OT: house buying

Mike M

Well-known Member
I see many places that are up for sale are by owner and not listed with a realtor. It didn't used to be that way. Any reason to be Leary of by owner home sales ? Any special reason you need a realtor involved ?
I'm pretty sure a bank is going to require the buyer to get an appraisal done and home inspection at the buyers expense. Does that sound correct ?
What are your thoughts on this. I know there is a lot of real life experience on here !
 

The realtor gets a percentage of the selling price, which comes out of what the owner gets. By not using a realtor, the owner gets all the money. No matter how you do it, there are still many, many fees that have to be paid. The realtor takes care of all that stuff and makes sure everything is legal and proper, and you, the buyer, will not be left holding the bag. In short, go with the houses that are listed with a realtor.
 
When I sold some farm land several years ago, I simply had our attorney draw up the paper work.

However, buying a house is not that simple. I'd contact your lending institution and your attorney in that order. The lending institution will know to have all the proper inspections and appraisals done, and your attorney can see that everything is in order. But an agency can simplify things. You see a lot of "By Owner" (BO) homes on the market for a couple of months, and then see the same home listed by an agency.

My wife and I are looking to buy a house in town and renting it out until such time as we may want to move in out of the country, either by choice or necessity. We recently looked at a house for sale by the owner and it was clear he was in over his head. The house looked like a money pit to start with, plus it was way overpriced. We passed on it. An agency would have handled it far more professionally and would have researched comparable sales to bring the price in line.
 
All you need to do is to go to your Lawyer, and have them make you a offer to purchase. You need to use due diligence in regards to value, title search, close dates , and demand that the property be vacant on close. You can add anything you want into a offer to purchase, for example, they must leave the appliances, and curtains. If it is not written down, then it is not a binding agreement. Put in anything you like, doesn't mean the current owner will exept your offer, but without a real estate agent , you have to do your own negotiations. Sometimes even with an agent, you have to remember, your lawyer is the guy who should be alerting you to poor terms in your real estate deal. Ultimately you are the one responsible, and will have to live with the deal, if it is excepted.
 
I purchased a rental from individual, no realitor, no lawyer. I used a title company instead. Would highly recommended a title company even if you use realitor. If title company over looks something they standby and cover their mistake. A lawyer won't.
 
When we bought our place, the owner was selling it himself. Made the deal and then hired a realtor friend for a pretty small fee to handle the transaction. Well worth the cost. Just be aware that even so, the realtor still can only officially represent one party but sure a benefit to both. Lots of things they know that can prevent a problem in the future.
 
Never have never understood why the Relator's percentage has gone up so much. They used to be around 4% and now there are upwards of 7%. With the rise in real estate values the increase in their base should have taken care of their rise in expenses.

Sold a house and gave the realtor a two month listing. A lady made an offer which I refused because the realtor wanted insurance on water heater, furnace. etc.. Mind you, these items were less than a year old.

After the listing had expired the lady asked why we had not accepted the offer. Turned out that the relator was a drunk and never got back to her. We could never contact the realtor other than his secretary. Finally sold the place to the lady with the use of a lawyer and saved $7,000 in the process.

Another time, while selling my mother in laws house the realtor had to be reminded that my office was right next to the State regulation and licensing board and I went to lunch with those folks.

I'll stick to using a lawyer in all my real-estate transactions.
 
The realtor will charge 3% which I think is "normal"
So on a by owner the buyer would have to pay 3% and the seller nothing as I see it. So say on a 100,000 dollar place we pay $3,000 extra. So I suspect maybe you would have to pay that much to a lawyer anyhow ? so nothing really to save there.
 
BTDT. The last rental house I owned was an 80 year old farm house which obviously didn't attract the cream of the crop for renters.

This time we're looking at buying a house that will rent for enough to attract a narrower category of renters. Plus, I intend to turn it over to a property manager rather than mess with it myself. When the right deal comes along, I'll go for it.
 
What do you need a lawyer for?

It is more simple use a title company (bonded abstractor) - that's what the lawyer should do anyway.
 
Many times the seller will insist on a price that has nothing to do with market or value. It has more to do with what they want or need to pay off what they've borrowed against it (home equity loans in addition to the mortgage).

