How to Invest in Sight-Unseen Property
When purchasing real estate, investors will generally choose to thoroughly inspect the property they are planning on purchasing. This will help them determine the condition of the property, better estimate its value and determine how it can be profitably used or resold. However, in some cases, an investor will only be able to purchase a property without first laying eyes on it. In this case, the investor can use a number of alternatives to personal inspection.
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Inspection By Proxy
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Although an investor may not be able to survey a property himself, he may be able to get another party to look at the property for him and report back. "The New York Times" describes purchasing property based on facts offered by other people as the real estate investment equivalent of going on a blind date. However, if the proxy inspector is trustworthy and experienced, investors can gather sufficient information to make a wise investment.
Contractual Promises
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If an investor cannot see a property before buying it, he should attempt ensure that the property is in the condition and location that the seller declares it. This can be done by requiring the seller to describe, in the form of a written and signed contract, details of the property. This contract should go into explicit detail, so that the investor will have legal recourse if he discovers the property to not be in the same state as it was described in the contract.
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Escape Clauses
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Many sight-unseen investors will request that the contract for the property carry an "escape" clause, one that allows him to void the contract if, upon inspecting the property, it is found to be to unsatisfactory. Some sellers may be unwilling to include this clause, while others may charge the investor a premium for it. Generally, escape clauses expire quickly: investors may only trigger them for a set period of time after buying the property, such as within the first year.
Reputation
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When purchasing a property sight unseen, the investor should attempt to learn a good deal not just about the property itself but about the person from whom he is planning on purchasing the property. The seller or real estate broker should be reputable and should have sold sight unseen properties before, to the satisfaction of previous investors. Prospective investors should ask the broker for the names and contact information of previous clients to whom they have sold sight-unseen property, and then contact these clients for information about the transaction.
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