The real estate market in Ukraine is much more diverse and complex than it might seem at first glance.
Today, real estate is one of the most profitable and safe ways to invest money. Even if, due to the crisis, apartments become cheaper at some point, in the long term, in any case, the price of square meters will increase. Due to this, there are quite a few people who want to invest in residential and commercial real estate. But the main problem of many potential investors is that they do not understand how the real estate market actually works.
There are a huge number of concepts, classifications and definitions that need to be understood before starting to study the situation in the real estate market. What is the difference between an investor and a shareholder? Who are developers and how do they differ from general contractors? What do brokers and appraisers do? Before investing in real estate, you need to get answers to all these and many other questions. And within the framework of our article, we will consider all market participants, conduct a small analysis and analyze their features.
The basis of the real estate market: buyers and tenants.
As already mentioned above, the real estate market in Ukraine is quite diverse. Its main subjects are:
- buyers;
- sellers;
- insurers;
- brokers and appraisers;
- investors and shareholders;
- customers and developers;
- contractors and subcontractors;
- other bodies involved in the systematization of the market (for example, land funds, management companies, etc.).
You don’t need a deep analysis of the real estate market in Kyiv or any other city to understand that the entire market exists for two subjects: buyers and tenants. These are individuals and legal entities that use the property. In other words, they buy real estate or rent it for their own purpose. If we are talking about residential real estate, then these are mostly people who buy apartments for living. There are also companies that buy the lion’s share of apartments and parking spaces in new buildings, and then rent them out, receiving a stable income, or resell them.
In any case, these are persons who use real estate. They largely dictate market conditions. Of course, prices are set by the seller. But supply depends on demand. For example, if two-room apartments are in the greatest demand, then most developers will mainly offer them.
Who are investors and shareholders?
Almost all customers start selling apartments already at the initial stages of building construction. This is due to the fact that any company needs an infusion of funds, so it is irrational to wait for the house to be built for several years. Persons who invest money at the construction stage are called shareholders. In most cases, these are individuals who, in order to save money, buy an apartment at the excavation stage. Prices in the early stages of construction are always lower, because there are certain risks. In fact, allotments are set aside as money for construction, hence the term “allotment construction”. The object of shared construction is all residential and non-residential premises in an apartment building or any other real estate object.
Since many companies do not have the entire amount at once to build a building from scratch, the money for construction comes precisely from shareholders. The risks are that there are sometimes unscrupulous developers. And if you contact such a developer, then the participants of joint construction may be left without the promised square meters and without the invested money.
Investors are people or companies who invest money in the purchase or construction of real estate. Simply put, these are ordinary buyers of square meters. At the same time, those persons who invest not only money but also intellectual property in construction can be called investors. They can develop new construction technologies or train qualified specialists.
Builders.
“Customer” and “developer” are similar concepts that are often confused. And this is not surprising, because the concept of “developer” does not appear in most legislative acts. The customer is the person who owns the land plot on which the construction of the facility is taking place. The customer may not own the object, but in this case he must rent the plot. Otherwise, such construction is illegal.
A developer is a person who is directly engaged in the construction of a building. He performs the functions of the customer. In most cases, the customer and the developer are one and the same company.
You can often hear about “apartments from the developer”. This means that the residential area is sold directly by the company that built the house or commissioned its construction. This method of purchase is considered the most profitable, because the buyer not only buys a legally clean apartment, which has not yet had owners, but also can save money on the purchase, because he does not pay for the services of intermediaries.
What do brokers, appraisers, brokers and realtors do?
The function of brokers, brokers, appraisers and realtors can be described in one sentence as follows: they bring together sellers and buyers and help conclude deals. Let’s consider each of these subjects in more detail:
- Brokers. These are specialists who provide a wide range of services. Mostly, brokers through their agents organize and control the process of buying and selling real estate. To put it simply, they act as intermediaries between the seller and the buyer. At the same time, such an intermediary does not represent anyone’s interests. A broker can carry out various operations: search for a buyer or seller, preparation of documents, consultation in the field of valuation and law, insurance brokerage, and so on.
- Realtors. These are professionals who comprehensively solve tasks. The main feature of realtors is that they represent the interests of one of the parties in the agreement. For example, a person wants to find an apartment that meets certain requirements. She turns to the realtor, who looks for suitable options, checks the documents, negotiates with the seller, prepares all the necessary papers, monitors the process of concluding the contract. A good realtor is always interested in the client being satisfied with the result.
- Assessors. Such specialists are highly specialized, they are responsible only for the evaluation of real estate. The appraiser’s task is to study information about the object, compare it with other real estate objects on the market, and determine the most accurate market value. Both sellers and buyers can contact the appraiser for services. Sellers apply when they want to put real estate up for sale at market value. That is, they are afraid to reduce the price, but they do not want to raise the price too much. Buyers apply when they want to know if the property they like is worth the money they are asking for it. Their services can also be ordered by third parties, for example, banks that issue mortgages.
- Brokers. These are typical mediators who do not represent anyone’s interests. The task of the broker is to match the seller with the buyer and receive his reward for this. At the same time, one of the parties may not guess that a third party is involved in the contract, who also receives interest for his services. The situation in the real estate market allows some brokers to work outside the legal status. That is, they do not conclude a contract with any of the parties, but simply hope for a reward. Of course, in this case, they work at their own risk.
Contractors and general contractors in the real estate market of Ukraine.
Three more important subjects in the real estate market:
- Contractor. This is the company that is responsible for making sure that the house is built on time. To put it simply, this is a performer who must perform a fixed amount of work for a certain amount.
- General contractor. If you find out who the general contractor is, then everything here is quite simple: it is the same contractor, but he does not perform the work independently. The peculiarity of general contractors is that they transfer most of the work under the contract to other contractors. But the general contractor is still primarily responsible for the final result. That is, it is a company that does not have a sufficient amount of its own equipment and its own specialists, so it involves outsiders.
- Subcontractor. This is precisely the third-party organization that the general contractor engages to perform certain tasks in the construction of the real estate object.
The word “developer” is also often found. This concept is not enshrined in normative legal acts. Most often, developers are called developers, as well as multidisciplinary companies that can invest in construction, as well as act as a general contractor and developer.
If a person knows all the considered concepts, it is easier for him to analyze the real estate market in Kyiv, and therefore, he will be able to invest money more profitably. The main thing is to remember that always before investing in real estate, you should carefully check the company to which you give money. It is better to cooperate only with proven and reliable companies.