round or bid negotiations. We practice what is known as the auction principle, with an open bidding round, where the highest bid wins the contract. In the vast majority of cases, the estate agent acts as an intermediary and administrator of the bidding round. How the bidding round is to take place is regulated by the Real Estate Brokerage Act.

Seller’s and buyer’s interests are obviously conflicting in a bidding round. The seller wants the best possible price and is supported by the estate agent to achieve this. The buyer wants the lowest possible price and is normally on his own to look after his interests in the bidding negotiations.

This imbalance, where the buyer stands alone against a professional party, makes the bidding round a nightmare for many buyers. There is often considerable competition over the objects to be purchased. This means that the only option is to register as a bidder via an estate agent, participate in the carousel and successively bid higher than the last bidder. You risk paying too much in relation to the current market level or losing the bidding round. Not always because the money is not enough, but because the fear of losing money becomes too great. A fear that can be a healthy reflex, especially if two bidders outbid each other by several hundred thousand.

Secret bids and bids directly to seller

However, there are methods that the buyer can use to avoid the traditional bidding round, namely closed/secret bids or bids directly to the seller.

These are today completely legal methods. In proposals for amendments to the Real Estate Brokerage Act, the rules for this have been discussed. It is proposed to prohibit closed or secret bids.

The buyer needs alternative tools in the toolbox.

As a home buying adviser, I have been reluctant to recommend home buying clients to make offers directly to the seller or to practice secret bidding. It has worked quite well to use the normal method with regular bidding rounds.

In recent years, however, it has been a tough housing market for buyers. With few homes for sale, high demand and subsequent crazy bidding rounds, especially for attractive homes. Then it has proven to be nice to have alternative tools in the toolbox, such as bids directly to the seller and secret bids.

Bid directly to the seller.

Imagine that you have lost four rounds of bidding and suddenly see that your dream house is for sale. You cannot bear the thought of going through yet another bidding round but want a quick and painless negotiation process where you hopefully secure the home. You have a fairly good overview or get help assessing the market price for the home. Wouldn’t it then be tempting to go directly to the seller with an offer within acceptable market level?

Such a procedure, which is called “kupping” in Norwegian, is obviously not so fun for the other interested parties who are waiting for the viewing and who are told that it has been cancelled. However, all buyers have the opportunity to make a direct offer to the seller. Moreover, the method is based on the principle of free negotiation, which is important in our country.

How to do it

If you consider giving a bid directly to the seller, usually before the Open House viewing, you have to ask for a private viewing.  If this is your dream home and you want to try to secure it with a bid directly to the seller, you fill out a bidding form with the top text, bid directly to the seller.  Please contact me for help with this, advice about the price level and strategy.

Read also:  How to bid on real estate in Norway

Secret bid

Secret bid can also be a good tool. This means that you make an offer, via a broker, where you make reservations that other interested parties should not be informed about the offer. It is the seller’s choice to accept the confidentiality clause, as well as to decide on the offer. If such a bid appears in the middle of a bidding round, the confidentiality clause will probably not be accepted, and the bid rejected. Unless it is sky-high, and the seller feels tempted to accept it.

But let us say that the home has been for sale for a while, and the market is a bit on the buyer’s side. There are interested parties on the estate agent’s list from previous viewings, but the new bidder wants to negotiate peacefully with the seller without waking up previous interested parties. In that case, a reservation about a secret bid can be both appropriate and timely and an important contribution for completing the trade. Something I myself helped to contribute to a little while ago. To the delight of both buyer and seller.  It is therefore unwise to ban this.

The method will be probably not be used very often in ongoing bidding rounds but can be an important contribution in individual bid negotiations. Transparent processes are a good thing, but the concern for transparency must not overshadow the possibilities of achieving a good deal.

How to do it.

You give the bid as usual, either on a bidding form or digital.  On “forbehold” – conditions for the bid you must write that you want the bid to be confidential to other interest parts and only be informed about to the seller.   The real estate agent is allowed to convey this bid.

Maybe the seller, through the realtor, will decline the condition of confidentiality.  If so, you are still in a position to keep your bid without the condition or say that your bid is not valid without the condition.  Please contact me for help with the price level and strategy for the process.

