How to Buy a House From an Owner
Buying a home directly from a seller is an excellent way to save money. Most real estate agents charge a commission of 6 percent, which is split evenly between the buyer's agent and the seller's agent. Buying a home from a seller that is not using an agent may allow you to save 3 percent on the price of the house, because the seller will get all of the proceeds and will not have to pay a commission. Buying a home directly from an owner presents some challenges but is relatively straightforward if you know what to expect.
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Instructions
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Get preapproved for a mortgage before you begin looking at homes. Getting preapproved will give you a sense of how much you can pay for a house. Also, mortgage preapproval makes you a more attractive buyer because there is no risk that you will not be able to secure the financing for the house.
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Research homes in the Multiple Listing Service (MLS) in the area where you are looking to buy. The MLS is a comprehensive listing service that lists all houses for sale, including broker sales and owner sales. Under the "Additional Criteria" tab, click the "For Sale By Owner" link.
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Visit the properties you are interested in with a building inspector that you hire. Do not rely on building inspectors or reports provided by the seller. Any defects that your inspector uncovers should be factored into the price you are willing to pay for the home. Talk about the property with the seller. In particular, ask the seller why he is selling the home.
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Make an offer for the property that is based on the prices of similar properties in the same area. Do not simply offer the price for which the house is listed. There are numerous websites that can help you research the selling prices of comparable homes. Two of the most popular websites are Multiple Listing Services and Trulia (see Resources).
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Negotiate the contract with the seller. Use your real estate lawyer extensively during the negotiating process, and do not sign any documents until your lawyer has reviewed them. When negotiating the contract, be particularly mindful of 1) the amount of time you will have to close on the purchase after you have signed the contract; 2) whether the contract will allow you to back out of the deal for any reason, including an inability to secure a mortgage; 3) whether the property is free of liens; and 5) any property defects or repairs that should be made. If there are a significant number of repairs, you should try and negotiate a lower purchase price.
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