Buying 'for sale by owner' homes is not as difficult as it is thought to be. We are so reliant on real estate agents nowadays, that it hardly ever occurs to us that we can actually opt for homes for sale by owners, and save on the agent's commissions. This dealing also leaves more scope for negotiation directly between the owner and the prospective buyer.
On the other hand, leaving the agents out through this deal leaves the buyer vulnerable to several disadvantages. The buyer may end up paying more, because the property valuation done by a known agent is absent.
Further more, real estate agents are thorough with their inspections, and without them, there's scope for making a bad buy in case the owner has withheld pieces of vital information. Last, but not the least, leaving out the agent means that one must do all the required paperwork.
Since agents are trained, their contracts are free of loopholes. That may not happen with a buyer-owner contract. Let us first have a look at some myths pertaining to buying such homes, before we move on to actual buying home in such a situation.
- Many believe that house sale by owners is not a serious business, as most are just testing the demand waters. On the contrary, most of these schemes are serious-selling initiatives.
- There is a perception that 'for sale by owner' houses are not flexible on prices as most people believe that these sellers are trying to save on agent commission, and thus need every penny. A National Association of Realtors survey proves otherwise, as its findings say that most of these sales get less than those that go via real estate agents.
- Many people assume that the owner has not appointed an agent so that he can get away with hiding vital information. People need not worry about this, as most laws make disclosure of material facts mandatory in real estate sales.
Tips For Purchase
Do not stretch beyond your finances, for housing loans as mortgages are usually long-term liabilities, and you can never predict your ability to pay that far along the future. Maintain a healthy debt level when you reach an affordable house budget.
Sundays are usually open days to view houses on sale. You can just drive around your locale, hunting for such houses. Searching for the perfect house is the most fun part of this whole process.
When inspecting the home, do not get carried away with the feel or look of the house, ask pertinent question about the drainage, water seepage, title deed, etc.
House Valuation Analysis
If you don't wish to pay for a proper valuation report, you can make one yourself. Find the going rates in the same area and locality. Look at similar houses, and do a comparative analysis. Make sure to factor in all the remodeling and renovation expenses done on the house, along with the age of the construction, etc. Reach at a fair valuation yourself.
Get Yourself an Attorney
Loosen your purse strings a little, and solicit the help of a real estate attorney. He will go a long way in serving you with counsel, advice on a fair offer, and the legalities involved with the process. Local attorneys will be helpful in keeping the contract aligned with the local laws and ordinances.
Make an Educated Offer
Make an offer that is neither too high nor too low, based on your research. An offer is legit only if it is in written form. Sellers often give higher asking prices, expecting buyers to drive for hard bargains, so, don't be embarrassed of quoting your price, no matter how low it is if you think it is a fair valuation.
Sort Out Your Bank Deal
If the seller agrees with your offer, don't waste time, and rush to your bank. Lock in your mortgage rate immediately when the offer is accepted. There is usually a 30-60 day lock-in period with mortgage products, that would give you enough time to settle other nitty-gritty of the contract. Remember there is one more step before actually closing the deal.
Look for structural problems or plumbing issues, for these are the most troublesome. Renegotiate your offer once you get a conclusive home inspection report, to include any problems you want the owner to sort out before the buy deal.
If you are going to buy a 'for sale by owner' home, keep in mind that you shouldn't be dealing with any individual who refuses to show you the true papers of the house and the disclosure forms before the deal is concluded.
The law specifically states that 'the buyer should beware', so be very cautious and vigilant throughout. Finding cheap homes should not be a difficult task if you know the right 'home buying' places to look for. Hope you realize that buying homes for sale by owner is somewhat simpler to undertake, and involves a lesser degree of red tape.
Disclaimer: This information is for reference purposes only and does not directly recommend any specific financial course of action.