It is natural for any inexperienced real estate investor to feel very excited when he is about to strike his first deal. But this excitement has its own drawbacks as it can fog their vision and they may not be able to see things clearly. This excitement can prove costly for newbie investors as they pay a little more than they should for a property. Here are some simple tips to keep a control over your emotions and avoid taking a decision in haste.
Insist on a written contract
Real estate transactions of a serious nature involving lots of money and they should always be kept this way. Do not give your approval to any verbal contract as one can go back on his words at any time to hit you financially. It is prudent to get everything written in the form of an agreement and signed by both the parties. A written and signed contract is legally binding upon both the parties. A written contract prevents the seller from inserting or deleting some points from the contract.
Do not hand over cash as advance deposit
This is a cardinal mistake to commit as an real estate investor. Do not give money in cash to the seller even if you are very happy and excited about the deal. You must hire an attorney to hold the money in escrow account. This will make sure that your money gets back to you in case the deal falls through because of one or the other reason. Otherwise, it becomes difficult to get your advance deposit back if it has been paid in hard cash.
Do not give money as part payment
This is a corollary to the earlier point that says no cash money as earnest money deposit. No matter how much trust you have on the seller, do not pay him any money as part payment until the close of the deal. In many instances there are several issues like taxes and liens that need to be resolved before the close of the deal. If you make payments without the seller settling outstanding obligations, you can very well consider your money going down the drain.
Never start to carry out repairs until the deal has been closed
Repairs can be costly, and you are putting your money at risk by undertaking repairs before the close of the deal. These things can be speedup as soon as the deal has been closed but you can never ask for money spent on repairs if the deal falls through because of some reason later.
Insist on title search before the close of the deal
It is very important to have title search done by an experienced title search company before the close of the deal. If any defects are found in the title after the deal has been closed, there is very little you can do except to sue the seller in a law court. What can you do if someone turns up after you have closed the deal and stakes his claim over the property? Fix the date of closing only when the report of the title search company has reached you and you have found the title to be clear.
Real estate business is a deep-sea world where you keep learning new things for a very long time. Instead of learning from your own mistakes, it is always better to learn from the mistakes of others to safeguard your own interests. You will always come across thick skinned people and those who are ready to pounce upon you as soon as you lower your guard. You will make sure that you are not easily duped by others if you follow the five points mentioned in this article.
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