Buying real estate is never a simple task, but it becomes even more complex when the property you are buying is in a foreign land whose laws and practices you are not familiar with.
Still, the lure of low prices and high returns invites many of us to buy property abroad, and often, they are good investments indeed. It’s just a matter of knowing how to be safe and do the transaction right and avoiding these five huge property-buying mistakes:
1. Judging with your eyes closed. Many of us fall in love with a property, simply because it’s located in what looks like a good neighbourhood, or because it reminds us of our childhood home. In real estate, as in real life, when we fall in love, we tend to decide with our eyes closed – and that’s never a good idea when you’re making a high-value purchase.
No matter how much you like a place, examine all the details of the structure itself: Are the walls sound? Do the floors feel solid or creaky? Are there signs of water damage? Are the drains and pipes working? How is the insulation?
You don’t expect to find a perfect house, but make sure you see the imperfections clearly before you decide to buy.
2. Overestimating one’s capacity to pay. There is a rule of thumb that says, “Never buy a house that will eat up more than 25% of your take-home pay.” There is a sound reason this rule was made; ignore it at your own peril.
Remember that the price of the property is not the only thing you’ll need to shell out for.
3. Ignoring the background of the property. Why is this property for sale? Has it been in escrow but fell out? How long has it been in the market? If it’s been for sale for half a year, you may be able to get more concessions. And why are people not buying?
To get the answers to these questions, you need to meet your neighbours. They can (and often will) tell you the background of a house, why the owners left, why it’s taking time to get sold, how quiet it is at night, how difficult it is to get a cab, how bad the traffic can get, how far the nearest schools, churches, and stores are – important things that your agent might not tell you.
4. Making the listing agent their buyer’s agent. Self-defeating! Listing agents are required to protect the seller’s interest, not the buyer’s. Why, then, would you want to rely on somebody like that?
It costs nothing but time to get a trained buyer’s agent on your side. Just make sure you get good referrals or carefully check previous clients’ reviews. A good agent can help you get a good inspector and check a whole bunch of important stuff such as titles, zoning and easements, right of way, official permissions, status of tax payments, property registrations, and any legal impediments on the property or its supply of utilities.
5. Not getting a local lawyer. If you were buying property at home, you would never dream of doing so without the help of a lawyer you can trust. And yet, so many people do exactly that when buying property in a foreign land! You don’t need to look for a lawyer yourself; a good agent can refer you to one. But make sure that you have an English-speaking lawyer who is a native of the country where you are buying property from, to help you make sure that everything related to your purchase is going as it should, correctly, legally, and fairly.
So whether you are buying property in Portugal, Spain or the US make sure you don’t make these mistakes.