If you and your spouse have saved some money and are ready to buy a home, you may consider for-sale-by-owner listings for a private-sale transaction. Some advantages of FSBO purchases include paying a lower price by avoiding real-estate agent fees for the seller and working directly with the owner to resolve issues. If you are not experienced in buying real estate, tread carefully with sellers. Following certain steps during the process can ensure a successful purchase and future enjoyment of your new home.
Drive through the area where you want to buy to find private sales by looking for FSBO signs. Also check listings in the local paper and log onto ForSaleByOwner.com or another of the many sites that advertise private sales.
Find recent sales to determine if prices of homes for sale are based on market value. Sometimes owners overestimate the value of their homes and place them for sale for more than they're worth. Use a website, such as Zillow, that gives you the final price of homes that have recently sold in the neighborhood.
Shop for a mortgage. Contact banks, brokers or other lenders to find the best loan for your financial situation. Compare interest rates, terms, fees and other details. Ask the lender you choose for a pre-qualification letter to show sellers that you have met preliminary requirements so the sale won't be delayed because of the lack of loan approval.
Approach sellers who are asking market value or less for their homes to schedule a viewing. Ask questions as you tour the property. Find out how when the house was built, how many square feet it is and if any major repairs, like a new roof, have been made recently. Ask for a list of disclosures of important information you should know before making an offer.
Contact the county property assessment office to find out the tax rate in the area and how much your taxes will be if you purchase the house for the asking price, which is the highest you will be paying. If property tax and other assessments are too expensive, look in areas with lower rates.
Negotiate a sale price and other terms with the seller. Place clauses in the contract that are in your best interest, such as being able to cancel the agreement within a specified period of time, and any obvious repairs that must be completed before the close.
Hire a real-estate attorney or agent who works with buyers to review the purchase contract before signing. Avoid a sense of urgency from the seller to sign a contract right away, even if another buyer is competing for the house.
Take your signed contract to a closing agent, escrow company or attorney agreed upon by you and the seller. A file will be opened to start the title transfer process and meet contingencies, such as the home inspection, written in your contract to close by the date specified. A title report and insurance will be issued to ensure that there is nothing to stand in your way of taking ownership.
Contact your mortgage company to start the formal loan application and give the representative your closing date. After all necessary documents are submitted, call the lender every other day to ensure the progress of your application. Real-estate sale closings are frequently delayed due to the lack of financing. Since you are involved in a private transaction, it's your responsibility to keep the timeline on schedule.
Schedule a meeting for the closing. You and the seller will meet with the escrow agent to sign the final paperwork and exchange funds to complete the purchase of your new home.
- Negotiate the inclusion of a home warranty paid by the seller. Include heating and ventilation coverage. These plans can give you peace of mind in case your inspector overlooked a potential needed repair.
Carol Deeb has been an editor and writer since 1988. Her work has appeared in magazines, newspapers and online publications, as well as a book on education. Deeb is a real-estate investor and business owner with professional experience in human resources. She holds a Bachelor of Arts in English from San Diego State University.