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Deadly Mistake No. 4 People Make When Buying Real Estate

28/10/2012

This 4-Bedroomed House Is Actually On Sale. Click Image For Details!

Deadly Mistake No. 4 is another common mistake people make when buying real property. In fact, in Africa, this mistake is rarely committed. WHY? Not because the majority of the people in Africa are aware of it BUT because most of them are NOT educated enough in real estate matters.

However, in the western world such as the United States of America and part of Europe, most people there take the initiative of deliberately and intentionally educating themselves in such matters with a view to enhancing and expanding their individual real estate investment portfolios. WHY? Because many of them have realized that an Educated Mind is an Enlightened Mind and therefore helps reduce the levels of loss or risks associated with investing through proper and informed decision making processes!

Of the many that have taken deliberate steps to educate themselves in matters of real estate investing, some of them for one reason or another have ended up committing Deadly Mistake No. 4 I'm discussing today. And I'm NOT in any way suggesting that my fellow African brothers and sisters are not educated enough but simply stating the fact that this deadly mistake no. 4 is rarely committed by them BUT commonly committed by our learned western world brothers and sisters who have taken the time to learn these things and due to one reason or another, have found themselves committing today's deadly mistake.

WHAT THEN IS THIS DEADLY MISTAKE NO. 4 I'M TALKING ABOUT?

Well, the particular deadly mistake no. 4 I'm talking about is simply this :

Financing Agreement Not Containing Non-Recourse or Exculpatory Clauses!

WHAT EXACTLY DO I REALLY MEAN BY THIS?

You see, dear blog reader, when it comes to buying real estate, most people do not KNOW that they could actually purchase real property by turning the seller into a Lender and therefore buy the property from him! In other words, you could obtain what is known in real estate matters as "Seller Financing". This, like I earlier on alluded to, can enable you - the buyer - to agree with the seller and turn him or her into a long term lender say twenty years and then pay for the property using monthly payments until the whole amount agreed upon by both parties is fully paid.

This arrangement is good for both the seller and buyer.

It is good for the seller who finds himself or herself in a pinch and badly needs cash to help him or her sort out some immediate personal and family problems. Instead of the seller selling his property for a full upfront cash payment which normally takes time, he or she can sell his property via what is known as 'Seller Financing' and allow the buyer to pay for the property in question through monthly payments at a good rate of return for say a twenty year period. And besides, it provides the seller with some Passive Income for the period of the loan until the full amount is fully settled. This strategy is best suited for a seller who owns a number of real properties and therefore wishes to convert one or two of them into passive income via intelligently calculated and reasonable monthly payments over a period of time in order to avoid the daily encumbrances associated with tenant/lord relationships!

This strategy is good for the buyer in the sense that it enables him or her to buy the property of his or her dreams affordably without having or possessing colossal sums of money. With just a small amount of cash or anything in kind used in lieu of cash, a buyer can own property whilst still paying for it. And if the buyer wants, he could easily rent it out so it can help him or her pay for itself!

Such a technique of acquiring real property is known as a "Creative Finance Technique". I talk about this very technique in detail including many others HERE. So, if it's your desire to learn more of such creative finance techniques, then please click HERE to have access for FREE to such detailed information!

Therefore, when I talk of committing deadly mistake no. 4 which is "Financing Agreement Not Containing Any Non-Recourse or Exculpatory Clauses", I mean and refer it to a real estate deal structured with a Seller Financing Agreement in place. It is in such an agreement where you - the buyer - MUST be very careful.

In such kinds of Purchase and Financial Agreements, you must make sure that as a buyer, you incorporate in such agreements what are known as "Non-Recourse or Exculpatory Clauses". WHY? Because these limit or reduce your loss via foreclosure to the property or asset pledged as security (Your Collateral). Moreover, such clauses also enable you - the buyer - to back out of the deal or contract should there be some misrepresentation or problem of some kind in the near future whilst performing and fulfilling the terms of the agreement.

