International Real Estate – Common Mistakes – Real Estate Company

More and more Americans are choosing to move overseas; some choose to retire, and younger folks are looking for work or adventure. Many end up buying apartments, houses, condos, or other types of property. Here are some common mistakes that foreigners make when purchasing or owning international real estate.1. Paying too much. I don’t understand why people continue to pay prices twice, double, three times or more, the market price for properties in foreign lands. It seems to be some sort of mind-set whereby prices are continually compared to North America and therefore seem absurdly cheap. Never compare prices in a developing country to a rich country! It doesn’t take much effort to ask around and establish current market prices for houses, land, farms, etc. Yet these stories continue to abound: Joe Blow is bragging about how he bought an acre of land for $10,000, yet this acre should have cost $2,000 at most. Ask around, find out what comparable properties have sold for before you start your search. And negotiate – you can often get a property for much less than its list price.2. Absentee Ownership In some areas it’s perfectly safe to leave your property or house unattended with someone occasionally looking in on the place and performing routine maintenance tasks. In other areas, it’s a recipe for disaster. I know of one person who left a small piece of land in a Central American city unattended. She returned to find that the neighbor had begun building on it and there was little she could do to fight it. She ended up paying a lawyer an exorbitant fee but a year later the issue is still unresolved. Make sure you know what’s happening with your property when you’re away.3. Absentee Purchase I don’t think this is a very frequent occurrence, but it’s a good story so here goes. Many investors will assign power of attorney to the real estate company to complete their purchase. There is nothing wrong with this and it’s a common, usually safe practice, as long as you’re dealing with a reputable agency. But a friend (let’s call him Mark) signed over power of attorney to his Spanish teacher, a woman he had known and worked with for a couple years and trusted. The woman bought the $50,000 house as directed – and put the title in her own name! He sued, but was never able to get his money or his house back. By the way, Mark was a real estate attorney in the U.S. Enough said.4. Incomplete Title Search I had my lawyer complete the title search on a small house I bought. Later, when I tried to sell the house, the real estate company found multiple liens on the property. I was sued by people who claimed to own the land, and after that, another mortgage was found on the house. The good news is that I won the first case, though we had to go all the way to the supreme court. I was also able to easily pay the existing mortgage. It turned out that the original lawyer was in on the whole scheme. My mistake was my choice of lawyers. Had I investigated him or asked for references, he wouldn’t have passed muster. Like my friend Mark in the previous story, I assumed that because I had known this lawyer for a couple years that he was honest. Use a reputable real estate agency, or, better yet, get title insurance as the insurance company makes sure the title is pristine. Any down payment is refundable by contract (Promise to Buy) if the title is not clear.4. Not Registering the Property Often the last step in the purchase process is registering the company with the appropriate city or state office. Make sure this step is carried out. If you can, accompany your lawyer or real estate agent to carry out this procedure. If you don’t register the property, the property might not really belong to you yet. A successful hotelier discovered that her hotel, now worth much more money than when she originally purchased it, had never been registered when she first bought it 7 years back, despite a paid receipt from the (careless or dishonest) real estate agent for the registration fee. Registering this now very valuable piece of property ended up costing thousands instead of hundreds of dollars.Most people buy property with nary a glitch. Just be aware of the process and stay on top of it. Use reputable real estate agents and lawyers. Know the process, the current market, and the people you work with.