Real estate can be a massive investment for a company, so you must ensure your money is well spent. Making mistakes can mean buying the wrong property, paying too much, accepting less than you should, causing delays, or incurring more long-term costs than expected.
A real estate litigation lawyer is here to shed more light on recently published industry tips on how to avoid mistakes:
Don’t Fall In Love With The Property
This usually happens in one of two ways:
- You’re looking for a place to buy. You see and walk through the property, and in front of the owner or their broker, talk about how great the place is and say it’s exactly what you’re looking for
- You’re the seller and refuse to sell it unless the buyer fulfills your “vision” for the property
In the first case, since the seller knows you’re highly motivated to buy, they will concede little, if anything, during negotiations. In the second, your standards are so high that finding a buyer may be difficult or impossible.
Don’t Talk About A Deal Until It’s Official
As our friends at Focus Law LA would advise, avoid careless talk that may cause a disaster. If you’re excited about the purchase, you may talk to others about it before the deal is done. If word spreads about this great property, others will take a look and increase the risk that someone else will pay more and get the property before you do.
Close The Sale Before Zoning Is Approved
Zoning regulations may limit what you want to do and where you want to do it. You may need a variance if you’re not in an area already approved for the purpose you plan. You may need to extend the closing date until a change in zoning or a use permit is approved. You may need to pay an extra fee, but that’s a small cost compared to what you’ll pay for a building you can’t use.
Trying To Make A Purchase Without Being In Good Financial Shape
Smaller, privately held businesses may be reluctant to share financial information with a broker before looking to buy property. You need to have sufficient funding lined up before looking for a property, or you risk wasting the time of everyone involved if the loan you think you’ll get doesn’t materialize. By knowing what you qualify for in advance, you’ll also see what you can afford and only consider properties whose purchase price is in your budget.
Unrealistic Expectations
It makes sense to factor in room for reasonably expected growth if you’re buying property. But going beyond that to have space you expect to lease out to others to help you make payments is risky, especially if you lack landlord experience.
Being Insulted By A Low-Ball Offer
Don’t be upset by a very low offer if you’re selling property. It’s a mistake to take it personally. It makes more sense to respond reasonably. Negotiations could lead to a sale if the potential buyer is acting in good faith. If they’re not serious about buying, that will soon become apparent.
Not Retaining A Lawyer Experienced In Real Estate Matters
Real estate brokers are not attorneys, so don’t expect them to act as one. Forms can save on legal fees, but not having a sales contract that meets your particular needs may cost much more than those savings. An attorney working with your broker can prevent future legal issues and save you time and money.
Not Paying The Costs Of Sufficient Due Diligence
Being penny-wise with a building inspection can be pound foolish later on. Hire experts to provide you with a property condition report and environmental assessment. This will help you understand and budget for the possible repair and remediation costs after you buy the property.
Not Planning For Delays
Buyers and sellers should have timelines that account for inevitable delays. There could be permitting involved, shortages of materials and labor, zoning procedures, and delays in financing approvals. Have a backup plan or put a cushion in your timeline to make the buying process more realistic and less stressful.
Are you looking to buy or sell commercial property? Your attorney may help make the process go faster and help you avoid problems that can delay the sale and increase your costs.