I tried to buy a place recently. The owner has lived there 4 years and has done nothing to improve the value of the home a few things that has hurt the value. He overpaid when he bought the place in 2012 (was on the market 2 years before he bought it) - about $30,000 to $50,000 more than it was worth. He originally listed it in April for a full 1/3 more than he paid for it. When he first listed it he turned down an offer for $35,000 more than he paid for it (realtor advised the bidder it was too much) - bet he wishes he has taken that. When I came along about 4 months later I offered what he paid for it and he countered at 25% more than my offer. I figured there was no point in trying to negotiate with him - especially since I kind of like where I live anyway. Been on the market for 6 months - will probably take them a couple years to get the price down to where it will sell it at this rate.
 
IMO, all a realtor brings to the table is advertising and exposure to a broader potential buyer base. A good one will do market research to help set the price for a seller or buyer, depending on who hired them. They do nothing as far as title search etc and are not on the hook for any errors.

In my area 7% is the standard, but may be negotiable with the broker, not agent, just broker.

I've both bought and sold using an agent and also without.

My recommendation: use a title company. They can provide all the forms needed to make an offer, accept it, prepare all the needed disclosures, tax sharing calculations, etc. as well as the actual closing.

As a buyer I, May, just may, use an agent if the property doesn't have wide local appeal or exposure.
 
I always request title insurance when buying property. Don't want someone who's relative died 60 years ago claiming my property.
 
(quoted from post at 09:18:08 10/19/16)
An agency would have handled it far more professionally and would have researched comparable sales to bring the price in line.

Goose, that isn't always true. Local guy here lost his job when his employer put in new computerized equipment and he refused to learn how to run it. That meant that he had to sell his house of risk a foreclosure. They owed about 60K on a home that was worth about 80K at the time. Owner wanted 140K. So he had it on the market for almost a year as for sale by owner. When hi finally went with a realtor he insisted on the same asking price. He finally got about 75K for it after he was with another realtor almost 2 years later. That delay cost him and his wife most of their savings just keeping up with the payments. So realtors will put your asking price on it even if it's listed as way too high.

Rick
 
Realtors are glorified door openers. Other than unlocking a door and handling a little paperwork they are useless. Whether buyer or seller agent, they are working for themselves.
 
I had a brokers license once and worked for the owner broker. She would split the fee with the listing broker and if I was buying the property, I didn't have to pay her. She quit and so did I because of insurance and there were realtors for the buyer and seller and high priced insurance. The costs and schooling became about 5 times higher and things got more complicated. Back then the normal fee was 5 to 6% and you could get that lowered if it was an easy and quuick sale. Now there are buyer and seller premiums which is a ripoff.

If I were in your shoes, I first would get the property(house) inspected. If you are savvy about trading, I wuld bypass realtor, lawyer, etc. If you can read and understand the contracts, go with it on your own and keep your eyes open. If you are dealing with a seller that has financial and or title problems, then I would get a lawyer. Those get sticky and could bit you.
 
My mother used a lawyer to buy a property. He only when back 10 years. When she why to sell there was a lein on property more than 10 years. Lawyer says too bad. I gave you want I found, TOO bad, you only paid for my opinion.

Title company gives you a guaranty.
 
The realtors call that a FISBO for sale by owner . They will fill your mailbox with cards asking to take over the sale , help you out ,blah, blah . How the transactions work varies so much from state to state that it can't even be discussed here.
 
It is legal and CHEAPER to sell your home yourself. IF you are willing to take the time to market your house. That means some advertising and making the house look Good. Then making it easy to setup a time to look at the house. The advantage to both parties is less money spend on real estate commissions. The total commission is usually around 7%. So selling it yourself you could take $3-4K less and still make more money and give the buyer a better deal. All lawyer can handle a closing and any bank can handle the financing side for the buyer.
 
Never bought or sold property with professional appraisal. MY appraiser not a bank's or realtor. I have had realtor tell me he had buyers with cash for 75% of appraised value becausae did not know I had it appraised and wanted a quick commission. Never used that firm again. Know the value you have to protect yourself
 
You do not need a realtor or a lawyer. When we bought our house the seller did not want a realtor and neither did I. We sat down at the kitchen table and agreed on the price and who was to pay for what. I wrote up the contract, we both signed it, I took it to my bank and got a loan for what we needed in addition to our down payment. Used a title company and had a survey done. Title search was easy, the property is 116 years old and we are only the fourth owners. Had no problems at bank with my hand written contract. A good friend of mine once told me a Realtor is just a nice name for a land pimp.LOL
 
About 25 yrs. ago we sold our first house ourselves with the help or a lawyer friend who was a realty specialist. He worked for one of the largest firms in Columbus that represented one of the largest builders in Ohio. So basically there was nothing in real estate that he hadn't handled at one time or another. He made some slick deals for my MIL that enabled her to put together a good size parcel of land from many small ones.

