Regardless of how a home is sold, by agent or by owner, the same rules apply. Here we show you how to buy a for sale by owner house in 5 simple steps.
The process of buying a for sale by owner house is not much different versus using a real estate agent. The main difference is no middleman representation, which allows you to communicate and deal directly with the vendor. We begin by summarizing this process in 5 simple steps.
Step 1: Obtain a mortgage pre-approval
Step 2: Tour the home in detail
Step 3: Determine fair market value
Step 4: Negotiate your offer
Step 5: Complete the home inspection
The most important goal for any buyer is to find the perfect home for the best price. A home is not made any better or worse if it is sold by a real estate agent. And no matter how a home is sold, fair market value is what you should pay.
But here is some great news, when buying a house without a realtor there is more money left on the table, which in the end represents a favourable equation for both parties. In many cases the seller has more room to accept an offer at a better price. So, if the home fits your wish list, buying a for sale by owner house may be the very best deal on the market. Here are a few more reasons why buying without an agent makes sense:
The owner knows their home best. They will be able to answer all the questions you have on the spot and most importantly provide you with a history of all the things they enjoyed, renovated, and added to the property.
Since there is no agent involved, scheduling showings and secondary visits is much simpler. Instead of having to accommodate three schedules you are only accommodating two.
Negotiating directly with the owner is more effective, instead of passing formal offers back and forth, sometimes for days. Initial negotiations need not be binding, until you have verbally agreed on the merits of the sale.
You may buy more than just a great house. Perhaps, a riding mower, garden equipment or other furniture that you really like. Sellers are often selling such items on other sites and would not hesitate to include them for great price. When buying using an agent, negotiating personal items is quite cumbersome and most often impossible.
Now it's time to understand the home buying process, let's look at the steps involved.
If will be financing your home purchase, it is important to obtain a mortgage pre-approval before you begin your search.
Obtaining a mortgage pre-approval from your lender will allow you to understand what your budget may be. Touring homes for sale that are ultimately out of your budget perspective is a waste of time for buyer and the seller.
In any transaction, especially for sale by owner, credibility matters. Do not hesitate to inform the seller that you have been pre-approved for financing and that the home fits your budget. This will get the seller excited and encouraged to deal with you.
Time to take advantage of your best resource, the homeowner. Unlike touring homes with real estate agents, the owner knows their home best and has all the answers for you. Use this to your advantage, do not hesitate to ask all the questions. Here are some examples of good questions to ask.
As you walk through, you may have many more questions that come to mind, do not hesitate to ask.
It is always advisable to have at least two visits before making an offer. On your first visit allow the homeowner to give you a guided tour. Following, you may ask the owner if you can take some time to tour on your own.
Give yourself a day or two to evaluate your first visit, and if the property seems enticing be sure to schedule a second showing.
It is important to take some time to understand what a fair market value for a home may be. Regardless of how a home is being sold, by agent or by owner, there are many homes that are priced outside of fair market value.
A good key indicator to an overpriced home is how long it has been for sale. If a house has been sitting on the market for several months there is likely one reason. It is overpriced.
Here are a few things you can do to determine fair market value:
Search the internet yourself and look for current properties for sale that are comparable to the home you are looking to buy. Look for similar features such as square footage, lot size, layout, condition, upgrades, and the area.
Keep an eye out for homes in the area that may have a for sale sign with a sold posting on it. If the home looks relatively similar, contact the agent or owner from the sign and ask them how much the property sold for.
Contact a certified real estate appraiser. You can find many local appraisers online. Most for sale by owner homes should have an online listing. Ask the appraiser to give you an "opinion" based on the online showcase of the home.
At this point you may be very excited. But it is important to remain "level-headed" during the negotiation process. If you goal is to get the home for the best price, you must be prepared to walk away from the deal.
In most cases, negotiating directly with the owner can be a very pleasant experience. When making your offer, support your value with facts. Do not hesitate to bring to the owner's attention any comparable homes that you have seen or are currently for sale, as you may have found in Step 3.
Regardless of how or where you buy your next home, always ensure that you retain or consult a real estate lawyer to help you through the buying process. In most cases you will require the services of a real estate lawyer to close your purchase, even if you are working with a buyer's agent.
Here are 3 important steps in the negotiation process:
Negotiate: You will need to agree with the vendor on 3 key points, as outlined below, which will be used to complete the final sales contract. All vendors on TradeCasa.com have been provided a Negotiation Worksheet document, designed to assist both parties in collecting and preparing the necessary information, based on which a formal agreement may be drafted by a lawyer. This simple document is non-binding and can be filled out by both parties.
a. Price: This will be the final purchase price of the property.
b. Closing Date: The date you intend on taking possession of the property.
c. Inclusions/Exclusions: What items are included or excluded from the sale.
d. Conditions: If you are obtaining a mortgage ensure your offer is conditional on financing. Most importantly always make it conditional upon a home inspection.
Complete the Contract: The Negotiation Worksheet document can be delivered to any real estate lawyer by either party. Based on the information provided, the lawyer will draft the final sales contract. Both parties will then execute the agreement. Once the document is drafted have your real estate lawyer review the contract before signing.
Once again, there is no difference in buying a house for sale by owner versus using a real estate agent. A certified home inspection should always be performed as a part of the deal. As in Step 4, your contract/offer should be conditional upon inspection.
It will be your responsibility to find a professional home inspector and pay for the inspection. You will be able to find many local inspectors online in your area. Always ensure that the inspector is certified.
The best part about buying a for sale by owner home is that you can be present during the home inspection process. This will allow you to have another look at the home in detail. Allow the inspector to do their job, however, if you see something out of place do not hesitate to ask questions.
A home inspection report does not pass or fail a home. An inspection report will reveal the internal workings of the home. Following the inspection, it will be up to you to decide if further negotiations are necessary. If the report reveals major flaws, you will have the opportunity to renegotiate the price or turn down the sale altogether.
The report may very well reveal that the home has many valuable merits, which will further reinforce your decision to proceed with the purchase. If such is the case, you can consider your deal done. At this point inform the seller and your lawyer that you are waiving the inspection condition. All you have to do now is prepare for your move!
Buying a house without a real estate agent gives you total control of the purchasing process. Best of all there is always more money left on the table, a pot of savings which is often shared by both seller and buyer.
As with any home buying purchase, it will be up to you to make the big decisions. The difference in buying a for sale by owner property is that you will be dealing directly with the owner yourself. This presents a major opportunity; however, you should always judge a home strictly on its own merits and not how it is being sold.
TradeCasa.com features thousands of for sale by owner homes across the country. Many of our listings are exclusive to TradeCasa and often not found anywhere else. We invite you to explore our for sale by owner homes and find your dream home.