Real estate, to many people, involves the process of a real estate agent brokering a property transaction between a seller and their potential buyer. The term also refers to the properties themselves, a wide variety of residential, commercial and even industrial buildings.
Lot of people get into the business of real estate for its challenges and the joy of selling incredible properties and empty land to prospective buyers for sellers. Let’s not forget about the satisfying transactions, too!
Though, some people are understandably curious about the potential problems, or rather, disadvantages that might occur when dealing with real estate. For every advantage you might gain in the practice, there’s often a disadvantage ‘lying in wait’ if you’re not careful. If you’re curious about what these disadvantages may be, here’s a brief look at some of them.
Most of real estate’s innate disadvantages pretty much involve legal issues, though some people might find trouble with costs and other tax-related issues.
About legal issues
Much of the legal trouble in real estate, for both participant and agent, usually involves local and/or state laws.
This usually happens when a buyer attempts to work out a deal to buy a property or lot of land… that the local laws don’t permit them to buy. Certain properties and land are restricted to certain buyers; factors like those are usually laid out in many local and/or state laws that address the issue.
Other legal issues often involve liabilities, particularly if a seller deals with buyers on a regular basis (if renting to them). Monetary issues, like if a buyer can’t complete the transaction or attempts to back out, may also escalate to needing legal intervention to conclude the trouble between all parties.
About real estate costs
Most people already know that many real estate properties have high price tags, particularly if they plan to buy. Though, the costs don’t stop with the value of the property and any additional monthly payments (like mortgage payments) the buyer needs to make.
Sellers, too, also have to worry about maintaining their properties, especially if they plan to sell. Many sellers end up dressing up properties, in accordance with their real estate agent’s advice, to make those same properties look more appealing to sell. If they rent out one of their properties, they also have to real with maintenance costs as a landlord.
About property taxes (and other tax-related issues)
People that own real estate properties do have to pay taxes on the properties they own—and that can be a disadvantage for property owners that don’t plan their finances to cover their property costs, including taxes.
Property taxes are the levies that property owners are required to pay. Naturally, this tax is levied in accordance with their home jurisdiction, where their properties are located. Most owners of real estate properties and other forms of property pay these taxes to fulfill their jurisdiction’s tax requirements for dealing with real estate.
Of course, higher valued properties are more likely to garner higher taxes… and that’s where the disadvantage originates. Owners of those particular real estate properties must be financially able to pay the costs for the property and its associated taxes. If they can’t, their failure to keep up with the costs may cost them their real estate properties, among other things.