Are Craig’s List, EBay, Classified Ads or For Sale By Owners (FSBOs) the best place to get a deal on real estate investing? The answer, of course, is it depends! You may find great properties on these internet sites and you may find horror stories. The big question to ask is, “is there someone involved in the transaction that will have a fiduciary responsibility in the transaction” (meaning: is there a licensed representative here that is obligated by law to look out for my best interests). If not that person needs to be YOU. Candidly, you should always do your diligence either way to make sure you are making sound decisions.
I hear stories everyday about people who have purchased investments only to learn the property is land locked (meaning you cannot access the property because it is in the middle of someone’s land and there are no roads in or out of the newly purchased property). Other “fun” problems are the property is located next to a nuclear power plant or some other disaster area.
The point I am illustrating here is that it is imperative to do your diligence and view the property BEFORE you purchase (check out our posts Exit Strategy – Foreign Investors Should Know About The FIRPTA Laws and Real Estate Investing Exit Strategy – The Demographic Shift). Ask lots of questions and know what you’re buying. Ask why it is being sold and do your diligence to see that the exit strategy you have in mind will work and be proficient for your desires.
The double edge sword when purchasing through these venues is the seller is trying to save money by marketing it themselves. (This is understandable human nature to save money). However, when there is not a real estate professional involved in the transaction there may be a lot of unknowns. If you do not sell properties every day, do you indeed know what you need to do to sell the property?
Same thing goes for the buyer. If the buyer does not buy property everyday, do you need to know what needs to be done to make a complete purchase without surprises? Many times it is the unknown that gets people in trouble. You should do plenty of diligence and, based on the stories I hear, I always advise to hire a real estate professional of some kind. Whether it be a real estate broker, a real estate attorney or someone that can help you make sound and intelligent decisions.
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