25 Real Estate Transaction Mistakes and How to Avoid Them
Real estate transactions can be filled with costly pitfalls that even experienced buyers and sellers encounter, as confirmed by leading property experts across the industry. This comprehensive guide highlights 25 critical mistakes observed in thousands of transactions and provides clear strategies to protect your investment. Understanding these common errors before entering any real estate deal could save thousands of dollars and prevent months of stress and legal complications.
Never Skip Thorough Home Inspections
I once lost $30,000 on a transaction because I didn't do a thorough home inspection. This was my first rental investment property, which almost made me quit investing altogether.
I purchased a property that looked good on paper. The seller said everything had been recently renovated, so I took their word for it.
That was a big mistake because soon after, my tenant called me in the middle of the night and complained that the kitchen was overflowing with sewage water so I had to get a plumber there at 1 AM.
I realized the pipes were broken - and on top of that, there was a rat infestation!
Fixing these issues cost me over $30,000 and months of lost rent.
The lesson I learned was to never assume and always do your due diligence. Even if a property looks good, hire your own inspector. A few hundred dollars for a thorough inspection can save you tens of thousands later on. And always budget enough money for unexpected repairs. They can happen even if you are incredibly cautious!
Verify Financing Before Celebrating Deal Closure
A mistake I made early in my career was telling someone that the deal is locked up, before crossing all the t's and dotting all the i's of what they say about their financing. I accepted an offer based on a prequalification letter, not a full preapproval, and several weeks later the loan fell apart as we were set to close. It was an anxiety-producing debacle that cost time, money and momentum. That dark chapter taught me to do due diligence and never skip second-party verification, no matter how enthusiastic each side is. I would remind people to ensure a buyer's financing is truly solid - verify it, talk to the lender directly if you can, and set realistic timelines. Going the extra mile at the outset can protect everyone involved and save you from a surprise at the eleventh hour that derails the deal.
Request Credits Instead of Complex Repairs
Repairs made during the request to remedy portion of the purchase contract can get tricky. For straightforward repairs like plumbing, electrical and HVAC I ask that a licensed contractor for that trade perform the work. It get more complicated when repairs fall outside a licensed trade. Early in my career I had a transaction where wood rot needed to be repaired. The sellers hired a inexperienced handyman despite my request for a professional skilled in their trade. The result of the repair was substandard and looked terrible. In the end we worked it out but since then I advise buyers to ask for a credit in lieu of repairs for anything outside a simple clearly defined fix. This allows the buyers to control the scope and quality of the repair.
Verify All Documents Before Commercial Transactions
Early in my career, I made a costly mistake during a commercial property sale by not thoroughly reviewing the tenant leases before closing. I assumed the seller's summary of lease terms was accurate, but post-sale, I discovered one major tenant had a clause allowing early termination with minimal notice. This led to an unexpected vacancy, costing my client thousands in lost rental income and delaying their return on investment. The lesson I learned was to never rely solely on provided documents, always verify every detail myself.
To avoid this, I advise others to conduct meticulous due diligence on all transaction documents, especially leases in commercial deals. I now personally review every lease agreement, checking for hidden clauses like termination rights or maintenance obligations, and cross-reference them with legal counsel. I also recommend using a checklist to ensure no detail is overlooked and requesting estoppel certificates from tenants to confirm lease terms. This proactive approach has saved me from similar pitfalls since, ensuring smoother transactions and protecting my clients' investments.
Get Foundation Engineering Reports Before Purchase
In Dallas-Fort Worth, the foundation is everything.
The mistake that taught our team at Bright Bid Homes the most was assuming a house with only small cracks was fine.
A few months later, our team learned the foundation movement was severe and required tens of thousands in repairs.
Since then, we've made it standard practice to always get an independent engineering report before purchase of any property. It's the single most valuable investment you can make before buying in North Texas.
Don't let surface-level confidence fool you (a fresh coat of paint can hide cracks for up to a year!). Clay soil is unpredictable, and a $400 report can save you $40,000 later.
Budget Beyond Purchase Price for Hidden Costs
The rule is simple. If you have $400,000, you should not buy a property that costs $400,000. It's difficult to let go of your dream house that apparently fits into your budget. But the reality is that, there are hundreds of unannounced expenses associated with a new house. You need to keep some of the fund aside to meet those needs and not go bankrupt.
For example, after getting your loan sorted, you need to pay monthly HOA fees. More exotic the neighbourhoods charge higher fees. Next comes setting or repairing utilities in your house. If you have to buy new furniture, that's another big investment there.
And, you have to pay the inspectors, appraisers before even giving a quote to the seller. All of these costs a lot reducing your actual budget for a house. People who don't consider these hidden costs end up buying something out of their budget and struggle to keep up with the expenses.