We hired an appraiser to give us a sale price, our attorney gave me a MS Word copy of a sale document that I was able to edit and print. We had to show the house, of course, and field all the phone calls. Since it was under $100K we had a lot of investors calling that wanted to low ball us. The attorney set everything up with the title company. Really had no issues, other than the young couple that made an acceptable offer had too many debts (cars, credit cards and student loans) and couldn't get a mortgage, so we had to start the process over.

I think with all the advertising, appraisal, attorney and other fees we had expenses of about 1.5 %. Well worth the effort since we needed all money we could out of it to build the new house.

Selling that second house we used a realtor, paid her 6% commission and I don't think it was worth it. Didn't appear she was doing much to help us or get the place sold. She wanted a dual agency agreement signed once she had a buyer on the hook, and we did, and I don't recommend you sign one as a seller. If I'm paying the commission I want then to represent me and me alone. The buyer financing took forever (it was VA) and we almost lost the farm we have now since the mortgage holder wanted to foreclose on it (we didn't know that at the time or would have held out for a better deal). They held off since there was a contract on the place.
 
I buy and sell(and rent) houses. I've bought through agents(brokers) and also from individuals. The purchase through a broker is always, always, always, harder and more hassle. I've never used a broker to sell, so can't comment on that.

Typical commission on a house is 6% but can be as low as 3-4%. Generally, the selling and buying brokers will split the commission so each gets 3% of the sale price. You will hear RE agents tell people 'the seller pays the broker fee, so you don't have to care about that'. Well - Bullspit. The BUYER pays for EVERYTHING. He pays directly for the property, and all the required inspections if there is a loan, and the buyer pays for everything else indirectly through the escrow company, including the commission.

So, that's why more homes are for sale by owner now. The internet has made the Multiple Listing Service obsolete. The MLS used to be the secret bible of homes for sale. Now, everything, and I mean everything can be found on zillow.com, trulia.com, realtor.com, or fsbo.com. If it's not on one of those, try craigslist.org. When I sell a house directly, I market it just under the price of comps in the area. People using a RE agent won't show it, so I have to put up a sign, and answer the phone myself. I've had several people call me who were riding around with RE Agents and then they contacted me after the agent dropped them off. I have sold homes to people who use their own agent, and also to people who use an atty. Frankly, people who use an atty for a simple home purchase with loan are throwing money away. Same with the RE agent. I tell them they are free to hire anyone they want to represent them, but the fee is being paid directly by them, and not through escrow, which has enough garbage fees already.

Most critical if you are buying a home yourself, and not using an agent. Order the title search, and the title insurance documents after negotiating the deal. Then sit down for 2-3 hours and READ EVERY WORD. The title abstract and the what the title insurer are covering can often be very different things. Title insurance in the past 15 years has become a joke. I see some of the language in the title ins document, and it reads like a 12 YO kid wrote it. Example from a recent contract: "Lot 22, Lone Prairie estates may have easement from street to 12 feet west for utilities. The lot should be surveyed for boundaries along the west and south lot lines, as there is a fence which may or may not be encroaching on lot 22."

Wow, you reallly did your homework there! MAY HAVE? Well, does it or doesn't it? Is the fence on, or encroaching on the lot? What are you covering if it doesn't? Look for solid adverbs like 'must' 'will' 'does' 'does not' 'is' 'is not'. It's getting harder and harder to pin down a title co on what they are insuring and what they aren't. Even old liens from > 30 years prior are becoming sketchy. Jeez.

I am in the process of buying a building and lot in NM and it's going fine without a RE agent. If you have no experience in the process, I would hire a RE agent as a fee-simple agent, and not a commission agent. Offer them $500 or whatever, and have them handle the contract, and required documents, while you do the shopping, inspections, and buying which is the fun part.
 

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