However, it may NOT be possible to secure this kind of an agreement when negotiating a loan with a bank or any financial lending institution, but it must be a part of any agreement that specifies an Owner Financed Deal.

Therefore, as you've probably read and seen for yourself, very few people KNOW these THINGS and you'll DO yourself a GREAT favor by Learning and Knowing about these Things HERE and so avoid this very deadly mistake no. 4 discussed herein today including the past ones!

So, dear blog reader, the next time you go out and settle for a certain piece of real property, you MUST ALWAYS make sure that you avoid committing this particular deadly mistake discussed herein including the previously discussed ones as well as the upcoming ones to be discussed later right here on this very property blog.

So, until next time, go well in your real estate searching endeavors!

NOTE: Read Deadly Mistake No. 5 -> HERE

I love to hear your comments. Both positive and negative ones are all welcome.

Therefore, go right ahead and drop a comment below.

P.S: Looking for Real Estate Property to Buy, Sell, or Rent? Then click on the highlighted words right in this very sentence to have a look.

2 Comments

How To Get Your Dream Property at a Low Price

3/10/2011

3 Comments

Buying an excellent piece of real estate can be quite expensive especially if that property is of your liking. In reality, the best real estate deals are usually costly.

If a person doesn't have enough money, the Only real estate deals left available to one, are often deals that people with excessive cash have passed on. Therefore, what then are you supposed to do if you happen to find yourself in such a situation?

Well, dear prospective property buyer or seller, may be the following Top Ten Hot Negotiating Tips might be of great help to YOU. I actually learn't these tips from a person named Sue Waddington. They blessed my heart when I first bumped into them. And I strongly believe that you'll find them beneficial as well.

Here then is a full and detailed explanation of the top ten hot negotiating tips for your own consumption and eventual assimilation below.

INTRODUCTION

Everyone uses negotiation tactics to get what they want, whether they ‘ re haggling over the price of an item in a car-boot sale or discussing potential salary with a future employer. Most of the time, when you enter a negotiating situation you can expect the other party to use certain manoeuvres to tip the scales in their favour. For example, you can expect a potential employer to offer you less money than they are actually willing to pay to give themselves negotiating room. And a buyer will usually act surprised at your stated price, no matter how reasonable it may be, to pressure you into lowering it.

Everyone uses these tactics, but that doesn’t mean that negotiations can’t be fair. Some tactics are acceptable, while others are downright sleazy(immoral). Tactics are part of the process, and you can use them and still maintain your negotiations on an honest level. In other words, the use of tactics doesn’t necessarily mean tricking or manipulating people. Some tactics are simply tools to expedite(speed up) the negotiation process ; whilst others are used to take advantage of the other person.

To be successful in sales and in business, you must be able to differentiate between the fair and unfair negotiation tactics so you can use the good ones to your advantage and deflect the questionable ones.

Consider the following ten negotiation tactics and how to deflect them and/or defend yourself against each and every one of them.

Tactic Number 1: The Wince

The wince can be explained as any overt negative reaction to someone’s offer. For example, you might act stunned or surprised when your negotiating counterpart names their terms. This tactic tells your counterpart that your know your limits, which isn't underhand or dishonest. And wincing at the right time can potentially save you thousands of pounds or dollars. Keep in mind that when deals are negotiable your counterpart will start high.

Of course, you won’t always be the wincer. Many times, especially in the sales profession, you’ll be on the receiving end of the wince. In this case, you can counter with the next tactic.

Tactic Number 2: Silence

In the negotiation process, silence can be your strongest tool. If you don’t like what your counterpart has said, or if you’ve made an offer and you’re waiting for a response, just sit back and wait. Most people feel uncomfortable when conversation ceases, and they start talking automatically to fill the void. Almost without fail, your counterpart will start whittling away his or her position when you use this tactic.

