1. Not using an independent lawyer.

This has to be number one on the list! I am amazed at the number of people that I have come across over the years who seem to have left their sanity at the airport when they jumped on a plane to take part in an overseas 'Inspection Trip' and forgot to instruct a good independent lawyer.

Your lawyer is an invaluable asset in the buying process and it is important to enlist one that is on YOUR side. They will not only act as facilitator, but often as an interpreter between sellers, buyers, banks, agents and notary offices. It is important therefore that they are completely independent from your developer or agent, with no financial interest in your property purchase. Many people have made the mistake of thinking that the notary included in their purchase cost is a suitable substitute for hiring a lawyer. But notaries perform a very different role than that of a lawyer. They will be working for the government and will legally oversee the property transaction from start to finish to ensure that everything is done within the state's guidelines - they won't warn you about unfair clauses in the contract or advise you in any way.

A good lawyer, however, will look after your interests and do all the necessary checks like a a solicitor acting for you on a UK property purchase would such as checking planning, licences, transfer documents, title and advising you on inheritance law. Don't be pushed in to appointing the 'chosen' lawyer of the developer or agent. Whilst there is the argument that this lawyer may already be familiar with the property and there are economies of scale applying since all other purchasers are using the same firm, it is unlikely that they will be on your side completely. Having an independent lawyer not only provides you with legally binding security, it also ensures that your best interests are being protected.

2. Signing Contracts too Early

You may come under pressure to sign the Preliminary Contract in respect of your purchase - particularly if you are buying a new build property from a developer who may have strict rules on the amount of time you are allowed between expressing interest in a property (and effectively taking it off the market) and signing contracts.

Don't confuse the Preliminary Contract with the reservation agreement. This is something that you will be asked to sign early on in the process when you want to put your name down against a particular property. It is quite common for the Reservation Agreement to be signed whilst still in the UK or during an Inspection Trip and it is there to provide assurance to the developer that you are seriously interested in the property. It is usual to pay a holding deposit at the time of signing the Reservation Agreement (typically around £2000) but you should be clear about under what conditions this deposit may be refundable - very often it isn't!

When you sign the Preliminary Contract, you will usually pay the deposit (which can vary from 10% to 40% depending on the developers terms) and since you are at this point committed to buy, this is not returnable.

You should always check the terms of any refund policy on the Reservation Agreement and only sign the Preliminary Contract once it has been thoroughly checked out by your independent lawyer.

 3. Developer in Breach of Contract

If the terms of your contract have been broken - for example, if your property is finished later than expected - then you may be entitled to compensation. However, even if you know the work will not be completed by the agreed date, you will have to wait until after this to make a claim. The amount of protection you have in this type of situation depends on the terms of your contract - and specifications in contracts can be quite vague. Make sure your lawyer checks through the contract thoroughly and that you understand the full implications of a breach in the contract before you sign it.

Another scenario that British buyers have faced when buying abroad, is the developer actually going bankrupt before completing your property. If this happens, your course of action will depend on the type of guarantee stated in the contract. An 'extrinsic' guarantee means that the bank has accepted joint liability with the developer and therefore has a responsibility to complete the project. An 'intrinsic' guarantee, on the other hand, simply promises that the developer will refund any money paid if they are unable to complete the project. However, the harsh reality is that if they go bankrupt they may be unable to give you a refund.

You should get your lawyer to check through contracts fully and any guarantees that they come with before you sign.

4. Unrealistic Budgeting

Leveraging can be a great strategy in a rising market but it is important that you are aware of the risks and don't over-leverage your investment. Taking out a mortgage that is the limit of what you can afford could be dangerous if property prices fall. In this situation, you could end up in negative equity, or even lose your investment. Don't assume that if a mortgage is mentioned, that you will get it - lending criteria in other countries can be more restrictive than here in the UK.

Renovations on a property can often end up being more expensive than first thought, so it is important to factor these in when considering a property. Buying a property abroad has numerous additional costs, which are easily forgotten by buyers when considering their budget. There are fees for agents, lawyers and notaries as well as purchase taxes which can add another 10- 15% onto the purchase price of the property.

5. Whose House Is It?

With agents and multiple companies involved in overseas house sales, it can be a challenge to work out who the 'seller' actually is. Agents can often seem like they are selling a property, when in fact they are doing so for a third party. Due to this, unsuspecting buyers could end up paying for a property that ultimately they don't own. This situation could be avoided by getting a lawyer to check through the paperwork and contract before you sign. If the seller doesn't infact own the property or the land, a lawyer can inform you of this and the reasons for it. Having the appropriate planning permission is no longer something to feign ignorance about as a foreign buyer, so it is important that the relevant checks are done before committing to the purchase.

For more information on this topic, please visit the site store to order your SIGNED copy of Martin's book, 'Teach Yourself: Making Money From Property' available for just £9.99 plus P+P.

Alternatively join me and my team on one of my Special 3 day Property Training Weekends, when we'll teach you what you need to know to become successful as a property investor or developer - and help you avoid costly mistakes.