7 Worst Mistakes DIY People Make When Buying a Property

What is DIY? DIY is an abbreviation for “Do-It-Yourself.” Usually, they use this term for home repairs or some arts and crafts projects. But sometimes, people also try to do it themselves when they’re trying to close a real estate transaction.

While there is nothing that’s stopping one from doing it, there are some mistakes that usually happens in the process because they either don’t know it or unknowingly they try to do it or they copy one’s format and they try to apply it on their own without really knowing that there’s really something different with their case.

So, these are just some of the mistakes that we want to talk about so that you can also avoid them.

The first mistake that DIY people make as far as investing in real estate is concerned is buying it at the wrong price.

Buying it at the wrong price will have different effects whether you are a buyer or a seller. If you are a buyer and you bought an overpriced property, then you’ve lost a lot of money. And it will take a long time or probably sometime for others to recover the kind of money which you should’ve never lost in the first place.

On the other hand, if you are a seller and you sold a property at a way lower price compared to the market value, then you’re probably losing money as well. You’ve really lost money if you’ve sold at a certain price with just way below the market value.

Now, some people, they try to do it their own way, they don’t have any professional at hand to advise them as far as what the correct market value is or what the correct price is or what are the acceptable terms as far as the deal is concerned. They usually do it through emotions. If they feel like it’s the right thing, they go for it.

Well, you might be selling your property at a very low-price tag. Or if you are a buyer, you might be buying a property that’s highly overpriced and there’s really no, not much to justify it for.

So, how do you know this? It’s best to consult a professional but the quick and neat thing to do is to try to check or do some due diligence with regards to the property.  As far as the background, what’s happening in the area? And also into the future, what’s the potential in the area?

Number two is getting the legal contracts wrong.

Sometimes, it’s very easy to copy one’s format of a contract from a neighbor or a friend who has recently sold his or her property. It could be wrong because you’re selling it under a personal name. Or say for example, you’ve copied his or her contract and there are some clauses there that you just, you know, copied for the sake of copying it so that you won’t make mistakes.

These legal contracts, paper works, and requirements are very important as far as handling your paper work is concerned. And sometimes, when you try to do it yourself, without consulting a professional to actually look at the documents, then it will be difficult for you.

Or worse, it could lead to a situation where you’re gonna transfer the property because you’ve already made the mistakes or you are not able to provide some of the documents that would otherwise be needed to successfully transfer the property to the next buyer. It’s very important to get these things in order.

So that you will be able to transfer the property smoothly without the hitch to the buyer.

The third mistake that do-it-yourself people make as far as real estate people is concerned is not transferring the title right away.

Some people, when they buy a property, they sign a deed of sale, they pay the property, and they get the title. And then, they stop right there, and that’s a problem. Because when you’re trying to resell the property, five, eight, ten years down the line and you do have the title but it’s not in your name.

Yes, you do have a deed of sale, it’s really yours but it’s not registered under your name. So, you still have to register with the local registry of deeds so that you can prove to the buyer that you are the real registered owner of the property. Some people, they just don’t do it. They just have the title and it could be quite difficult if you own the property and it’s not registered under your name because there’s a lot of paperwork that you have to go through.

Come time that you want to sell or  dispose the property. Or say for example, when you want to lease out the property and they’re asking for a copy of the title and it’s not your name that’s indicated in the title, that’s a ground for doubt, right?

Although, you can show a deed of sale and all, there’ll be so many questions that you may or may not be able to answer confidently or not confidently and it constitutes a room for doubt as far as the tenant or the next buyer is concerned.

The fourth problem that do-it-yourself people make after closing the sale is not paying the correct fees and taxes on time.

Just like the previous example, once they’ve signed the offer of the property, they’ve signed the deed, they already have the title, and they paid enough… they forget that there are due dates for taxes and fees that are involved when you are transferring a property.

They forget to ask for manager’s check or they forget to cut out a check for the payment of these. And the problem here is that once you’ve missed that due date, there are surcharge and penalties, and it keeps on piling up because if you’re not paying these dues, they’re gonna be looking at it as a missed or delayed payment. And maybe after a year or two, when it comes to your mind that, “Oh! I need to fix my property affairs.”

It may be very difficult for you to settle it because the penalties and the fees are way larger than the supposedly taxes that you would’ve, otherwise, paid in the first place.

There are due dates for the payment of these taxes as far as their transaction of a real estate sale is concerned and you have to put a look into these. Because otherwise, you would be charged with penalty that you shouldn’t even be paying for, only if you paid it on time.

So, it’s very important that you pay these dues on time to avoid unnecessary fines.

The fifth mistake that DIY people make is, and I say it with a lot of regret, is buying the wrong property.

