Don’t Buy In Frustration
Buying Saint Lucia property can be one of the biggest investments you may make. Needless to say of course, price isn’t everything. You shouldn’t buy a property simply because the price is low or because you’re tired of property hunting.
It can be quite exasperating when you finally find the right house but the price is not what you can afford or the property within your price range just don’t meet your needs. Don’t get carried away by your enthusiasm or frustration. You may end up purchasing a property you will later live to regret buying. Choosing your ideal property requires planning and careful decision making.
Avoid Buying St Lucia Real Estate Above Market Value
Buyers have been duped into purchasing lots priced well above their true current market value, by real estate agents or property owners. First time would be home owners, eager to own St. Lucia property or simply fed up with the tedious old fashion property hunting have settled for less than desirable property deals. Remember you don’t have to endure property hunting on your own or in tedious fashion anymore. Companies such as Cynosure Inc have placed real estate options right at your fingertips in an instant.
Back in 2008 I met a couple who were just about to close their first real state deal. They were encountering some problems with the purchase and decided to get professional assistance in closing the deal. Getting a professional on board may well have been the best real estate investment decision that they made. It turns out that the couple had not done due diligence inquiry on the property. They were about to buy a property that was valued at 3 times its true market value, but at the time they didn’t yet know it.
Based on my assessment of the property, and notwithstanding the development potential and value increases that the property owner and their real estate agent were preaching, I thought the property was highly overpriced. Of course I put a spoke in the wheel when I delivered my verdict, since the action was well on its way and nearing closing at the time. The buyers were confused, since they had received rave reviews from others and had been convinced that the property was well worth with, since the neighbouring land owner had plans to commence a condominium development, and that property values in that area would sky rocket almost instantaneously. No real proof of this was presented.
Get An Independent Property Valuation
I advised the owners to get an independent valuation by a reputable assessor, of their choosing. The property was so overrated that once the independent Evaluator stepped in and presented his findings on the market value, the banks didn’t want to touch it. Initially the couple wanted to go ahead with the purchase but luckily good sense prevailed and the couple was able to bail out on the deal just in the nick of time. A few weeks later the real estate market came crashing down. Needless to say that 3 years later, the speculated condominium property on the neighbouring plot has yet to materialise and the particular lot is still on the market.
Too many buyers, especially first time buyers have purchased largely overpriced properties. They usually come to realize too late that their investments were padded with promise of quick profits which unfortunately hasn’t and may never be realized. Well we we’re about to expose one of the oldest tricks in the book, that property owners and real estate agents use all the time to rip off unsuspecting buyers to buy property above market price. The number 1 strategy, that sellers use to dupe unsuspecting buyers into buying over priced properties is to claim that the property is likely to gain an almost instantaneous increase in value and that comparable lots have been quickly turned over and resold at huge profits.
Get Proof That the Property Value Will Soon Increase
Property owners and real estate agents usually induce buyers to purchase land by convincing them that a lot has good investment potential and is almost certain to increase in value shortly. They often convince their buyer that comparable lots or parcels in the subdivision have, in fact, been resold by their owners on the open market at a profit. Often this cannot be substantiated by any real evidence to that effect and is usually based on mere speculation and inflated promises merely aimed at securing a quick sale, often at a price above current market value. Many sellers and their agents provide misleading oral guarantees as to the prospective or speculative value of a property. They may go as far as representing that the vendor, developer or agent will resell or repurchase the property if the increase in value does not materialize. I quickly say to you, don’t fall for it unless the owner, developer or agent has an ongoing program for doing so, that is documented in writing or is prepared to reduce it into writing.
Many buyers get fooled into thinking that there are likely to be huge future monetary or investment values in pre-construction developments with a promise that a unit will almost instantly increase in value and can be resold prior to closing. While some promises of future value is often mere speculation. Often these real estate contracts cannot readily be transferred or assigned to a new buyer so that the buyer cannot have the unit resold at a profit before the required closing date of the initial transaction since title has not yet passed in the property. These purchases are often subject to bank finance and any transfer is usually tedious and complicated.
Large Pre-construction Developments Can be High Risk
If you’re buying into a Pre-construction development with more than twenty-five homes you should beware. Buying pre-construction units in a large development can be hazardous. With so many developers going bankrupt, many persons who have bought into pre-construction developments are increasingly running the risk of huge losses on their real estate investments. Many real estate developments have simply come to a grinding halt in construction due to problems in construction financing or uncertainties surrounding the continued viability of these real estate projects. As a result buyers have been unable to close the transaction, flip their properties on the market as intended or to somehow realise their desired return on investment. Acting in reliance of the advice of the seller’s real estate agent or information received from the property owner themselves, and the prospect of quick profits, buyers often purchase significantly overpriced properties. Quite unfortunately, they have since had to seriously reconsider the soundness of their investment. Many have come to realise too late that they were duped into purchasing properties priced well above their true current market value.
Get Proof in Writing that Neighboring Lots Sold at a Huge Profit
As a buyer unless it can be established, by way of some documented evidence that comparable lots or parcels in the subdivision have, in fact, had short term increases in value or have been resold by their owners on the open market at a profit, don’t fall for it. Make sure that there is a proven factual basis for any representation or speculation of a future increase in value soon to materialize and that that factual basis is certain. A deed of sale or depending on the stage of the transaction, a contract of sale, becomes the final record of the terms of sale. So that except in special circumstances a purchaser cannot rely on any oral undertakings or promises that their purchase would prove to be a good real estate investment, as a ground for overturning the transaction.
Property Prices Already Reflect Expected Increases in Value
The reality is that a seller often wants to suck the life blood out of any real estate deal, unless in poor health and extremely strapped for cash, facing foreclosure on another prospective property or some other pressing reason. If there are any other profits in the deal in the not too distant future, a buyer will more than likely sit on the property deal and wait until the market value increases so that they can themselves cash in at the higher price. Otherwise they’ll try to squeeze the life out of any increase in property value speculative or otherwise which may be realized in relation to the property. The sales price of the offered lot generally already reflects the anticipated increase in value due to any promised facilities or amenities. Ask the developer to substantiate any claims in relation to any comparable sales and the certainty of any speculations regarding any prospective short term increase in property value.
Don’t Get Ripped Off
Whilst it is possible that a property may realize an instant increase in value, this is generally the exception rather than the rule. Examine any grounds for speculation of an increase carefully, find out the buyer’s reasons for selling and if necessary get an expert evaluation. Make sure that any such representation is supported by tangible evidence. By all means if the increase in value can be established go for it, but beware of fool’s gold.
