My wife and I recently viewed a house that we both really liked. The only kicker that we see is that it's a FOR SALE BY OWNER (FSBO) house. After talking to my real estate agent and learning that the FSBO seller wouldn't work with a realtor, I believe that the rule of thumb is that I'd be going at it alone.

That said, I'm a bit timid when it comes to such a divestiture with an individual. I guess I'm intimidated by the paperwork and closing and all of that stuff as well...

Can someone explain to me the process? I know that it'd be nearly identical to using an agent but, I'm not sure if there are differences (other than the obvious commission that the realtor wouldn't get).

Any guidance and/or thoughts are appreciated. Thanks guys.

-RP-

 

Contact an Attorney that specializes in real estate. Abstract needs to be brought up to date, taxes, etc. An attorney is a must. imo. Good luck.

 

Get on AIM.

 

Have you realtor approach the seller and ask them. If the seller is willing to, they can work with a realtor. I think they have to agree to pay your realtor a fee, which I think is just the sellers portion of the selling price.

 

Correct, it's going to be their commission. If the owner of the home doesn't want to be "paying" the commission, than just work it into the price of the home. Considering we're in a strictly buyers market, the seller isn't too smart.

 

I have done this before. First step is signing a purchase agreement. The seller needs to prepare this. Upon signing this agreement, which usally is pretty much a standard real estate agreement, sign it contingent (sp?) that buyer gets financing approval, pest inspection passes, and home inspection passes. (I strongly reccommend you have your attorney view the contract before you sign anything.) These things your attorney will include or add to it. after that, you need to get a mortgage co involved (or have funds available) then it goes to a title company and they do all of the rest. Other than that, it's quite simple.

 

16 years ago, my business partner and I bought a building directly from the owner. The bank we got the mortgage with hooked us up with the attorney and walked us thru the process. It worked fine and saved the realtor fees.
Recently we sold the building. We worked with an attorney that specializes in real estate. All went well.

 

Again, as I mentioned, the seller is not interested in working with a realtor.

I appreciate the insight in to all of this. Long story short, my wife and I were generally hoping to have someone hold our hand through the entire thing as we are far from seasoned home buyers. LOL! Naturally, we don't want to get burned.

 

Most states require a disclosure statement when using a realtor. This statement requires the seller to disclose any structural issues, past fires, flooding, etc. Usually this is not required of a sale between two parties like your FSBO and you. Don't even consider the house unless you have it inspected by a licensed inspector. You can find one over at www.nachi.org
These guys must pass a test annually or no cerification. Figure around $250.00 for the inspection and consider it cheap insurance. If the seller is not agreeable to you having it inspected, you don't want the house at any price. Make sure the contract is contingent on the items found by the inspector. Personally, I'd stick with the realtor and let him do his job.

 

We are in our second home and still "wet behind the ears." If you have a realtor, maybe you can consult with them and ask their advice. Our last realtor is still working with us while we rent our first home. She's gone out of her way in helping get the management company set up, taking care of getting contractors to repair little things, etc. We'd be lost without her. And we originally started with one of her agents... he moved to Florida after helping us buy our second home. I'd definitely talk to your realtor and ask for advice.

As to the commission, I think the buyer's realtor may get as much as 2%, but the seller's realtor gets the lions share. If you own a home now, and plan to sell rather than rent, your realtor will probably want a listing contract and the commission information will be in that. They may be willing to forgo the commission on the purchase of your new home for just offering advice. Let's face it, realty is not what it was 2 years ago.

Labnerd is spot on with the home inspection. You will want that. Plus a pest inspection and a radon test. That price seems a little lowball for me, but I do live in Metro DC... everything is more expensive here.

 

Can't offer any advise. But just wanted to wish you luck! We find out on our offer for our first home tomrrow. Keeping the fingers crossed because we really liked this one.

 

RP, I sold and bought my last home by owner, while keeping the Realtor out saves 3-6 % of your money, don't let it scare you. Pick up the correct forms, (several copies) incase you make a mistake from a local Realtor.

Fill out the forms with your offer and stipulations, such as playground stays with house, or seller to offer $XXXX towards closing cost etc. Have each party involved sign and date each page.

I can see where you may be leary, but most banks loaning money will require a home inspection, this is for your's and there protection, along with a pest inspection. This is how the Realtor make his money, he would be the one setting the appointments up between the buyer and seller. in a FSBO case you and the seller would have to make the calls to set up the inspections.

When it comes to the closing,the banks will have their attorneys and people present they just won't be looking out for your best interest, so thats where you need to be aware, they will still do the backgound checks, mortgages and so on. You will then need to contact your insurance co. and update your new purchase.

So you see it can save you a lot of money by doing it yourself, just more leg work for you.
Let me know if you have any more Q's As have done this twice before.
John

 

I have purchased 2 homes without real estate agents and also sold one house without a real estate agent. Finding a real estate lawyer will be your best bet. These guys seem to be right on target as to what needs to be done from both the seller and buyer. I don't remember any of the 3 processes being very difficult, just some extra legwork on your end.

Also, keep in mind that when the real estate agents are cut out of the picture, the seller is usually willing to be more flexable on the purchase price, because they are not paying a comission. This works out better for both of you...

I wish you luck. If you run into any hurdles, just post them on this thread. Someone should be able to give you some advice.

I wouldn't be asking any divorce questions on this forum though, that seems to open up the floodgate... Good luck and conratulations.

 

RP,

Don't be intimidated with not using an agent.
A good real estate lawyer can do everything for you that an agent can.
You might have to pay your lawyer more money, but you will still end up saving money in the process.

Like someone else said, make sure you get a qualified home inspector.
Chose one carefully as there are a lot of crappy ones out there.

I don't have much respect for real estate agents anymore, they can pretty much screw you six ways to Sunday, and there will be a small clause (BURIED) somewhere in the paperwork letting them off the hook.

People think real estate agents are going g to be there for you to right any wrongs that may happen, and they will, as long as it doesn't cost them any money, but once something happens that costs THEM money, forget it, it's all going to be on you anyway.

I'm not saying "Don't Ever Use One", but if you can close a deal without one, go ahead and do it. They are not as indispensable as they try to make you think they are.

 

This my vary by state, but reality here in WA is that agents can't practice contract law and if you look at the "standardized" contracts they push there is a lot of language protecting themselves. This doesn't stop them from practicing contract law though as the real estate lobby has gotten them some sort of pass. Check out the contracts that they do try to lock you into and you will see there is language in them that holds them harmless in the event of fraud or misrepresentation on their part and they still get commissions and earnest money. They have no liability which means that they are not truly representing you. This isn't to mention that the percentages they get are highway robbery for the amount of work they do. For example, standard rates get them and the agency $24k on a $400k house sale. Let's just say that they put in a 50 hrs on selling/purchasing the house (and let's be real, it doesn't take much to list it on a website, have some guy put the sign in the ground, show up every now and then to walk somebody through it and then fill in the blanks on the paperwork) that would be $480/hr or $240/hr each agent.

That being said, they have a bit of a lock on the process and it is tough to get anything bought/sold without them since they refuse to work with owners directly or owner's lawyers. If you have chance to not use one, do it but get a lawyer. You will get true contract representation if you go with a lawyer and they are on the hook for proper representation. They can't get away with asking you sign away their liability due to the bar standards, etc. It will cost you out of pocket money (rather than out of the sale/purchase) but it is usually waaaaay cheaper than 3-6% of a sale.

P.S. I'm not a lawyer nor am I related to any.