I know, relatively, there shouldn’t be a right and wrong property but if you have a certain purpose for a property. Say for example, you want to have a property for investment and there’s a certain yield that you want to getand you bought the wrong property wherein there’s no development, there’s no road network, there’s no commercial development, there’s no schools, practically, there’s no reason to live there and you expect a rental income out of it. It’s relatively a wrong property.

You can be in a situation wherein you were able to buy a property for the wrong goal and that’s gonna be very costly to fix.

Another mistake we don’t want you to make is when you’ve bought the wrong property for personal use. Sometimes, when a person is buying a property and he just wants to get a house and you’re in a pressure to move in right away to buy something and renovate. This kind of situation happens where you’re able to buy a property and then, something perfect comes up after you’ve pulled the trigger in this one just because you didn’t know that this type of property exists. Say for example, you want to buy a house and lot, you’ve done the down payment, you’ve already settled on this because this is the one thing that you can find at the moment. But just because you weren’t able to consult a knowledgeable professional who knows the area or probably acceptable areas around the target place that you like. And since these professionals, they know the ins and outs, they know the communities, they know the fees, the maintenance fees, or worse, if you were able to buy a property and the maintenance fees are so high, it could be the wrong property, right?

It’s definitely hard to do the upkeep or as simple as, you weren’t able to buy what you like because you weren’t able to consult a professional whose more knowledgeable in the area than you.

So, it could happen wherein you bought a property that’s in the wrong location or simply put, you weren’t able to get the correct property for your goal. So, that’s one of the worst mistakes that you can make.

The sixth mistake that a person makes in buying a property is not doing due diligence.

Like I’ve said before, there are some properties wherein when you buy them and you don’t make due diligence, you don’t actually see them. For example, you bought a seaside property and you didn’t do due diligence, you know, it’s seaside property, it’s beachfront, you have a nice view, but it disappears during high tide, could you build a house on that? Could you build your dream home on that? And during low tide, you see it, it’s there. But during high tide, you can’t see where it is.

Or another example is you found a home, you love it, the pool is there, the front lawn is there, it’s nice but there’s a lien on the property or an encumbrance, there’s a mortgage that’s unpaid whereas in most situations, this can be fixed; the owner can settle the mortgage, then the buyer can buy it and move on.

Or the buyer can pay off the mortgage, they create a contract, they move forward with the sale, there are so many ways to go about it but the bottom-line is you have to do the due diligence before you purchase a property just so you really know what’s under the hood and you really know what you’re buying.

The seventh mistake that DIY people make as far as investing in real estate is concerned is overestimating or underestimating the potential of a property.

As I’ve said in one of my previous videos, buying a property is a very physical, tangible business. You see it for what it is. Now whereas it pays off to see into the future as to what it can be, how much values it might potentially come up to, or how much potential rent it can get back to you?

Overestimating this and relying on this overestimation could prove fatal if you are an investor. Say for example, you have a certain among of savings, you bought it to invest in a property and you don’t have anymore savings and you’re estimating that the rental of this property is gonna be giving you the returns you need to replace your daily or monthly income but the rental price that you overestimated it to be at did not even reach the cut. The actual rental rate is half of what you expected and now you have to live off on half of what you expect it to be. That’s a very difficult situation to be in.

Or underestimating, it’s also difficult to be in a situation where you underestimated the potential of the property. You’ve seen that it’s a raw land, you feel like there’s nothing that’s gonna happen there, it’s a province, you feel like there’s no development but what you didn’t know was there’s a road network that’s gonna come up in the next two to three years, there are commercial establishments in the area, there a lot of good schools, there’s an emerging residential high end area nearby and some developers are coming to develop the area. So, you might be missing out on a good deal because you’ve underestimated the value of the property in the area. So, how do we determine it?

It requires a lot of factors to access and to finalize. But then again, overestimating or underestimating the potential of a property is one of the worst mistakes one can make. You may either overspend, or you may either miss out.

So, what did we learn today?

Today, we learned that there are so many avenues for mistakes to happen as far as buying real estate is concerned. There are just so many moving parts in one real estate transaction.

There are just so many moving factors as far as buying real estate is concerned and its very important to get these correct. Cause these items, these tasks, the subitems, if you make one mistake, it could proof a costly down the line. And when you are consulting or buying from a real estate professional, it doesn’t really cost you extra because that’s gonna be part of the price and in effect, it’s free. But it saves you a lot of money long-term.

So, I hope today’s article was able to give you a better idea as far as what mistakes there are to avoid when you are buying a real estate. It’s really much easier and better for you long-term if you consult a real real-estate professional – true licensed professional one (not just some person whose trying to sell you somethin)  so that they can give you proper advices to where to put your money, in which real estate could be good for you, what properties’ great for investment, etc.

And of course, you have to decide for yourself after assessing all of these advices.