5 Precautionary Tips
On November 24, 2014, the FBI Detroit Field Office issued an official press release that it had arrested 16 people in a telemarketing and real estate ponzi scheme, netting the offenders over $20 million from 290 victims nationwide who thought they were investing in bank-owned homes. According to authorities, telemarketers lied about the values of the homes, telling investors that they were purchasing homes worth many times more than the current sales prices.
It seems that every year, law enforcement exposes an unscrupulous real estate or mortgage scam, but even more incredulous is that people are willing to purchase real estate over the telephone.
Here are five things to seriously examine before purchasing an investment property.
Visually Inspect Property
In real estate, variables such as property location and structural integrity affect value. A physical inspection of the property is imperative. If it’s inconvenient to visit an asset, hire an independent, licensed professional appraiser to assign a property value.
Order Property Title Search
Every property comes with a unique title history. Mortgages, delinquent taxes, assessments, and judgments are but a few types of liens that will directly impact a purchaser’s ownership rights. Order a title search from a reputable title company or get a “title opinion” from a real estate attorney.
Investigate Participants
State and federal law require licensing for most real estate services and activities that involve real estate investments, sales, or loans. When in doubt, contact state licensing authorities to see if an activity is regulated or contact a real estate attorney for an opinion.
Disburse Funds by Title Company
When purchasing property, use a title or escrow company to disburse purchase funds to a seller, even in a cash transaction. Title companies will also provide title insurance to verify property ownership, address property liens, confirm property taxes, and itemize money disbursements in a transaction.
Review All Documents
Real estate transactions involve many documents that include, but are not limited to, sales agreements, deeds, mortgages, discharges, liens, settlement statements, authorizations, and resolutions. Review these documents with a real estate agent or a real estate attorney.
Do Not Sign Incomplete Documents
Most importantly, never endorse any documents that are blank or contain incomplete or blank fields.
Keep Document Copies
Never relinquish original documents without retaining copies.
Successful real estate investing requires patience and reliable information. Rushing into a transaction without thoroughly performing one’s own due diligence or hiring experienced professionals to do the same is an open invitation to deep financial disappointment.
About David Soble: David is a seasoned real estate and finance attorney with more than 35 years of experience, combining his background as a “big bank insider” with a commitment to demystifying complex legal issues for his clients. As the founding attorney of Soble Law (also known as Soble PLC / Proven Resource), he leads a specialized team in Michigan and Ohio that handles real estate transactions, contract disputes, probate, and financial litigation. Known for a practical, no-nonsense approach and peer-rated excellence (Martindale-Hubbell AV Preeminent), Soble and his team strive to protect clients’ property and financial interests with clarity, integrity, and experience.
Disclaimer: You should not rely or act upon the contents of this article without seeking advice from your own qualified attorney.
