Red Flags in Real Estate Transactions
Real estate has its own fair share of red flags, they are warning signs that guide you from losing huge sum of money to real estate fraudulent transactions. Aside from knowing what to watch out for, it is equally important that you do your due diligence to avoid falling victim to real estate scams.
Avoiding Legal checks – Real estate transactions are legally binding, therefore the service of a lawyer are required. When a real estate agent insists on not including legal documents in the transactions, that is a red flag. Most times such real estate agents are smooth talkers and often persuasive, you have to be careful not to become a victim of their fraudulent propositions.
Impatience – This is the #1 red flag, when a real estate agent seems impatient to close a transaction. It is important to take your time to re-evaluate the transaction; to be sure that it is not a fraudulent deal. If it is not a dubious real estate transaction, then you don’t have to rush to make payment.
Evidence of Payment – It is important to have evidence of payment for every transaction you engage in, especially real estate transactions. The evidence of payment can be receipt or other documents that clearly identifies you as the bonafide and legal owner of the property. The receipt must indicate the following information – Confirmation of payment, Date of payment, Amount Paid and Name of the receiver. When the real estate agent closes a deal without giving you an evidence of payment that is a red flag.
Incoherent Figures – Another red flag is when the figures don’t add up, particularly when it sounds too good to be true. This is not the time to be excited over the ridiculously cheap price of a property, rather you need to take a step back and reevaluate the figures. Also beware of exaggerated claims; instead do a market survey to know the price range of the properties you want to buy.
Inspection – Amongst all the processes involved in securing a property, inspection is one of the most crucial step. Most fraudulent real agents always avoid this part of the transaction, by delaying, postponing and even denying you of the opportunity to see the property you want purchase or rent. Before closing any real estate transactions, ensure that the agents can be verified and do thorough investigation about the companies they are working for.
Mode of Payment: It is important to avoid cash payment such that the history of the transaction can be traced. Spreading of payments can also help detecting fraud and reducing risk.
Scope of Repair: Always agree and document repair scope and responsibilities. This is important because often times you might think you have a good deal by paying low but the cost of repairs can make the effective rent or purchase price grossly higher than the open market rent or value.
Timing of Inspection: it is best to inspect during rainy season otherwise you might unknowingly pay for property prone to flood and dampness