What You Need to Know About Buying a Home for Sale by Owner

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Buying a home that is sold by the owner can mean paying a little less for the property. It can also make the process more complicated for the buyer. Many tasks that real estate agents usually complete must be done by the buyer when it’s the homeowner selling the home. This includes setting up inspections, negotiating and getting a real estate lawyer.

  • Understand that your seller has a legal obligation to disclose certain facts about your house. Depending on the state, this may include disclosing the risk of flood, hurricanes, loud noises, any violent deaths that have occurred in the home and other aspects that can affect someone’s enjoyment of the home.

  • Be prepared to negotiate on the price of the house. Without a real estate agent, you will make the offer on the home. Make sure the price is comparable to other home prices in the area to avoid overpaying.

  • Get an inspection report and negotiate with the seller to get repairs or changes made before the sale of the house. The inspection report will detail every problem, large and small, that is wrong with a house. Most houses have small details, such as a creaky floor or a small crack in a wall, that aren’t important enough to warrant costly repairs. But, the seller should pay for the repairs of bigger problems, or you can negotiate to have the repair costs deducted from the home price.

  • Make an earnest money payment if required, but don’t pay it to the seller. Earnest money is paid into an escrow account instead. If you pay it directly to the seller, you could have trouble getting it back if the seller backs out of the deal.

  • Hire a real estate lawyer to handle the contracts. Unless you have a lot of contract experience, there may be a lot of things you miss in creating a legally-binding contract. Buying real estate is a huge investment, and a well-written contract that protects your interests is a small price to pay to protect that investment.

  • Buy title insurance for the house. This will cover you if there are any problems later with the title or with disputed boundaries on the property.

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