Due Diligence

• Novice investors may take everything they read in a real estate listing as truth. Before placing a property under contract, ensure all information advertised on the property is accurate. Due diligence is the process of finding out information essential to making a final decision on a transaction or agreement. In an effort to sell quickly, sellers might exaggerate features or omit information that might discourage a buyer to close on the property. You can avoid losing large amounts of time and money by performing due diligence on all real estate transactions.
  
  

Clauses

• Purchase contracts are legally binding agreements. However, purchase contracts can be amended to suit your investing needs. You can add amendments or clauses to your purchase contract to your preferences as an investor. For example, if you have a preference on financing terms, be sure you include a clause in your purchase contract that states your right to cancel the contract if you are not able to secure reasonable financing. Include a statement of what this financing entails. Some agents may require that you use the seller's contract; review the contract to be sure its existing clauses address all your concerns. If not, add an amendment at the end of the contract.
  
  

Make Multiple Visits

• Visit the properties you want to purchase multiple times before making a commitment. Make a special effort to drive by the property during poor weather conditions such as when it is raining. You may notice flooding that could be damaging to the foundation of the home. Your observations can provide you with grounds to negotiate further on the deal or walk away. Beginner investors should shy away from issues with a property that can't be remedied, such as being in a crime-ridden neighborhood.
  
  

Get Approved

• Get approved instead of prequalified for financing before making offers on properties. Prequalification does not mean you are guaranteed financing. The preapproval process takes you through all the steps needed to ensure you are able to buy the home once your purchase offer is accepted. Some sellers, including corporations and banks, do not accept offers from buyers who are not preapproved. This is usually seen in the case of foreclosures when the owner wants to sell the property quickly and avoid wasting time with buyers who are unable to close on the home.