There is no doubt that new technology now allows us to acquire information, products and services at the touch of a button. However, transactions involving real estate have historically taken some time to complete after an array of due diligence and paperwork. This could well be changing with a number of new companies hitting the market offering so-called “flash sales” which allow people to acquire property almost instantly.
Anyone who has acquired property will be well aware of the long road to completion which can take weeks if not months in some cases. The recently announced array of flash property sales involve new builds where there is not necessarily a chain of transactions to complete. Would you be comfortable acquiring a property as quickly as shopping on Amazon?
In theory the idea of closing the deal almost instantly has its attractions and will no doubt appeal to many people at the time. The problems will likely begin to emerge after deals have been agreed and perhaps more in-depth due diligence or financial information is required. Once you have signed on the dotted line to acquire a property then you are obliged to complete your part of the transaction. Will the developer complete their part of the deal to the letter of the contract?
Is this a regulatory nightmare?
It does not take an awful lot of investigating to learn about problems associated with the banking industry over recent times. We have seen allegations of mis-selling PPI contracts and an array of other insurance products and services. We can only imagine the potential regulatory problems which so-called flash sales may attract especially for those who have perhaps “got carried away” at the idea of walking away with a property almost immediately.
A property developer in India recently announced plans for a forthcoming flash sale auction which would make new developments available to investors. We assume there is paperwork and information available prior to the sale but in effect you are attending an auction, pure and simple.
Take your time when acquiring real estate
Any solicitor or accountant will tell you there is an array of potential pitfalls when looking at acquiring real estate whichever part of the world you live in. Just ask investors who have signed up to acquisitions prior to in-depth due diligence and found major problems which have cost them dearly. The reality is there is no rush to sign up immediately to acquire a property and those prepared to do so without any form of due diligence are asking for trouble.
There are some shortcuts you can put in place to reduce the traditional purchase/sale process but the reality is that this process is in place for a reason.
We recently wrote an article about online companies “disrupting” the real estate market and these flash sale companies also have the potential to do that. In effect they are nothing more than an auction and it is very easy for people to get carried away in the moment and signing up for something which they cannot afford? Are you sure the developer will finish off the property to the plan spec?
Do flash property sales have the potential to be a regulatory nightmare?