Real Estate Investment Loses Value

Added May 4, 2007 by Ilyce R. Glink

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Summary: Investing in real estate is not without risks. Buyers must beware when purchasing investment property -- there's no guarantee your real estate will increase in value. There's no one to blame when investment property doesn't appreciate the way you might have hoped.

Q: In 2005, a "friend" got me to buy real estate in Victorville, CA through his wife who is a real estate agent. He said the prices would keep going up and that it would be easy to sell the house.

The exact opposite turned out to be the case as the real estate market crashed. Did my "friend"commit an act of fraud against me and is there any legal recourse I can take? Or, do just have to deal with the consequences?

A: That's some friend you have. In some ways, I think you'd be better off buying from people you don't even know.

Unfortunately, in this situation, you have to deal with the consequences of buying real estate blind. It sounds as if you simply took your "friend's" advice without doing any real work to figure out if what he was telling you was true or not. Your friend's wife may have pocketed a huge commission off of your ignorance but many people made lots of money this way as the real estate market prospered.

At some point the market peaked and you were the one that got hurt. You probably would not be complaining about your friend if you had bought the home a couple of years earlier, and it was now worth twice what you paid.

Buying and selling real estate, as any other investment, has risks. Those risks include losing money.

As they say in real estate, caveat emptor which means "buyer beware."

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