7 Main Mistakes When Buying Property in Thailand.

Purchasing property in Thailand has its pitfalls. Property acquisition is a process requiring serious planning and preparation. Many foreigners come to Thailand to buy property for various reasons: retirement, a second home, or investment. Buying a second home is becoming a common practice worldwide. This article will look at seven main mistakes made when buying property in Thailand.

Lack of Ownership Rights Check (Due Diligence)

It's essential to conduct a full investigation of the property rights registered at the Land Department. Ensure the seller has legal rights to the land before entering into any sales agreements. Checking property rights will trace the land's history and check for any encumbrances like liens, leases, or mortgages.

This investigation also checks zoning, environmental, and planning regulations in the area. Any mortgages, encumbrances, or other restrictions will be revealed during this process. There have been cases where foreign buyers purchased property only to find they're restricted from building on the land, rendering it useless. This is particularly important in Phuket, where there are height restrictions on buildings. This check can be done in a few days. Not doing this is a serious mistake with potentially disastrous consequences for your building plans on this land.

Lack of Preliminary Analysis

Every financial transaction requires analysis by the buyer to ensure it's a reliable and liquid investment of your savings. When buying stocks on the stock market or investing in a mutual fund, you usually study the company's or fund's profile and performance. The same is true when buying property from a developer. You can contact previous buyers to find out if they are satisfied with the quality and construction timelines. If you don't have time to study the developer's history, a local lawyer near the construction site can check the project, find out information about its leaders and their past. This report will also contain all the information mentioned in the due diligence above.

Buying Without a Lawyer

You might be able to buy property in Thailand without a local law firm's services. However, this can be risky if you're unfamiliar with the country, language, and legal system. Contracts in Thailand may not always match international standards and can seem unusual to us. Therefore, you should take the time to meet and discuss the purchase process with a lawyer before buying. Remember, you're spending a significant part of your savings on this property, and you need to think carefully about all your steps. Your home country lawyer may give you general advice regarding contracts and agreements, but they won't be familiar with the country's laws, as they may not have experience in this area.

Buying Without a Real Estate Agent

Back home, we're always told to choose areas we're familiar with when investing in real estate. That's because the real estate market depends on many variables. It's important to know the market and manage potential risks that can arise in any transaction.

Thailand is no exception. You'll need a local expert who has experience in real estate in the area where you plan to buy. An agent can show you many quality properties from their database according to your needs and desires. The most obvious advantage of using a real estate agent is that they will act as a link between you and the seller. They will get you the best price and act in your interests throughout the process.

Delaying Deposit Payment

Sellers and agents, obviously, want to sell the property. When you find the perfect object and make sure it meets your expectations, the usual first step of the deal is to make a deposit or security. In response, the seller or agent will reserve the property for you and begin the process of preparing purchase/sale agreements. Typically, this is a small amount, up to 5% of the property's value. In most cases, this amount will be deducted from the original purchase price if both parties fulfill the contract terms. However, if you do not plan to continue the transaction, the seller has the right not to return the deposit. In the case of refusal from the transaction due to the seller's fault, this amount is returned. Be sure to keep the receipt and terms of the deposit agreement.

Buying in a Project with Poor Management

Phuket is seeing a sharp rise in new developers entering the market for housing construction. Among them are many newcomers who see potential in real estate construction as a profitable business and decide to try their hand at this industry. They may not have the necessary experience to manage a project, so there are often delays and other fundamental problems. However, these developers typically offer lower prices and a more flexible approach to meeting your needs.

Larger developers, on the other hand, are more experienced, and many of them are public companies. They have the resources, experience, and competencies to complete construction projects on time. They usually do not make concessions on property prices. They are less flexible, but the commercial risk here is much lower. The main thing is to find a developer with whom you feel comfortable. It is recommended to check their previous projects for quality and ask people who have purchased property from them before.

Consider the Environment

If you are buying property in a popular residential complex, the developer will likely try to repeat their success and start the second phase of construction nearby. This should be considered when choosing a property. It will not be very pleasant if, after a year of waiting for your villa to be built, you find yourself next to a construction zone with noise and everything that accompanies construction. You should also know about the possible development plans of nearby sites to avoid blocking the view from the windows of other buildings if you are buying an apartment in a condominium.

Choosing Based on Price

Many factors are included in the assessment of the value of real estate. In summary, you can check prices for similar projects in the same area of the island, and this will give you an idea if you are overpaying too much for your property.