Plan for Delays When Using Bridge Loans
I first got started in real estate flipping houses, and on my second-ever flip, I used a bridge loan. This worked fine until my renovations got delayed by shipping issues. I ended up eating 3 months of payments on that bridge loan before I eventually sold the home, and ended up losing money on the deal. The bottom line for me is that creative financing can be useful, but it's something you need to be cautious about and plan ahead for.
Verify Property Details Yourself, Not Others
Lessons from the Listing: A Reminder to Always Trust (and Double-Check) the Details
Years ago, I listed a co-op in Manhattan and relied on the square footage provided by the previous agent. But unfortunately, the square footage mentioned had been slightly overestimated. Although it was an honest mistake, the buyer felt they were being misled, and I had to work twice as hard to rebuild trust and keep the deal from falling apart.
It's easy to depend on existing information in this fast paced world, but it's your reputation that's on the line, and it depends on your accuracy. Always verify everything yourself, especially property details that can influence the value of any listing. I now make it a point to measure each room myself or hire a professional when needed because you can never compromise on credibility in the real estate market.
Analyze Reality Over Potential When Investing
Early in my investing career, I made a mistake that has stuck with me: I fell in love with a property's potential rather than its actuality. It was a quaint older house in a neighborhood that was growing quickly. I allowed the location and anticipated resale value to override the obvious information provided by the inspection and repair estimates. Only if everything went according to plan—which is rarely the case in real estate—did the numbers work. I discovered that I had purchased an idea rather than an investment after unforeseen foundation work, electrical rewiring, and design delays.
Ever since, I have operated under the principle that a deal should never be justified solely on the basis of its potential. I now approach each property from the perspectives of a designer, contractor, and investor. As an investor, I want to know if the numbers are sound now, not tomorrow. I determine how much hidden work is underneath the surface in my capacity as a contractor. Additionally, as a designer, I assess whether the final product will emotionally resonate with the intended renter or buyer. The deal is typically good when all three viewpoints are in agreement.
I would advise others in this industry to separate analysis from enthusiasm. Before making a commitment, always get a second opinion. This can be an agent, mentor, or contractor. Clarity, not optimism, is rewarded in real estate. The most successful investors are those who make mistakes only once and never again, not those who never make them.
Secure Permits Before Starting Construction Work
Years ago, I underestimated how long permit approvals could take on a renovation project and jumped into construction assuming the city would sign off quickly. The delay held up my crew for weeks and cost me thousands in idle labor. Now, I never start a project until every permit is in hand--and I advise other investors to build realistic time buffers for approvals into their budgets and timelines. It's not the fun part of flipping, but it's what keeps your profits intact.
Inspect Properties During Rain For Drainage Issues
My biggest mistake was rushing through an investment property purchase without conducting proper water drainage inspections--what looked like minor yard pooling turned into foundation issues that cost me five times my expected repair budget. Now I insist on bringing in specialized site drainage experts during rainy seasons before purchasing any property, especially in our Gulf Coast markets where water management is crucial. I recommend every buyer inspect properties during or after rainfall at least once--those puddles in the yard might be telling you a much more expensive story about where your money will go after closing.
Include All Decision Makers in Probate Deals
In one of my first probate deals, I made the mistake of working with just one of the heirs, assuming they represented the family's consensus. The deal imploded days before closing because of unspoken disagreements among the siblings. That taught me a critical lesson: in emotionally charged sales, you must get every decision-maker in the same room--or on the same call--to ensure all voices are heard and everyone agrees on the path forward before you even discuss numbers.
Meet Neighbors Before Buying Community Property
One mistake I made was not taking the time to really connect with neighbors when buying in a new community. After closing on a house I thought was a great deal, I learned too late about a feud between neighbors that ended up affecting our renovation timeline and future resale. Now, before any purchase, I have a simple rule: knock on a few doors, introduce myself, and get honest feedback about the block. Those conversations have saved me from repeating that headache--and I recommend every buyer make this quick step part of their process.
Document All Contractor Plans Before Renovation
Early on, I underestimated how critical clear communication with contractors is. During a renovation, I assumed everyone was on the same page--and ended up with a kitchen layout that had to be redone entirely. Now, before a single hammer swings, I make sure every scope, timeline, and decision is documented and reviewed together. It's costly to fix assumptions, but easy to prevent them with clarity upfront.
Review HOA Rules Before Investment Purchases
Early in my career, I once overlooked verifying HOA restrictions before buying a condo I planned to rent out. After closing, I learned the association banned short-term rentals entirely, which forced me to pivot my investment strategy. Now, I always request HOA bylaws upfront and confirm any rental or renovation limits in writing--because in real estate, what you *don't* ask about can quickly cost you both flexibility and profit.
