What are the top ten mistakes of developers selling overseas property? A solicitor who has seen it all before lays down the law!
Lawyer Peter Esders of Judicare could have been excused a certain weariness as he spoke to OPPLive London on the most common mistakes that agents and developers made in previous property booms and seem destined to make again on current form. However, he was in fact upbeat on the return of the mass market to buying overseas property, if only developers can sell it right!
- Being premature, selling a development before permissions are in place, before the development is ready, perhaps before they even own it.
- Offering financial guarantees. Why give them if you can’t deliver them?
- Not understanding the law, for example, what type of product you’re actually selling – is it fractional or a time share? Do your agents need to be registered? Are you asking people to sign a reservation contract when it’s actually a sales contract with “reservation” written across the top!
- Spending it. We are talking about developers who buy that Ferrari, or put the money into preparing the next project… When it all goes wrong they’re accused of running a Ponzi scheme, when actually they’re not, they’re just spending the profit too early. The profit you makes comes at the end: wait!
- Forgetting due diligence. How many times do we hear “I wish I had known….” Check out partners, product, competition. At least Google them! Do your legal due diligence.
- Just thinking about the money. Just going for the highest returns will come back to bite you. Is 20% commission on a poor product worth it in the long run?
- Thinking people are stupid. Okay, some are, but on the whole, people are getting better informed.
- Thinking it’s new. It’s rare to see a genuinely new idea, and renaming an old concept doesn’t change it, but it could lose you credibility
- Not running the numbers. It doesn’t matter how good your product is, or how charismatic you are, if the numbers don’t add it isn’t going to work. Assume the worst case scenario, not the best
- Over promising and under delivering. Yes, you’ve got to sell it but… your reputation is worth more than your short-term gains. People have memories, but even if they forget about you, Google and social media won’t.
And if it does go wrong, don’t hide. Speak to your insurers, speak to your clients, work with them to find a solution and above all, Learn. From. Your. Mistakes!
Peter Esders is Commercial Director at Judicare, whose mission is to help clients with legal issues related to property abroad, including recovering money. Peter can be reached at [email protected]. Click here for www.judicaregroup.com.