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What are the Risks of Buying a Property Directly from the Owner?

What are the Risks of Buying a Property Directly from the Owner?

Want to know about the risks of buying a property directly from the owner? Then check out the content Sky Marketing has prepared for you!

The challenge of building equity requires close attention to how money is invested in avoiding losses. Wrong investment can disrupt an entire life project. Therefore, it is necessary to carefully evaluate the risks of buying a property directly from the owner before closing such a deal.

It is quite common to find those who believe that this is an advantageous practice, as it seems more flexible than purchasing through a real estate consultancy. However, that same flexibility poses far more risks than benefits and almost always results in a bad deal for the buyer.

Check out below what are the risks of buying a property directly from the owner and some very interesting tips on how to acquire new property in a safe way, making an excellent deal.

Why is it Believed that There is an Advantage in Buying Directly from the Owner?

Some factors, at first, may seem more advantageous in a purchase without the intermediation of a realtor. However, when making a deeper analysis of the direct offer of the property by the owner, it becomes possible to perceive how many risks and limitations are added to it.

See, in the following topics, the other side of everything that is defended as an advantage rather than a risk of buying real estate directly from the owner.

Risky Feeling of Greater Flexibility in Trading

When dealing directly with the owner, it is common for the buyer to feel that he will be able to get more discounts and benefits since – as some think – there will be no intermediary “getting in the way of the negotiation”.

What this buyer forgets is that, in most cases, the broker is endowed with advanced trading techniques and is much more qualified to achieve the given goals. In addition, this professional will do everything not to lose the sale, which means that he will apply all his efforts so that both the seller and the buyer benefit from the negotiation and it is concluded.

That way – believe me – he will get discounts and advantages much greater than those you would get alone and without the techniques and market knowledge that only a good real estate consultancy has.

Some examples of this are agreements to solve problems in the property that could go unnoticed without the broker's attention, more aggressive discounts due to the knowledge he has of the market, and leaner and more economical bureaucratic processes due to the professional's experience to optimize and avoid unnecessary expenses and waste of time, among other points.

False Savings on Brokerage Commissions

Another issue that always arises when negotiating directly with the owner is the payment of commissions and brokerage fees, which, for many, is considered abusive. However, it should be understood as the remuneration of the professional who is taking care of your trading to be successful and free from hidden future losses.

The fact that the owner of a property chooses to sell it without professional help has a deeper meaning and reveals some troubling details about his profile. Based on this information, it is possible to question whether the maintenance of the property, while it was owned, was carried out in the same way, that is, without the presence of qualified professionals.

If he chooses not to spend on a broker, he may well have chosen not to spend on the engineer, the architect, the building permits, with good quality materials in possible renovations that have been carried out, for example. And in this case, the lack of an experienced real estate advisor at the time of sale could keep potential pitfalls in the property hidden. It seems very convenient.

Anyway, the savings with the broker's commission can cost much more up front for those who buy this property.

Illusion of Bureaucracy Reduction

Bureaucracy in buying a property is a necessary evil, and there is a very subtle boundary between optimizing it and neglecting it. Therefore, it is necessary to observe very carefully if the bureaucratic steps of the purchase of a property are, in fact, being reduced or not being done due to lack of knowledge or even bad intention.

Often, the lack of a simple document, considered unnecessary at the time of purchase of the property, can lead to the loss of the property in the future. Therefore, the reduction of bureaucracy does not exist.

False Impression of Increased Business Opportunities

The search for properties for direct business with the owner can give the false sensation that one is having access to business opportunities that would not be available through real estate agents and brokers, and, in this way, one is expanding the range of options.

But what actually happens is that, in most cases, these properties are or have been in the hands of a real estate consultancy, but due to some limitation of the property itself or of the negotiation options, they ended up not being sold.

In many situations, the broker makes recommendations regarding the conditions of the property or the price, which are not accepted by the owner who, then, in the expectation of getting a better deal ― for him ―, seeks the sale without the intermediation of the real estate advisor.

In cases like this, you need to be extra careful when buying a property directly from the owner, as he can hide unpleasant surprises that would not pass through the sieve of a good broker.

