How to Avoid Common Mistakes when Buying Property Abroad

Every country differs in how it regulates its real estate market, but following some simple, though all-to-readily forgotten, advice can help you avert some of the most common mistakes when buying property abroad, whether for a primary residence, a holiday home or an investment.

The pitfalls are especially great when it comes to buying property outside of your home country. Though most people go through with a house purchase without problems, far too many face unnecessary and easily avoidable problems just because they left their brains at home or on the plane. They end up getting caught out by unscrupulous real estate agents, lawyers and other players in the property market because they forgot to keep their wits about them in a foreign land.

The most obvious but most easily overlooked advice is to never put your signature on any document that you do not fully understand - including reading the small print. If it is in another language have someone you trust or a professional translator explain it to you, do not go by what the property seller or real estate agent tells you.

Perhaps nothing is more critical if you do not know the language, let alone the laws of your chosen country, than getting advice from a professional, whether to guide you through the buying process or to help you navigate the paperwork that comes afterward, from switching over water and electricity bills to obtain residency and work papers.

Also always give yourself a cooling off period, because even if you think you've found your dream home a little serious thought could uncover the nightmare just below the surface.

The role of real estate agents

Whether buying somewhere you are already familiar with or in a completely new location, finding a property will be made considerably easier by going through a real estate agent.

In most locations that attract foreign buyers, real estate agents speaking several languages are common. But buyers should be careful when dealing with agents no matter the country.

Though many people are inclined to think that an agent of their own nationality is less likely to take them for a ride than a local, it is often the other way around, particularly in places where there has been a rapid influx of foreign buyers. In such areas unscrupulous agents looking to make a quick buck abound.

Because some countries do not regulate who can act as a real estate agent it is easy for virtually anyone to try to sell property, in many cases charging extortionate amounts of commission or duping the buyer into acquiring real estate that is substantially overvalued or even illegal.

In such places - as well as in countries with regulated real estate sectors - other operators set themselves up as so called property developers, buying houses for cheap from locals and then attempting to sell them to naive foreign purchasers at two, three or even four times what a local would pay without actually 'developing' anything.

The importance of language

Language skills that would allow you to talk directly to the seller and locals evidently help avoid some of the risks of falling foul of such scams. Hiring an interpreter is another possibility to consider. Failing that, it is necessary to take time to find a good, honest real estate agent to deal with.

Beware of agents that pretend to be a one-stop shop for buying, renovating and relocating. Though they will probably get the work you demand done, it is not uncommon for them to charge extortionate commissions to the unwary client, doubling or tripling the local price for say cleaning your apartment or renovating your villa.

An acceptable fee for agents in most countries is between 3% and 5% of the value of the property, although in some places commissions can be as high as 10% or 12%. Make sure you always know in advance, and walk away if the agent won't tell you their commission upfront or says it is already included the price.

Ferdinand Hales is a real estate investment analyst and a writer for http://www.landsnatch.com, a website providing international property investors with insightful news and reports on where, when and why to purchase investment property in different real estate markets around the world.