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Buying
FSBO
Buying property, whether
directly from an owner or not, must be a carefully planned process. A good
place to start is to determine what features you want or must have, and
how much you can afford to spend. Unless you are paying cash, strongly
consider being pre-qualified by a lender before looking at any property.
Nearly all lenders are happy to do this for you, without any cost or
obligation. By taking this step first, there will be no disappointments to
you or a seller when you find something you want. If you are not sure of
how to get started, check out
How to buy a home. This is an excellent
step-by-step guide to getting a loan.
There can be several
advantages to buying property directly from the owner. One major benefit is
they will know more about the property than anyone else. You will also
save considerable time and telephone calls. If you happen to work with a
knowledgeable seller, chances are also very good that you will save some
money, because the asking price might not have a commission built into it.
It is not
difficult to buy "for sale by owner" property, but it is important that you
seek the
right guidance to ensure a smooth transaction. For professional help
please refer to real estate
services. The following article also presents a
good overview of how to proceed.
It's Easy to Buy from
an Owner
by Lucy Harr
Perhaps you're wondering how to work directly with an owner in
purchasing a home. Here's how the process works.
To make an offer, ask the owner for the "Residential Offer to Purchase"
form. This is a legal form you use to offer a purchase price and also
describe the contingencies of the sale. Contingencies include such items
as obtaining financing, having the home inspected, selling another house
and so forth. This is a standard legal form used in almost every home
sale, but you need to read it carefully and fill it out completely. You'll
also receive a "Real Estate Condition Report" which provides details on
various defects. (This report must be provided to you in any real estate
transaction.)
Return the offer and an earnest money check. Earnest money represents your
good faith in going through with the deal. The amount of the check varies,
but is typically no less than $1,000, and often is about 1% or more of the
purchase price. If you buy the house, you'll usually have the amount
credited to the purchase. If the contingencies identified in your offer to
purchase are not met, you will get your money back. But you will not get
the money back simply because you've had a change of heart. Ask whom to
make the check payable to; often it's a trust fund.
If necessary, a counter-offer will be made. Sometimes, counter offers are
countered as well. Both the offer and counter-offers spell out the various
conditions of the sale, and must be adhered to. The contingencies have
deadline dates. Neither party can ignore the deadlines. If there's a
problem in meeting one, however, both parties can agree to an extension.
The contingencies are removed by filling out a legal form describing the
action that's been taken. For example, once you obtain financing, that
contingency is satisfied.
Shop around for a mortgage. If you need assistance in comparison shopping,
check out the following websites:
Quicken Mortgage,
E-Loan,
Homepath. You also will need to provide proof of homeowner's
insurance; your insurance agent will have the proper forms. (Comparison
shop for insurance, too!)
If your offer is subject to an inspection, you usually are responsible for
making the arrangements and paying for the service, although sometimes
it's negotiable. A list of
home inspectors can be found in the yellow pages; ask for references.
The owner will make the arrangements for closing the deal, including title
insurance, meter readings, etc.
Often, the owner works with an attorney. You also may want to consult with
an attorney or legal services agency. This need not be expensive,
especially if you get organized before you seek advice. Write down your
list of questions ahead of time and have copies of any pertinent documents
with you. Your attorney and/or the owner's attorney also may attend the
closing.
Remember, no one knows more about the house than the owner. Buying from
the owner gives you the chance to ask questions directly.
Copyright
©1998
Providing Solutions, reprinted with permission.
Lucy Harr owns Providing Solutions,
a communications consulting firm in Stoughton, Wi, that specializes in
personal finance. She sold her home by owner using fsbomadison.com.
FSBO Website
Links
All content on sheboyganbyowner.com is subject to the Federal
Fair Housing Act.
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