Sadly, this is the mother of all mistakes made by people trying to save a few hundred dollars when they are dealing with a commercial or residential hard money loan. As a hard-money lender, I’ve seen genuinely heart-breaking tragedies.
A wealthy gentleman, who knew practically nothing about real estate, bought a property from a seller (who turned out to be a charlatan) for cash and did not know to require an Owner’s Title Policy. The seller gave the wealthy buyer a Warranty Deed, but unfortunately, the seller owed money secured by the real estate, and he did not pay off his lien. The secured lender foreclosed on the subject property, and the unfortunate buyer lost the entire amount of money he paid for the property.
I’ve seen uninformed borrowers pay substantial upfront fees to unethical loan brokers and dishonest lenders only to lose all their money. Sometimes these are 5 and 6 figure fees. Once that unscrupulous loan broker or lender receives upfront fees, you’ll never hear from them again. We believe in “performance fees.” A loan broker or lender should be paid when the loan is funded. The only exception to this rule is when the lender has the applicant pay certain vendors their third-party fees. E.g., paying for an appraisal or paying for a survey.
Another common mistake is when a prospective buyer is willing to buy a foreclosed property from a Houston hard money lender, a private mortgage lender, a bank or mortgage company when the subject property is occupied by a tenant in possession of the property. Why is this possibly a mistake? Well, I’ve seen it take the best part of a year to evict the tenant, which could put a significant strain on the investor’s plans.
I could write a book on mistakes uninformed individuals have made with tragic results. Hundreds of thousands of dollars could have been avoided by spending a few hundred dollars to seek the advice of an attorney.
Please try to consult a real estate attorney before having anything to do with real estate, and in no circumstance should you get involved in a real estate deal without the help of either a Real Estate Broker or a Real Estate Attorney.
Real Estate Attorney vs. Real Estate Broker –
Who is the Right Choice for You?
A real estate transaction is one of the biggest, and the most crucial investment that you will make in your life and the smallest mistake or oversight can lead to a significant monetary loss. Whether it’s about buying a house or a property, selling it, or applying for a mortgage, every transaction requires a person’s undivided attention along with top-notch professional assistance.
Choosing a professional to handle real estate matters is crucial since such transactions require several factors to be taken into consideration, including value, pricing, location, size, and consumer needs. When it comes to hiring a real estate professional, there are three options: one can hire a real estate broker/agent, a real estate attorney, or they can hire both an agent and an attorney.
Some people believe hiring a real estate attorney can help them steer clear of frauds, which can derail their entire life’s financial stability. However, the majority of people hire brokers or agents when it comes to real estate transactions. It is a common practice around the State of Texas, and many people fail to understand the role of an attorney in real estate matters!
Real Estate Attorney vs. Real Estate Broker
While selling or buying a property or applying for a mortgage from private mortgage investors in Houston, the first step is to hire the right professionals. The matters of real estate are sensitive, and that is why the involvement of a real estate professional is crucial. However, deciding between a real estate attorney and a real estate agent can be confusing, especially if you don’t know what each does.
Here is a thorough comparison that will help people make the right choice!
A real estate broker or agent is the first choice for people handling a real estate matter. A broker is a person who acts as a middle man between a buyer and a seller in exchange for a commission. These brokers represent a seller or a buyer and help them complete a transaction seamlessly. They even act as price negotiators.
Real estate brokers have the potential to evaluate a property’s value. They can help consumers get the right property at a reasonable price or sell a property at a competitive rate. An agent, on the other hand, is the one directly in contact with a seller or a buyer. It is essential to understand that a broker cannot give legal real estate advice, and in the majority of states, it is not permitted by law.
Real estate brokers have a vast network of buyers and sellers, they can evaluate a property's value as per the market trends, and they can help in assessing a property before purchase. The drawback of hiring these professionals is that they charge a commission for their services. Because of this, the efforts of these professionals may sometimes seem a little “pushy.”
Then there are real estate attorneys. These professionals are experts in handling litigations and legal matters that arise during a real estate deal or transaction. Although they are not the first choice when it comes to buying or selling properties, however, they play a crucial role in mortgage finance issues. The best thing about hiring attorneys for real estate financial matters is that they keep people safe from fraud. The problems that real estate attorneys usually handle include transference of titles, reviewing documents for errors, and negotiation of terms and conditions in a contract.
Hiring real estate attorneys can help people protect their rights in a legal contract, especially during a case of contract breaching. Today, mortgage lender companies and investors demand the participation of legal entities to ensure the validity of the documents.
If budget is not a problem for people buying or selling a real estate property, it is smart to hire both a real estate attorney and a real estate broker. However, having an unlimited budget is not the case with most people, and they are forced to choose one from these two professionals. When it is a matter of buying or selling, choosing a broker is the best option. When it comes to mortgage financial matters, these professionals might not be of much help. The chances of fraud are high when finances are involved. It is due to this reason a real estate attorney is the smartest choice when it comes to managing real estate finance matters.