VI. Shopping for the "Perfect Parcel of Land"

Once you have settled on the area you want to buy land, then you are faced with the task of finding that "perfect piece of property".

A. Some General Warnings

Indonesia has very few laws to control any one or any company who offers to sell real estate (i.e., agent). Other than the most general anti-fraud laws, no company or person selling real estate is subject to regulations mandating full-disclosure or transparency.

As in any other country there are both good and bad agents. The same process necessary to find an honest and trustworthy partner (as discussed previously), applies to working with any real estate salesman. Always take time to find references and check those references (in person or via e-mail) before you trust anyone with your money.

Very often a potential buyer is tempted to believe, "If a person or company has been crooked and cheated people in the past, surely their reputation would be well known." Absolutely not true for complex reasons. Some people have been selling real estate and cheating people for more than a decade. The aggrieved party, usually some overly trusting tourist, will pack up and go back home - disillusioned with Lombok and vowing never to come back again. They have lost quite a bit of money and no desire to get on some Internet forum to tell their story about how they have been cheated.

Another necessary evil is the preponderance of middlemen. The problem can exist with almost every method you choose to buy property. Middlemen exist because news that a parcel of land is for sale spreads by word of mouth, from one person to the next. One agent may purport to represent the seller, one agent may be the listing agent, and one agent may be the agent who made you aware of the land, etc. The end result is a number of intermediary agents standing between you and the landowner. Of course, everyone in the chain wants a sizable commission. The result can be the selling price quoted to you is almost double the price of the land as originally offered by the landowner. A lot of money can flow to various agents as big commissions if you are not a skilled and knowledgeable negotiator.

B. Real Estate Companies and Internet Sites

1. General Description

In the past few years, the number of Real Estate Companies doing business in Lombok has increased dramatically. The most visible Real Estate Company consists of a store front office in an area popular with tourists - front window plastered with pictures of properties for sale.

A second variety Real Estate Company is on the Internet. These companies show a huge array of properties for sale. Many the pictures show beachfront property. A large number of pictures show properties with panoramic views. Besides the pictures and a general description, few details about the property are presented on the Internet pages. The photos look spectacular, but in reality they do not show actual property that is for sale. Their purpose is to attract customers to explore the website further.

Both types of companies generally have a parent office in Lombok or Bali and offer land for sale in many areas. Both types of companies may also offer other non-real estate sales, such as short-term rentals, hotel room reservations or legal services.

2. Potential Pitfalls

Don't be impressed by any company because it has a fancy office or ranks high on your search engine. Both good and bad companies can make a healthy profit from selling in real estate. Often dishonest companies can make obscene profits - more than enough to buy anything needed to impress a client.

Real Estate Companies, as a rule, are not the way to buy property at a bargain price. For one thing, bargain properties do not remain on the market for long. This can cause problems for a real estate company who has a constant need to keep a full portfolio of property in the office. In Lombok, landowners do not list their property with a company. Instead, middlemen make an occupation out of finding land that the real estate company can sell. These "land finders" have contacts with people in each small village. If one of his local contact persons attends a social function and hears about land for sale, that person will pass the information up the chain. The middleman may package a group of properties together and offer them to a real estate company. Needless to say a real estate company cannot offer the lowest price on land.

People in the real estate business know the process of purchasing land can appear complex and strange to a potential buyer. A real estate company will often offer to provide you will a basket of services. This may include finding you a partner, recommending a lawyer, and recommending a Notaris. The more services the company can provide, the higher their fee. The real danger to you is being distanced from the daily decision making process. It is very difficult control an experienced real estate agent once the process has begun. In fact, frequently the agent will bristle at the thought that you want to be more involved with the detailed process of purchasing the land.

In all fairness to any honest agent, he probably believes that not burdening you with details is the best way to complete the sale quickly. Conversely, armed with the knowledge presented in this Website, you the buyer can say, "You, my agent, are using my money and making decisions that will cost me money. If we are going to work together, you can sit down with me for a few hours every so often and tell me exactly what you are doing in language that I can understand."

If possible, you should find your own partner (or "nominee"), negotiate directly with the owner of the land, do your own due diligence, and all the other steps set down in this report.

3. Potential Benefits

Without a doubt Real Estate Companies offer the most comprehensive listings of land for sale. They have a do have the most experience and knowledge to draw on in case you need it. In addition, they are set up to be fast and convenient. They are fluent in several languages so you do not have to struggle with the language barrier. If you can negotiate around the price and processing pitfalls listed above, the average foreigner will find this is the most expedient way to purchase property.

B. The Local Tour Guide

1. General Description

A group of young men (called guides or beach boys) are frequently found lounging in restaurants, surf shops, or near the entrance to hotels. These young men provide a wide array of services, from providing a day tour, renting motorcycles, or showing you land for sale. Generally, these young men have contacts with other Sasak men who are older and more experienced in the land sales process. So after the initial contact, you may be introduced to someone who can help you through the entire process.

2. Potential Pitfalls

You should be aware of the way Lombok people approach business. The people of Lombok have lived on this small island for many generations. Large segments of the local population can be traced back to a single, distant relative. Consequently, the Sasak are careful about maintaining at least an outwardly friendly relationship with other members of their community.

This can have significant consequences when a foreigner starts to work with a local guide to find property. You may think you are only having an informal conversation. However, the moment you the start talking seriously, you will be regarded by the community as a committed client of that one man. Once this happens, it becomes very difficult to find another local person to work with you including finding a partner. One Sasak will not infringe upon another Sasak 's client.