So what if you find yourself negotiating with a person who understands the importance of silence as well as you? Rather than wasting time in silence, restate your offer. Don’t make suggestions; just repeat your terms. This manoeuvre forces the other person to respond, and more often than not they respond with a concession.

Tactic Number 3: Good Guy/Bad Guy

This sleazy tactic is often used in movies, where two detectives are interrogating a person who’s just been arrested. One detective seems unreasonable and inflexible, while the other tries to make it look like he or she is on the suspect’s side. If you find yourself in a good guy/ bad guy situation, the best response is to ignore it. Recognize this game for what it is, but don’t play along and don’t allow the good guy to influence your decision.

Tactic Number 4: Limited Authority

This tactic is a variation on the good guy/ bad guy routine, but instead of two people working over you, the one person you’ re dealing with tells you that he or she must approve any deals with an unseen higher authority. Sometimes, this higher authority exists, but other times your counterpart will create this figure to gain an edge in the negotiation process. So just because your counterpart tells you “ its out of my hands” don’t automatically assume the person is being honest. In this type of situation, two options exist: one, ask to deal directly with this so-called higher authority or two, test the limits of your counterpart. You may find that the other person has used this tactic to force you into backing down.

Tactic Number 5: The Red Herring

This technique comes from fox-hunting competitions, where one team drags a dead fish across the fox’s path to distract the other team’s dogs(fox). At the bargaining table, a red herring means one side brings up a minor issue or point to distract the other side from the main issue. Effective and ethical negotiators generally agree that this tactic is the sleaziest of them all.

Tactic Number 6: The Trial Balloon

Trial balloons are questions designed to assess your negotiating counterpart’s position without giving any clues about your plans. For example, you may ask your counterpart, “would you consider trying our services on a temporary basis?” or “Have you considered our other service plans?” Essentially, these type of questions put the ball in your counterpart's court, and the nice part about them is they aren’t really offers. They allow you to gain information without making a commitment.

When you’ re on the receiving end of a trial balloon question, you may feel compelled to answer it thoroughly. To maintain your edge, resist this temptation and counter with another question. For example, if someone asks, “ Would you consider paying cash? Respond, “ Well, if I did, what would your offer be?”

Tactic Number 7: Low –balling

Low-balling is the opposite of the trial balloon. Instead of tempting you to make the first offer, your counterpart will open the process with a fantastic offer. Then, after you agree, they start hitting you with additional necessities.

For example, say you see an ad for a product priced lower than other stores. But then, after you buy, the sales representative uncovers the hidden costs, such as delivery or installation. In the end, you probably pay more than you would have at another shop listing a higher price on the product. To avoid falling victim to this tactic, ask your counterpart about additional costs before agreeing to any deal.

Tactic Number 8: The Bait- and- Switch

Similar to low- balling, the bait-and-switch tactic should be avoided at all costs. Your counterpart may try to attract your interests with one great offer, but then hook you with another mediocre one. This tactic will almost always burn you, unless you can recognize it. If your counterpart were really able to offer a genuinely good deal, they wouldn’t have to resort to bait-and-switch.

Tactic Number 9: Outrageous Behaviour

Outrageous behaviour can be categorized as any form of socially unacceptable conduct intended to force the other side to make a move, such as throwing a fist of anger or bursting into tears. As most people feel uncomfortable in these situations, they may reduce their negotiating terms just to avoid them.

Tactic Number 10: The Written Word

When terms of a deal are written out, they often seem non-negotiable. For example, when was the last time you negotiated a real estate lease, or a loan, or even a service contract that was typed up in an official looking document?

The best defense against this tactic is simply to question everything, whether it appears in writing or not.

Conclusion

As you can probably see, these tactics can potentially save you a lot of money just by applying one or more of them to your particular situation. They have saved me a few thousand kwachas and/ or dollars as a result of using them. They have also benefited me financially and continue to benefit me in my businesses as well as my personal endeavors.

I edge you to try them out the next time someone tries to up-sell you something.

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