What are the Risks of Buying a Property Directly from the Owner?

Trading in a property without the guidance of a qualified realtor poses numerous risks for both the buyer and the owner. It is the famous “cheap is expensive” situation.

In the following topics, we will see the most common risk scenarios in this type of transaction. 

Occurrence of Additional Expenses

The expertise of a professional realtor encompasses a lot of specific knowledge that goes far beyond simple negotiation. The lack of this professional ends up generating the need to hire others, which can be even more expensive.

For example, the broker usually knows all the procedures and documents involved in the purchase and sale of a property, which, when there is no type of impediment to the property, ends up dispensing with the hiring of a specialist lawyer to prepare a contract.

Another example of the broker's performance that avoids additional expenses is his "quality control" in relation to the maintenance of the property, capable of preventing you from ending up acquiring a property with problems that require unexpected renovations.

Choosing the Wrong Property

It is necessary to know what to look for when buying an apartment, and this ranges from issues related to the legal aspects of the business and the maintenance of the property to the needs of the buyer that the property will need to meet. It is common, in the excitement of closing a deal, that some important details are ignored by less experienced buyers. In this case, a real estate consultancy is able to prevent these items from going unnoticed.

They may be related to the neighborhood's infrastructure, telephone and internet, and transport, among many other resources that end up directly impacting the quality of life of those who inhabit the property. When they are not properly observed when closing a deal, they can lead to the purchase of a property that does not meet the needs of those who intend to live in it.

An experienced realtor will know how to ask the buyer and seller of the property the right questions to uncover the details that will reveal whether or not the property is suitable for their needs. Often, there is no intention to hide certain details, but the inexperience of the parties doing the deal can make these points not even remembered. However, after the deal is closed, they become real “elephants in the room” for the buyer.

What are the benefits of having a real estate advisor?

Difficulties with Documenting the Property

The bureaucracy involved in buying a property is something that requires a lot of attention and a lot of knowledge. The lack of a simple document can make the business unfeasible or even cause the loss of the asset later on. There are so many details that must be raised and analyzed that, for those who are not used to the process, they can become an unnecessary risk.

It is necessary to verify the entire history of the property and its current owners. If it is a legal entity selling the property, the scenario is even more complicated, as it will be necessary to verify the existence of labor lawsuits that may result in the attachment of the property, in addition to the situation of each partner and their spouses.

The list of documents and certificates that must be provided, especially if financing is involved, is quite extensive, and not all items are achieved simply. Therefore, enlisting the help of a real estate professional, who already knows the ways to obtain each of the “papers” required, will save you a lot of time and a lot of headaches.

Above Market Rating

Another risk of buying a property directly from the owner is when evaluating its price. When this assessment is done by an experienced broker, all the pros and cons of the asset are considered. Therefore, if there is a renovation to be done, for example, this is taken into account in the price.

When this professional appraisal does not please the owner of the property, it becomes one of the reasons why the owner of the property chooses to try to sell on his own with the objective of getting the price that he imagines to be fair, without taking into account factors such as conservation and the market situation.

Existence of Old Debts

Although it shouldn't be a common situation, eventually, there are those who use bad faith to get rid of some responsibilities. Or even without this character flaw, there may be fees or taxes related to the good that have fallen by the wayside.

In this case, when there is an intervention by a real estate consultancy in the negotiation, all this information is collected, and, in the case of any old debt, the value is deducted from the price of the good or the deal is conditioned to its payment by the seller.

Problems with Property Maintenance

Some problems with the maintenance of the property, especially the electrical and hydraulic parts, are not very visible. On the contrary, they can grow silently without the residents of the property even noticing.

Real estate professionals know exactly what problems to look for when inspecting a property. Therefore, the risk of buying a property directly from the owner with maintenance problems is much greater, as he may not even have realized the need for repair.

Occurrence of Blows

Yes, they exist and they are not few. There is a great risk that, outside of a specialized real estate consultancy, you will run into someone with malicious intent, capable of selling a property that is not owned by you or that has already been sold to other people.

