Investment in Real Estate is indeed very profitable and the sooner you get to buy a property the better it is for in terms of investment point of view. Moreover, the price of Real Estate is quite favorable these days, which make Real Estate investment, be it residential or commercial, very tempting. One must however realize that there are significant risks involved in a Real Estate transaction and all the details pertaining to the property as well as the agent need to be thoroughly verified.

First of all, in this market there are agents who are neither licensed nor bonded, and there could be many who do not know the market well and do not even care to check if the property they are trying to sell is problem-free. A number of them are fakes; there have been many instances where the agent has fled with the down-payment cash he received from the buyer or the seller, whomever he is serving. Property buyers or sellers are therefore advised to use an escrow or third party services of similar nature. Stewart Title in Houston and Fidelity Title in New York offer escrow services. These agencies hold your money in one of the US accounts until funds are disbursed based on your offer terms and conditions.

Secondly, you must check the title of the property before finalizing a deal. Nowadays a large number of properties have title problems. You may also hire an attorney to get you title clearance of a particular property. Also check whether the seller has a US title clearance and a Fideicomiso. If he doesn’t, there are possibilities that the land or property has title issues. However, even if the seller has a Fideicomiso, it doesn’t guarantee clear title of the property. You need to therefore play safe and get title insurance. But then, even this is risky. You may have applied for the insurance and paid a lump some to your agent for the same purpose, but it may happen that you never receive those insurance papers. By dealing through the escrow agents, you can however avoid this problem. These escrow agents are recommended by the genuine Real Estate agents and enjoy attractive incentives to ensure that your cash is disbursed righteously and you deal hassle-free.

Third, the deal closure is both complicated and expensive. Foreigners buying properties near coastal regions or borders are required to obtain a permit for foreign investment and hold the land/property title through a bank trust (the earlier discussed Fideicomiso). These trusts for doing the necessary services charge about $300-500 annually. This amount is very well mentioned in your trust documents, therefore, ask your agent to shop around to get the best possible deal. Moreover, there is a huge transfer tax. You may be expected to pay nearly $7,000 as closing fees, which cannot be recovered while selling that property. There is no point underreporting the transfer values because that would be considered illegal and huge fines can be imposed if caught. If you do this or allow the seller to do this, then you will be yourself accountable for the seller’s capital gains. It is simple, if the seller doesn’t pay the stipulated capital gains, then you are liable to pay the same. You need to therefore mention in your contract that the seller doesn’t receive any money from your end until he has paid all his capital gains.

On face value it can appear as though selling your home privately does not make financial sense. This is particularly the case where you are offered a price that represents a large discount off the price you wish to achieve on the open market.

However, a closer look at the situation may reveal that selling your home in a short space of time for a reasonable discount makes perfect sense.

These days there are hundreds of companies and individuals who offer to buy property from people who are looking for a quick sale. Most of these businesses make offers in the region of 75-90% of the market value of the properties. In return they offer to buy the property quickly and in some cases they pay for costs such as legal fees.

At first glance this may seem like financial suicide. However, if you calculate how much money it can cost to sell your home on the open market the discounted price may not seem so low after all.

First of all there is the estate agent’s fee. This is payable upon selling the property and is usually around 2% of the final selling price in the UK. This can account for a significant chunk of the final selling price and raises the question of whether the value of the fee should have been discounted from the market price earlier on in order to trigger a fast sale.

Additional fees for selling your home through an estate agent will also include legal costs and a survey fee. Depending on how long the property remains on the market, if it is vacant and there is a mortgage secured on it you will be liable to pay several mortgage payments as well.

If instead you accept a discounted price for your home upfront you may not be liable to pay for these costs. Businesses that offer to buy your home quickly will usually pay for legal and survey fees and will take the property off your hands quickly meaning that you will not be liable to make further mortgage payments.

These additional costs can account for a few extra percentage points off the market price of your home. When added to the estate agent’s fee the total outgoings you will be liable to pay from selling your home on the open market could be between 5-10% of the final selling price.

Finally, your home may not achieve the advertised price set by the estate agent. It is likely that you will have to provide a discount of around 5-10% in order to secure a sale.

It is now clear to see that the apparent discounted prices quoted by companies offering you a quick sale in order to buy your property may make financial sense after all.