Trust But Verify All Transaction Details
For me, one of the biggest lessons I've learned in real estate came early in my career when I trusted verbal assurances instead of confirming everything in writing. I was representing a seller, and the buyer's agent mentioned that their client's financing was "solid." We proceeded with confidence, but a week before closing, the loan fell through because the buyer hadn't finalized employment verification. The deal collapsed, costing my client valuable time and other opportunities.
That experience really shaped how I work today. No matter how professional or trustworthy someone seems, you should always verify key details, especially anything related to financing, contingencies, or timelines. Communication and documentation are everything. Now, I always require written confirmation from lenders before removing contingencies and keep all parties consistently updated to avoid misunderstandings.
My advice to other agents or even buyers and sellers is simple: trust, but verify. Be proactive about following up with lenders, escrow officers, and other agents. A quick email or call to double-check can save you from weeks of stress later. Every transaction is a partnership, but your responsibility as a professional is to protect your client's best interests at every step.
That one mistake reminded me that even small oversights can create big issues, but with experience and systems in place, you can turn those lessons into long-term strengths.
Jack Ma, Realtor | Founder, Jack Ma Real Estate Group | Century 21 Masters | San Gabriel Valley, CA | [www.jackmarealestate.com](http://www.jackmarealestate.com)
Obtain Detailed Written Contractor Estimates First
One mistake I made early on was underestimating repair costs on a flip because I trusted a rough verbal estimate instead of getting a detailed written scope of work. Everything looked straightforward at first — a few cosmetic updates and minor plumbing fixes — but once we started demo, the hidden issues added up fast. The project ran over budget and over schedule, and that hit both profit and momentum.
The lesson I learned was simple but expensive: always verify your numbers. Now, I get at least two contractor bids and insist on a line-item breakdown for materials and labor before closing on a property. It takes more time upfront, but it prevents surprises later.
My advice to others is to slow down during due diligence. Don't let excitement or a "good deal" blind you to the details. In real estate, what you don't verify will always cost you more than what you do.
Maintain Credit Discipline Throughout Home Purchase
One of the hardest lessons I learned early on was watching a buyer lose their home because of a credit misstep. They opened a new credit card right before closing, thinking it wouldn't matter. It did. Their loan was denied, and we had to start from scratch.
That experience shaped how I guide people today. At Rent to Own Homes Dallas, we understand that credit challenges don't define a buyer's potential. Our rent-to-own program helps Texans live in their chosen home while they rebuild credit and prove payment consistency.
My advice to others is simple: financial discipline during a transaction is non-negotiable. One decision can change everything
Consider Community Impact Beyond Financial Returns
For me, one of the most rewarding property investments we've been involved in wasn't just about profit, it was about community impact. A few years back, we worked with a client on a small multifamily property in a part of Las Vegas that had a lot of potential but was overlooked by most investors. On paper, it made sense financially, but what we didn't expect was how much it would affect the surrounding neighborhood once the project came to life.
After some thoughtful renovations, not just cosmetic updates but real improvements to safety, accessibility, and energy efficiency, the tenants who moved in were mostly local families and service workers who wanted stable, quality housing close to their jobs. Watching how that property became a place people took pride in changed the way we looked at "returns."
The most meaningful benefits often come from projects that elevate people's day-to-day lives. Real estate has a ripple effect, when you improve one property, you're often improving a street, a block, and the overall sense of community around it. Financial success is obviously important, but the emotional and social return, seeing a once-neglected property bring new energy to an area, is what really sticks with you.
As agents and investors, Joanna and I try to remind clients that real estate isn't just about what you buy, it's about what you build, both literally and figuratively. The most fulfilling investments, at least for us, are the ones that create stability and pride for others while still making sound financial sense. That balance is where the real reward lies.
Order Full Title Search At Process Start
One mistake I made early on was assuming that a property inherited through an estate had a clear title, only to discover hidden liens during closing that nearly derailed the deal. Now, I always order a full title search at the very start--no matter how straightforward the transaction seems--and I encourage other investors and sellers to treat title verification as a first step, not an afterthought. It saves everyone from costly last-minute surprises and builds trust with all parties involved.
Establish Clear Communication Preferences With Clients
Early in my career as a real estate agent, I lost a client because I didn't communicate enough. At the time, I didn't realize how big a mistake that was, or how much it would shape the way I work today.
I've always been a very independent person. I need time to think and process without interruptions, and I assumed most people were wired the same way. One of my first buyers was a young woman in her twenties buying her first home. We got along great. We went to the same college but graduated in different years, had the same degree, both played soccer, and genuinely got along like friends.
I showed her quite a few houses, and we wrote 2 offers. This was in 2021, when the market was crazy after COVID, and it felt like every house was getting a dozen offers that waived all contingencies. Neither of our offers got accepted, and my client wanted to take a break from looking for a week or two. I gave her space, knowing that it was a stressful process for her.
