Don't compare with Singapore prices when buying overseas homes
Tan Ooi Boon for The Straits Times
If you want to invest in overseas properties, the last thing you should do is to compare their prices with those of similar real estate in Singapore or assume that such investments are as safe as those here.
Doing so will give you a false assurance that you are bound to make money because the deals are cheaper, and nothing will go wrong just because the sellers tell you so.
Instead, you should conduct your own due diligence, such as engaging an independent professional to verify that the deal is genuine, especially if the sum involved is huge, or pay a visit to ensure the location of the development is well worth your money.
There have been at least three overseas real estate disputes filed at the High Court in Singapore in recent years after the buyers discovered they had been conned into investing in fraudulent overseas home projects that did not exist.
In all these cases, the victims did not do their own checks and had bought the homes based on exaggerated and false information fed to them by the sellers.
Although they successfully sued to recover their money, they would still be out of pocket after spending tens of thousand of dollars to engage lawyers to file the claims.
Here are three lessons you can learn from these buyers so you can avoid making the same mistakes.
Don't compare with Singapore homes
With even a small new private apartment here going for close to $1 million or more, it is certainly tempting for investors to succumb to the lure of owning a foreign home that costs as little as $50,000.
This was what happened to a couple who spent about $800,000 to buy 16 properties in two countries. They spent $200,000 to buy three homes in New Zealand and $600,000 to buy 13 properties in Brazil.
They were duped into buying these properties by Singapore agents who oversold the projects and presented untrue information to make them believe they stood to make huge returns.
Instead of rejoicing over an expected property boom, the pair found themselves facing total losses because both projects were run by two different groups of crooks.
Even if the deals were genuine, you cannot be sure that you will make money unless you are familiar with the overseas real estate markets.
Don't rely on sale pitches
Just pause to consider this million-dollar question before you sign any deal - if these overseas homes are so attractive, why do the sellers need to come all the way to Singapore to offer them to you?
Just like the hundreds of buyers who flock to showrooms of well-known property launches here, residents in those countries would have rushed to snap up all the good deals before they can be offered to you.
Even if you think the deals are good, you should at least make a trip there to see for yourself that you are buying something you would be happy to own and not a property in an obscure neighbourhood.
If you are buying an expensive home, you should consider engaging your own lawyer to conduct the necessary checks to ensure the transaction is genuine.
All the fraud cases could have been avoided if the buyers had conducted their own checks or had insisted that reputable lawyers be involved in finalising the purchases.
Deal with only reputable sellers
Buyers of foreign homes are sometimes lulled into complacency because they are told their funds would be deposited in escrow accounts, which are used to hold money as securities until the homes are handed over.
Buyers are often told that their funds would be disbursed only in line with the progressive stages of construction.
But such guarantees are only as good as the people involved in the deals because in one case, the buyer's money was moved out of these accounts even though not a single brick had been laid.
Similarly, you should be wary whenever investment terms such as "due diligence" are thrown at you. The reality is that Singapore agents would also face problems in conducting proper checks in another country unless they already have offices there or are working with reputable partners there.
Even if you are keen to jump in, it pays to check whether the Singapore company brokering the deal has the ability to refund your money if the purchase goes belly up. Just because cases involving Singapore developers going bust are uncommon, you should never assume all foreign developers are equally trustworthy.
Finally, never buy a foreign property just because it is a lot cheaper than a similar one in Singapore: You should at least be familiar with the market there or you may end up buying a home that even the locals would steer clear of.
