For Sale by Owner
Even for the most ardent thrill-seeker, going it alone when it comes to buying a home can be terrifying. By doing a little leg work, a homebuyer can buy directly from a seller, without using a real estate agent. In fact, the educated buyer might even walk away with a better deal.
Begin by coming up with a wish list. Write down everything you’re hoping for in a home. What neighborhood would you like to be in? How many bedrooms and baths do you want the home to have? Write down how many garages you want and if those garages should be attached to the home. Determine whether you want to move into an area with a home owners association. Having this list on hand can help you stay on task as you search for a home.
Unless you’re going to look for a home that is being owner financed, get pre-qualified for a mortgage. Look in the Sunday newspaper and compare APR rates for the various mortgage lenders in your area. Call the ones you’re interested in to find out more about the fees they charge for a mortgage loan. These fees can vary greatly, so find out who looks like they’re not going to nickel-and-dime you to death. Once you’ve found a mortgage lender you believe you can work with, get pre-qualified for a mortgage loan. Remember, you don’t have to spend as much as they’re saying you’re qualified to borrow. Buying less home than you can afford will give your budget a little breathing room and leave money for maintenance issues.
Once you have your pre-qualification letter in hand, you are ready to look at homes. Just because you’re not using a real estate agent doesn’t mean you can’t look at houses being sold by an agent. The seller pays the agent fee, so that isn’t your concern. Look at homes that best meet the features on your wish list.
Regardless of how enthusiastic you feel about a home, don’t show your hand. Before you consider making an offer on any home, take a look at the comparables in the area to make sure you’re not offering more than the property is worth. Checking the comparables means you find out how much similar homes in the area have recently sold for. You can do this by checking web sites like Zillow.com and PropertyShark.com for recent sales information. Or, if you’re considering a home that is being sold by an agent, ask her to give you a list of recent comparables to study. Don’t allow your enthusiasm for the home to override the major financial decision you’re about to make.
There are particular things that will take place once a purchase price is determined and the buyer has agreed to your terms. Make sure your purchase agreement includes a clause that allows you to cancel the offer if the home needs major repairs. As tempting as it might be to the save the fees you’ll pay for an inspection, don’t skip this step. The hundreds you spend to have it done can end up saving you thousands in unforeseen repair costs.
If the home inspection turns up any major issues, you will have the opportunity to go back to the seller and renegotiate your purchase price or back out of the deal entirely. By now, you may feel some kind of emotional investment in the house. Don’t allow those feelings to cloud your judgment. As much as you like the property, you may not feel the same way after pouring thousands of dollars into maintenance issues.
The mortgage company will want to make sure they’re not loaning more on the property than it’s worth, so they’ll insist upon a home appraisal, conducted by a professional appraiser. He’s going to check the general quality of the home and do a market analysis to make sure the price is in keeping with comparable homes in the area. In the event the home appraisal shows that the property is worth less than you’ve agreed to pay, you’ll either need to renegotiate or walk away.
Read everything you’re asked to sign, from the sales contract to the closing agreement. If there is anything you don’t understand, ask questions until you’re comfortable with the answers. The closing will likely be held in a title company, chosen by your mortgage lender.
By approaching a home purchase like any other important financial decision, you can easily locate and purchase a property without the help of a real estate agent.