Buying a house from a "For Sale by Owner" seller?

[Smith]

I am ready to make an offer on a house, but it is for sale by owner and I don't know quite what to do.  When you have a realtor they handle all of the paperwork.  What is required when you are buying from an owner?  Can anyone shed some light on this?  Do we need a "closing coordinator" or anyone else who wants to get a piece of the pie?  Thanks in advance!

[TarpleyG]

I don't know a lot about this but I would at the very least hire a real estate atty. and get a thorough home inspection (which is usually required by the lender and insurance underwriter anyway).

Greg

[Monkeyleg]

We sold our last house ourselves, and bought our current house from the owner. It cost about $300 to $400 each for an attorney. Very straightforward, and you save a lot in realtor fees. Thus, the sellers have more room to bargain.

[roo_ster]

If you really feel like a babe in the woods, hire your own realtor & sign some sort of REASONABLE contract.  Put the realtor in touch with the homeowner & let them chew the fat.  Many FSBOs are happy to have a realtor show/make a bid on their house.  Generally, a pct of the selling price goes in comission to the realtor.

If you want to do some lightweight homework, do your own research on what it takes, which is not rocket science.

[The Rabbi]

Obviously if you are really uncomfortable then hire a professional to represent you.  That said, no this isnt rocket science.  Go to any of the office supply stores and look for a pre-printed contract for sale of real estate. Fill in the blanks.  Things you will want to be specific about are obviously the price, any mortgage contingency, home inspection contingency, anything that might be a problem (e.g. removable buildings), termite inspection, and closing costs.  Get a real estate title company in line.  Call around because their fees vary wildly.  
You can email me off list if you want more help.

[Otherguy Overby]

It may not be that simple, anymore.  Some states have enacted law that requires disclosures in writing regarding the condition of the house and property.  Some states go even further and require additional disclosures regarding nearby landfills and other stuff.  California comes to mind as a state requiring a bunch of additional requirements.  Some cities even require their building inspectors sign off prior to close.

If the house is in town, pay a visit to the lcoal building department and get copies of all permits applicable to the property.  Ask them to show you whether or not they've had final sign-offs.  You do want to avoid a property with an unpermitted room addition, or something else major.  Lastly a big hang up can be sewer hook up.  If the place was once on septic, do have a plumber come out and do a die test.  EVEN IF the city building department says it's hooked up...

Do have a competent home inspection, and not one from your cousin Ralph.  Generally a buyer's expense.  If it's in an area where termites are a problem, make it contingient upon termite inspection and the seller doing any needed repairs.

Have a Home Protection policy (generally seller's expense) covering things like heating and AC, plumbing and other stuff.

Make the transaction contingient on getting a loan to close.  Use a standard amount down like 10% or 20%.  If you put more down, include this phrase:  "contingient on property appraising for purchase price"  IOW, the lender's appraisal opinion of value protects you from paying too much.

Lenders also require things like title insurance, recorded deeds and several other things that also protect the buyer.

If you are going to use seller financing, there's a bunch of additonal situations to beware of.

Finally, it's free to ride around with a Realtor and look at other properties. It will give you a better idea of value regarding your intended purchase.  If you find you like him and still want to buy the FSBO (for sale by owner) ask what he'd charge to chaparone your transaction.

If the house is in the country on some acreage, do seek professional help.  

[Waitone]

Attorney's are good.  A real estate broker working FOR YOU for a flat fee is good also.  Depending upon what your attorney does, you may need a broker.  Start by talking to an attorney.

[Dave Markowitz]

Buying and selling a home isn't rocket, science, but real estate law can sometimes be a bit arcane.  I'd hire a real estate attorney who practices in the locale where you're buying the home and have him review any contract presented to you by the seller.  Alternately, hire a realtor.

FWIW, I'm an attorney but don't do real estate.  If I was in your shoes I'd hire a real estate lawyer.  $500 spent now can potentially save you much more down the line.

[CatsDieNow]

I bought my first house a couple years ago "by owner".  No agents were involved on either side.  (Which means I could afford 6% more house).  As Dave said, it's not complicated.  

Also, if you are financing the home, the lending institution isn't going to let you make a legal/paperwork mistake with their money.  

I feel the need to brag about my 4-3/4% fixed interest rate now.