How to Buy a House From a Private Seller
For Sale By Owner (FSBO)--the signs are popping up across the country. The buyer who is prepared to take on the challenge can find the home of his dreams and save considerable money by dealing directly with an owner. Owners sometimes place their properties on the market at a discount in proportion to the commission they anticipated giving to a Realtor. They also may be more willing to negotiate on a price when they’re looking eye-to-eye with a serious buyer. As long as a buyer does his homework, there’s no reason not to deal with a private seller and several reasons to deal with a private seller.
Other People Are Reading
Instructions
-
-
1
Have your financing in line. Before you begin looking, you need to have a realistic idea of what you can afford. From the seller's point of view, a potential buyer is more attractive if he is preapproved for financing. It may even factor in during negotiations, when shaving a few dollars off a price is worth it to the seller when the buyer can close by his deadline.
-
2
Find a property. You are not limited to driving through neighborhoods in search of those FSBO signs, but it is a good starting point. In addition to posting a sign on their house, private owners advertise in newspaper real estate sections and through Internet sites designed for real-property sale. Check out the websites in the Resources section below for recent offerings.
-
-
3
Do your research. If you’ve found a potential property for sale by owner and it is within in your price range, determine if it is priced right. Realtors determine pricing by looking at comparable home prices for the area. While you will not have access to the full network of tools at their disposal, you can subscribe to "Banker and Tradesman" and get all the information you need about recent sales in the area that arecomparable to the property you are looking at. In addition, check out the neighborhood, the schools and whatever else you deem important. Don't be afraid to sit in your car and just watch the property. Are there jets constantly flying over your property? High-tension lines? A hidden landfill at its border? Observe and ask questions.
-
4
Make an offer. Once you’ve decided on a property and understand its relative value, make an offer to the seller in writing. While what you can and cannot afford is something only you can determine, do not be afraid to offer less than the seller is asking. It’s the first step in negotiation. Bear in mind that the market isn’t the only factor that determines the kind of reaction you receive. With no intermediary, you are dealing with the seller and his personality and whatever that may entail.
-
5
Have a home inspection done. This is a great tool not only for you as a future homeowner, but also for you as a negotiator trying to work out a fair price.
-
6
Negotiate. The offer/counter-offer is at the crux of negotiation. Be fair; be realistic.
-
7
Hire an attorney. At some point during your house hunt, you should consider hiring an attorney. A competent and experienced real estate attorney can save you time and money. You’ll want him to prepare the Purchase and Sales (P&S) agreement and to work with you on title search and final contract preparations and execution.
-
8
Be prepared to walk away. If you buy only with your heart and not your head you can get stuck in a big way. If at any time during your negotiation, or after the home inspection, you have doubts, reconsider. Don’t walk away from the home of your dreams, but by the same token, do not wind up in hell house because you liked the flower garden out front.
-
9
Sign a Purchase and Sales agreement. This is where you lock in. While there are outs beyond this point, you are usually required to put down a sizable deposit with the P&S, and it is nonrefundable. You need to be certain that you are ready to commit.
-
10
Set a closing date. Since you already have your financing in line this can be as early or late as you and the seller agree to. Take the advice of your attorney and do not neglect to have a title search done and account for closing costs.
-
11
Close on the property. You, your attorney, the seller and his attorney all meet to sign the final documents and present funding. Once all necessary contracts have been executed, your attorney will record the transaction and register the deed in your name with the Registry of Deeds in your county. There is also something known as a right of recision, which gives you three days to get out of the contract. However, the mechanics and particulars of the three-day right of recision is a matter better handled by your attorney.
-
1