For this reason, remember that any conversation that you have in a restaurant or hotel about real estate should be kept very casual. It is acceptable to listen to someone talk about land, and casually write down a name and telephone number. If the man starts to pressure you to "take a look now" or "we can go tomorrow", then excuses such as "I don't have money to buy now" or "I am not serious right now" will allow you a graceful exit.

Of course, informal conversations should not be avoided, they are still an important part of the process of getting to know the people in the community. It is best to move from one restaurant to another to meet as many of the local people as possible. Listen to the gossip, talk informally about a man's background (i.e., level of education, age, etc.) As discussed above, eventually you will need a partner or nominee you can trust, so you must spend some time getting to know people in the community. Just try to avoid prolonged conversations about buying land until you are ready to get serious about working with this one man to buy property.

3. Potential Benefits

The primary benefit of using a local guide to find land is a reduction in the number of middlemen. Often a local guide will have first hand information about someone in his village that has land for sale. Plus, as a result of spending a lot of time with his friends around town, a guide tends to accumulate a lot of information about what is happening in the local area. That includes knowing who has land for sale.

Another benefit of using a local guide is the option of controlling the pace of activities to match your comfort level. For example, you may wish to look at properties which have been on the market for a while just to get a feel for the area. For any number of reasons you may wish to delay your search and put the whole process on hold. This is a lot easier to do with a guide than it is with a Real Estate Company.

If you will be in Lombok for an extended time period, you may wish to take time and wait until a choice parcel of land comes on the market at an inexpensive price. Good deals come to those who are willing to wait. For example, a landowner may need to sell land quickly to pay for a son's wedding, or an elder parent's desire to travel to Mecca.

When a bargain priced piece of land comes on the market, the guide will quickly notify you about the situation and show you the land. Assuming the property meets your approval, you must be prepared to act quickly. The landowner needs money. He will sell the property to the first person who is able to pay him a substantial portion of the selling price. To take advantage of these bargain properties, you must have a) selected a team (including your property partner) who can act quickly to perform due diligence, and b) have the money readily available to pay for the land quickly.

C. The Local Gossip Mill

Here is the testimony of what one tourist's experienced with buying land. It is an excellent example to clearly illustrate there is more than one way to buy land in Lombok. It also shows the importance of staying in control of the process.

"My husband is Indonesian and when we arrived in Lombok we were warned by friends NOT to buy in Kuta because of the problems with 'dodgy' certificates, however we thought we would still spend some time there and see for ourselves.

After about 2-3 weeks of speaking to as many locals as possible and looking at dozens of plots of land we finally felt confident enough to buy. We did not use any agents or third parties in the end, we were lucky to deal directly with the seller.

My husband was very careful not to make any promises to the people we dealt with along the way as we did not want to offend anyone and we got the best information from just spending time with the people and chatting honestly about what we were hoping to achieve, word of mouth travels fast!

By the end we were the ones being approached by people trying to sell!"

D. Other Miscellaneous Sources

Many other less popular and less reliable method are available to find land. A few examples are by talking to local expatriates or other tourists who have purchased land. In both instances, these people have gone through the process of buying land. They know the process and also may know of property that is for sale. An Expiate can often refer you to a close friend who has experience buying and selling land.

Another infrequently used method is to simply look for "land for sale" signs in the area you want to buy land. This is a risky way to buy land if you do not have a team of people already selected who can do the due diligence research.

A similar method is to look in local newspapers or the Lombok Times which carry classified advertisements of property for sale. Classified ads are more popular in the Senggigi area where land owned by foreigners is up for sale.

I.Important Facts to Consider

A.Is ownership risky?

B.Lombok: A Different Culture

C.Living on Lombok

II.Summary Steps to Buying Land

A. Get familiar with Lombok

B. Choosing a Partner("Nominee")

C. Find a parcel of Land

D. When You Find a Parcel

E. Negotiate the Price

F. Comprehensive Due Diligence.

G. Initiate Title Transfer.

H. Issuance Land Certificate

III. Visit All Lombok First

A. From Tourist to Resident

B. Explore the Hidden Lombok

C. Starting a Checklist

IV. Legal Issues

A. The Issue of Ownership

B. Foreigners Solve the Problem

C. The Nominee Method

D. Foreign Direct Investment(PMA)

E. One Final Option

V. Choose Partner and Team

A. Start Looking Early

B. Wide Variety of Skills

C. Other Trustworthy People

D. Check if Trustworthy

VI. Places that Sell Land

A. General Warnings

B. Real Estate Companies and Websites

C. The Local Tour Guide

E. The Local Gossip Mill

F. Miscellaneous Sources

VII. When You Find a a Parcel

A. Initiate Early Discussions

B. The history of the land

C. Get to know the Players

D. Slowly Get to the Price

VIII. Through an Engineer's Eyes

A. Clear access

B. Public facilities

C. Everything Belongs to you?

D. Check the Drainage

E. Check the Stability

F. Double Check Everything

IX. Settle Price and Terms

A. Necessary Preparations

B. Establish Proper Atmosphere

C. Conduct the Negotiations

D. The Issue of Parcel Size

E. Money is Not the Only Issue

F. Giving a Deposit?

X. The Written Agreement

A. How do I Pay Money?

XI. Due Diligence and Research

A. Risk versus Benefit

B. Due Diligence

C. Checking Public Records

D. Digging for the Unwritten Truth

XII.The Notaris Office

A. Settling the Final Terms

B. Notaris - Initiate Title Transfer

C. Sign the Nominee Agreement

XIII. Finally a Certificate