Avoid problems by putting on your ‘smart investor cap’

The best real estate deals occur when you get in early on a project, usually promoted as pre-sales or pre-con­struction opportunity. For your early commitment to a yet-to-be-built dwelling, de­velopers are usually willing to of­fer deep discounts relative to the trust you’re putting in them to build as promised.

There’s always a level of risk associated with this type of investment, but if you feel this is the right home for you and the deal is hard to resist, then put on your smart investor cap and fol­low a few simple guidelines to as­sure a secure investment.

1. Never make a snap de­cision on the spot. Get away from the salesperson and think it through. Ask yourself: Does it make sense for me and my family? Can I make it work financially? Does it fit my lifestyle now and into the fu­ture? Simply be sure the property is the right fit and worth the waiting time for delivery.

2. Request any verbal prom­ises in writing. Make sure the de­veloper’s office puts in writing all the details of your offer. It will help you avoid misinterpretation of the real es­tate jargon and a disappointing situa­tion as you go forward. Your contract is the only valid legal document that guarantees you have legal right to what you’ve paid for.

3. Get an original of sales contracts or any other documents you’re asked to sign. Make sure all areas have been signed or initialed by both parties. On the developer’s side, the contract should be signed by someone that’s legally able to commit the company to the liability: the de­veloper himself or his legal represen­tative. Sometimes the Sales Director is part of the development team di­rectly and can sign on the developer’s behalf. This guarantees you the most protection and leverage if there’s a problem at any stage of the purchase and delivery process.

4. Ask the seller to provide evidence that the construction is adequately financed. If the devel­oper’s office is reluctant to do so, then there’s a risk the construction is financed by sales and has no guar­anteed construction loan. If you’re given the lender information, it’s still advisable to do your due diligence to check out the finance source.

5. Find out about your devel­oper/builder. Do they have a track record, either locally or internation­ally? What’s the background of the developer? If they’ve developed other communities nearby, visit them and speak with the owners to learn about their experiences with the developer’s team.

6. Check if your money will be held in a trust or an escrow ac­count. If not, at least understand how your money will be held or used. Most developers are using some or all of their buyer’s money to help fund constructions, which is normal. But if they require you to pay a lot up front or in very frequent increments, per­haps they’re not well financed. You’re more secure if you’re paying along with the progress of the construction.

7. If you need mortgage fi­nancing to fulfill your purchase obligations, make sure you get pre-approved in advance. While normally you can’t get a loan to buy something that’s not yet built, you can get pre-approved so you under­stand the parameters you need to work within when the time comes.

8. Use an independent local real estate agent to help you with your market diligence. These peo­ple are market experts and can share their expert knowledge while advis­ing you on your property ideas. While there are many real estate agents in Mazatlán, not all of them are asso­ciated and operating by the code of ethics of the Real Estate Association (AMPI). You can look at the website www.ampimazatlan.com.mx for the directory of associated real estate professionals. You won’t get a better deal just because you went directly to the developer, and in some cases your Realtor’s knowledge of the industry can help you get the best deal of all.

Sylwia DeSoto is originally from Poland and moved to Mazatlán home nearly 4 years ago. She’s the treasurer of the Mazatlan Real Estate Associa­tion, a co-founder of Invest Mazat­lán, and Sales Director of Mazatlán’s first green community. Contact her at This e-mail address is being protected from spambots. You need JavaScript enabled to view it , www.boardwalkresidences.com.