Not everyone sells their house with the help of a realtor. It’s no secret that realtors’ fees are costly! The sellers who try to bypass the realtor’s services are often successful. However, as a buyer, you might be leery of the process. Since there is no realtor overseeing the sale, how do you know you are not being taken advantage of? While it is recommended that you at least secure the services of a real estate attorney when you buy a house direct from the owner, there are things you can do on your own.
Secure a Preapproval
Before you start shopping for a home, it is a good idea to secure a preapproval from the lender of your choice first. With the preapproval in your hands, you stand on better ground with the sellers. Some owners do not even show the house to potential buyers without a preapproval letter. The statement from a bank showing that you can secure financing gives the seller confidence that you are serious about buying a home and that you have the resources to do so. Because the seller has to do all of the work on his own, he needs to limit who he shows the house to in order to avoid wasting his time.
Figure out the Right Bid
Without the services of a real estate agent, you might not know the right amount to bid on the home. Before you bid an amount that is way off course, try to do your homework. Try looking for homes that recently sold in the area and determine the amount they sold for to help you determine your bid. This way you know that your bid might be within the appraised value and will not provide you with a problem when it comes to financing.
Execute all Contracts When Buying a House Direct From the Owner
A sales contract is not legally binding until all parties sign and date it. If the seller creates a contract and you don’t sign it, the contract is not in full effect and vice versa. Within the standard sales contract, you should make sure the seller includes a Seller’s Disclosure. On this form, the seller must disclose the condition of different areas of the home as well as whether specific appliances and household items will remain in the home. This is the disclosure you use at your walk through to ensure that the items you were promised would be there are still there. For example, if the seller completes the Seller’s Disclosure stating that the refrigerator stays with the house, the refrigerator must be in the house according to the law.
Get Proper Inspections
You should never take the seller’s word regarding the condition of the property. Yes, you can walk around and see for yourself what certain areas look like, but your untrained eye probably misses a lot. You need professionals to conduct a home inspection, termite inspection, and a survey. Each of these three inspections of the home can help you feel confident in your purchase and they each have a different job:
- Home inspection – This helps you understand the condition of the home. The inspector checks the inner workings of things like the electrical system and plumbing. He also checks for mold growth and foundation issues. He will write up a professional report that shows the condition of every area of the home.
- Termite inspection – This helps you know that the home does not have any termite damage or the potential for termite issues. The professional will inspect the interior and exterior of the home to ensure that there is no damage anywhere.
- Survey – This inspection helps you to understand your property boundaries as well as to know if there are any encroachments on your property lines.
These three important aspects should be done right away. If you can work them into your sales contract as a contingency, then you should do so. This gives you a legal way out of the contract if something comes back that you don’t like. For example, if the home inspector comes back and says there is mold growth in each of the windowsills and the home needs all new windows, you might not want to purchase the home. If the seller does not agree to fix the issue before you close on the loan, you could have the right to cancel the contract within a specified period of time.
Find a Title Company
Every home purchase needs a title company. They serve as your “escrow company” and help you with the closing. You can consider them a neutral third party. For example, if you put down any earnest money, you should not hand the money straight to the seller. Instead, you can give the money to the title company to hold in an escrow account. Once you close on the sale of the property, the escrow agent can release the funds to the seller. If you give the money directly to the seller, there is nothing saying that he won’t take your money and run.
The title company also helps you with other aspects of the home purchase process. For starters, they can perform a title search on the home. The professional searcher will review all past transfer of ownership transactions to see if anything looks out of the ordinary. This is done to protect you in the event that someone tries to come back and claim ownership of the property. After the title agent performs the title search, they can issue title insurance. This policy protects you against any future issues regarding ownership of the property.
Buying a house direct from the owner does require a little more legwork on your behalf, but it is worth it in the end. Make sure you have plenty of professionals helping you oversee the process including inspectors, title agents, real estate attorneys, and loan officers. This way you can collaboratively make the home purchase process as seamless as possible.