FAILURE TO PERFORM DUE DILIGENCE
Performing property due diligence means thoroughly scrutinizing and evaluating a potential real estate investment. It serves to confirm all material facts and legal parameters surrounding the sale or acquisition of a potential investment. Some investors tend to disregard this important buying process and do not realize that failure to conduct due diligence usually results in terrible consequences. Some cases results to serious financial and legal distress on the part of the buyer. If problems, risks and liabilities are not discovered and identified in advance, the seller might evade any responsibility for them later on.
There are some fraudulent property dealers and developers taking advantage of investor’s lack of knowledge on legal procedures and documentation related to real estate. Therefore, you have to spend time in conducting due diligence before committing to acquire the property.
NEGLECTING TO VERIFY IF THE TITLE DEED IS CLEAN AND LEGITIMATE
Before giving out any deposit or reservation fee, it is necessary to prove if the Title Deed is correct and legal. Land descriptions contained in any Title Deed must match with the records in the Land Department. It is necessary to review the Register of Records stated at the back of the Title Deed to be aware of any burdens, or any pending or potential legal action existing on the property.
UNDERESTIMATING THE FULL COST OF THE PROPERTY
There are a lot of aspects to consider before buying a property. Most potential buyers tend to focus on the selling price and overlook other significant expenses, such as Land Registration (Transfer Fee) at which the rate is 2% of the appraised value of the property. Along with this, there are renovation expenses, property taxes, maintenance cost, and other related expenses such as notarial fees, etc. Extensive research on the property is essential in order to avoid costly real estate investing mistakes.
NOT GETTING A LAWYER’S HELP
Many real estate investors do not consider getting help from professionals and proceed to the buying process by themselves. This usually ends up with unfavorable deal and discovers the problems only after finalizing the transaction.
It is advisable to seek a lawyer’s help for advice, guidance, and assistance. They play a big role in checking the important legal matters regarding the property. Lawyers are the best people to help review the sales contract. They will ensure that it contains proper terms and conditions, without any terms of any hidden cost and drawbacks. Lawyers can also negotiate and discuss with the seller on the buyer’s behalf for proposed changes until both parties mutually agrees with the final contract before signing.
Moreover, Thai lawyers evidently understand the Thailand System. Hence, they can make the buyers understand the rights and obligations of each party. This includes who pays which taxes and fees, when to pay the deposit and balances, how long a project will take to completion and possible remedies if they do not complete the project on time. Working with a Thai lawyer can protect the buyer’s interest. They can give warnings of any error along the way and ensures a fair transaction.
GIVING THE DOWN PAYMENT TOO SOON
Many real estate investors get so excited to make partial payment to finalize the deal. As a standard procedure, the buyer has to pay a deposit to reserve the property while the purchase is on process. This amount will then be deducted from the selling price. In case the buyer backs out and the deal does not push through, the seller usually has the right to keep the deposit. This is the reason why it is wise to only give the down payment after careful evaluation of the property.
Real Estate Investing Mistakes Can Be Avoided
Investing in Real estate has so many factors to consider and it certainly involves a huge amount of money. Therefore, investors must take extra precaution before finalizing any transactions. Get all the help that you can get. You need to make sure that you are acquiring a property that suits your needs and expectations. To combat the many pitfalls, it is wise to consult a professional before signing a binding contract.