As you understand, this is a little complicated.  But it is important that buyer’s  know about these possibilities.  Especially if you see that your dream home is on the market and want to secure that it is becoming yours.  If so, I will help you to choose and implementation of the best bidding process.

Boligdama – Trude Larsen
trude@boligdama.no   +47 950 37 330

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With the help of Boligdama, it was super easy to buy an apartment in Norway.

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Despite the time difference and a bit of formalities, Trude took care of every step in the process, which made us feel very confident that things were done correctly and as expected. She was with us in all the video conversations with the broker and made sure that all things were cleared out and that all relevant information was given.

She answered all possible questions we had and did a solid check of the builder and what quality we could expect in the apartment. With her expertise and long experience, we received lots of good advice and fantastic follow-up. We could not have completed this process and bought an apartment in Norway without her help.

Thank you very much for this good feedback from Astrid and Arik that I have helped with purchasing a home in a super exciting project in Nydalen in Oslo.

This is how the home purchase became a reality

The couple, who live in the USA, wanted a base in Norway that they could stay in when they were visiting. And maybe settle down permanently, when they retire. Oslo and Norway were not chosen randomly, since Astri is from Norway and has family here. They also have a son who has settled in our country.

After some waiting time from the first contact with Boligdama to prepare financing and survey wishes for the new home, we started our joint house hunt, just before Christmas 2022.

With today’s technology, long-distance home buying is not a problem. Both digital meetings and Boligdama’s communication system were used extensively. The only thing that could be a little confusing was keeping in mind the time difference.

When house hunting in collaboration with Boligdama, both parties usually are eager to follow what comes out on the market. It is naturally difficult to stay away from finn.no, home buying platform in Norway, when you are in buying mode!

After checking a number of proposed homes during the month of January, which were not entirely to their liking, Astri and Arik themselves found a home in the Vertikalen project. It is a very special building that is under construction in central Nydalen, Oslo. Here there was a vacant home that suited their budget. Vertikalen is an innovative building with a strong focus on environment and sustainability.

Boligdama did research on the project, contacted the broker and advised them to go ahead with the home. Broker Jan Græsvig from DnB arranged a joint digital meeting with us where we could see a solar diagram, illustrations of the building and apartment , optional extras and answers to all questions. They decided to submit a purchase offer. Which the seller approved.  Thus, the home purchase agreement was concluded, at least almost.

There was a little bit of fuss afterwards, with formalities and things that had to be sent by post from the USA. But, with a little patience, it also worked out.

Bureaucracy and slow mail are trifles in the grand scheme of things.

The most important thing is that they have bought themselves an exciting home that they are very much looking forward to taking over in the autumn of 2023.

Congratulation !

Best regards
Boligdama – Trude Larsen
950 37 330 – trude@boligdama.no

 

 

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Surprisingly increase in home buying prices in Norway so far in 2023.

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House prices rose by 1,2% in March.  Looking back at the last 12 months, house prices are now at the same level as a year ago.  

This means that the housing price fall in the autumn of 2022 has been “eaten up”.

For home buyers the supply of homes for sale is important, combined with demand from buyers.  There are fewer homes listed for sale than last year, and there are slightly fewer unsold objects at the end om March than it was earlier this year.  After the Easter Holiday, now in April it seem like the lack of homes put up for sale continues.

Usually there is a spring flow of homes for sale after Easter holiday, but so far it has not occured.

Prices could continue to raise if the lack of homes on the market continues.  However mos experts believe that we will see a decline in prices forwards. We have not yet seen the top of the interest rates!

The market is still somewhat clmer than other periods of rising prices, sales take a little bit longer time.  That is an advantage for the buyers.  But be aware that the market is selective.  If you go for the most attractive objects, you will experience tough bidding rounds where you have to stretch your rope or risking not to reach out in the competition.

If you want to have an non-binding talk or digital meeting about the market or your possibilities on the market, please do not hesitate to contact me.

Download my booklet of home to buy a home in Norway

 

 

 

 

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