A real estate company with a history of credibility in the market is an extra guarantee for you to be sure that you will not be deceived and will not have unnecessary losses, capable even of preventing the realization of a new business.

Waste of Time and Money

Once again, the experience of a realtor becomes essential to avoid problems and waste, since the professional will know how to analyze your profile and, in this way, offer properties that really meet your needs. He will filter and evaluate the property, saving you time and expenses with unproductive visits.

Lack of a Purchase and Sale Agreement

Another point of attention in relation to the purchase of property directly with the owner concerns the preparation of a valid purchase and sale contract. In cases like this, often, the document can even be made, but for not observing all the legal details involved, it may not be valid.

Limitation of Financing Options

The institutions that grant the best mortgage loan options tend to be quite demanding in terms of documentation, both for the buyer and for the financed asset, which will serve as collateral.

Often, the lack of these documents leads to the non-approval of the credit and the limitation of payment options, leading to the negotiation of a direct installment with the owner that offers no guarantee that the property will be transferred in the end.

How to buy a property safely?

How to Buy a Property Safely?

To make sure you are getting a good deal and without taking any risks, it is ideal that you take into account the tips that we will give in the following topics. Follow up!

Choose the Property that Best Suits your Needs

More than a good price, appreciation capacity and ease of payment, the property must, above all, meet the needs of the buyer according to their objectives. CountrySide farms is the best option in this regard.

If you intend to live on the property (such as blue world city), check questions such as the distance from your place of work and the children's school, local traffic conditions, establishments in the neighborhood, and times when the sun shines on the property, among other issues that will directly affect your life day by day.

If your intention is to turn the property into an asset through its lease, make sure it has enough attractions to value the rental price, such as an affordable condominium fee ― it is often necessary to reduce rent because of a very expensive condominium ―the location and the services offered by the enterprise.

Inspect the Property with the Help of Professionals

Before closing the deal, take a professional to the place who is able to identify problems that could cause damage, such as the need for a renovation. Ideally, all electrical and hydraulic parts are checked, especially if the property is older.

Check and Review the Documentation

Be sure to check that all the property's documentation is up to date, and don't forget to take into account the costs to provide it and for the necessary changes to be made. Here's what documents specifically you'll need to review.

From the property:

  • Public deed;
  • Property registration;
  • Registration;
  • Clearance certificates of taxes and fees;
  • inhabit;
  • Notarial expenses

From the seller:

  • Identification documents;
  • Identification of the spouse and property regime;
  • Debt clearance certificates, executions and protests;
  • Clearance certificates of civil, labor and criminal actions;
  • Clearance certificates of interdiction, guardianship and curatorship

What are the Benefits of Having a Real Estate Advisor?

If you have read this far, you already understand that to make a safe investment in property, the ideal is to count on the help of qualified professionals since experience brings a series of guarantees that you would not have when buying a property directly from the owner. We’ve already talked about all of them throughout the text, but here’s what they are in a more objective way:

  • Greater knowledge of the market;
  • Fairer and more accurate assessment;
  • More experience in negotiating intermediation;
  • Inspection of the property with qualified professionals;
  • More accurate document analysis;
  • Agility in bureaucratic processes;
  • Drafting of the purchase and sale contract with security;
  • Ease of acquiring good financing

Therefore, when thinking about buying a property directly from the owner, be sure to take into account all the advantages and benefits that you will be missing out on in order to achieve a better negotiation. Even if you get a good opportunity by trading directly, be sure to consult a qualified broker, able to check that everything agreed is correct and that there is no kind of “gotcha” that could become an inconvenient surprise in the future.

As you have just seen throughout this content, the risks of buying property direct from the owner are much greater than the apparent benefits when they exist. In most cases, this type of transaction becomes the famous “cheap is expensive”.

Therefore, it should be avoided as much as possible, giving priority to safer purchases, assisted by a good real estate advisor capable of ensuring that all points of attention are observed before closing the deal in order to avoid all possible losses.

Now that you already know the risks of buying a property directly from the owner, how about considering the possibility of making a much more advantageous deal through the purchase of a unit directly with the construction company? Stay tuned!

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