One day, she called me to tell me she had just gone under contract on a house... with another agent. I was completely blindsided. It turned out she'd called the listing agent directly to see a house, and that agent ended up writing the offer for her. When I asked what happened, she said she thought I was too busy to help. I'd gone quiet for a week and she didn't want to be a burden.
The truth was, I thought I was giving her breathing room. She was anxious, and I assumed space would help her feel less overwhelmed. What she actually needed was reassurance and communication from someone to help her feel grounded.
That experience completely changed how I approach client relationships. Now, from the very first meeting, I ask every client about communication. Do you prefer texting, calling, or email? Do you want me to check in with you daily, weekly, or just when something changes? Do you want to sign paperwork in person or digitally?
I've learned that setting those expectations upfront prevents 99% of miscommunication later on. It was a painful lesson in my first year of real estate, but it made me a better agent. I learned that great service isn't just about knowledge or results, it's about how people feel during the process. Some clients need space, but others need constant communication and reassurance. The only way to know the difference is to ask. It's made a huge difference in my client relationships, and it's what I teach the agents on my team who collectively sell over 100 homes per year!
Challenge Client Location Assumptions When Appropriate
One mistake I've made repeatedly in my real estate career is taking clients too literally when they declare "I'll never live in that neighborhood" or "I'll never live in that type of building."
I've learned that these "I'll never" statements are often based on outdated information. As real estate professionals, we're the ones with current knowledge about changing neighborhoods, building renovations, and new construction. When I followed up with clients who didn't work with me, over 50% ended up buying or renting in areas they initially dismissed.
My advice: Unless clients are genuinely restricted by school districts, zip codes, or other non-negotiable factors, don't limit your showings based on their initial geographic preferences. Remember that most clients have busy lives that don't revolve around tracking real estate trends. They might be unaware of positive changes happening just minutes from where they currently live.
The most important element of any transaction isn't location—it's having a qualified prospect who needs to move. Focus on understanding their true needs rather than their stated geographic limitations. Show them all suitable options within their budget range. They'll appreciate your knowledge and willingness to expand their horizons.
Review Every Contract Line With Full Attention
Early in my career, I missed a line on a contract in which the buyer asked for an insurance disclosure from the seller, my client. This is not a common request, and I overlooked the normally blank line where it was requested. As the hired real estate and contract professional, as soon as the error was brought to my attention, I acknowledged my error, obtained the missing information from the seller, and provided it to the buyer. Communication was transparent and clear, and the situation was luckily resolved amicably between the buyer and seller. It could have been worse, and so ever since that day I make sure I give each and every contract I read 100% of my attention 100% of the time. Even though I've read hundreds of real estate contracts and could recite clauses in my sleep, an error like that is unacceptable.
Research Neighborhood Factors Beyond Property Features
Early in my career, I made a mistake that taught me a crucial lesson: deep market knowledge is far more valuable than pure salesmanship. I was representing buyers for a home they loved, and I focused heavily on the property's features, the new kitchen, the great layout, the backyard. They asked about a vacant lot across the street, and I gave a generic answer about future residential development.
During their due diligence period, my clients discovered on their own that the lot was zoned for a car-wash. This created significant stress and eroded the trust I had been building with them. We were thankfully able to salvage the deal, but I learned that my job isn't just to sell a house; it's to provide my clients with a complete picture of their future life in that location.
My advice to other agents is to be an expert, not just a salesperson. Go beyond the MLS data. Regularly check the city's planning and zoning websites, talk to neighbors, and understand the development pipeline in your service areas. Your clients are relying on you for the information they don't know to ask for, and that's where true value is created.
Conduct Complete Legal Due Diligence First
"One mistake I made early in my real estate career in Vietnam was underestimating the importance of legal due diligence — I focused too much on location and growth potential, and not enough on the project's legal documentation and approval status."
The project looked perfect: prime location, attractive pricing, and strong marketing. But later, I discovered the developer hadn't fully completed the land-use certificate and construction permit adjustments. As a result, the transfer process was delayed for months, disrupting my cash flow and investment plans.
The biggest lesson I learned is that in Vietnam, clear legal status is just as critical as profitability potential. Before committing to any purchase, investors should verify:
The land-use rights certificate (the "red" or "pink" book),
1/500 master plan approval and valid construction permits,
Whether the project or land is mortgaged or in dispute,
And the developer's track record of completed projects.
My advice: never let emotions or hype drive your decision. Always validate legal documents through official channels, work with reputable agents or advisory firms, and consult a lawyer if needed before signing any contract.
In a fast-growing market like Vietnam, opportunities are abundant — but only those who combine optimism with discipline will find "safe opportunities" instead of "attractive risks."
