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Deadly Mistake No. 4 People Make When Buying Real Estate

28/10/2012

2 Comments

 
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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
Martin Litenga
2/11/2012 04:28:07

I have read deadly mistake number 4 and wish to state that it is very informative and enlightening. Looking forward to deadly mistake no. 5.

best regards

Martin

Reply
Glen link
21/12/2020 03:58:41

Grateful ffor sharing this

Reply



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