Looking at purchasing our first home from a For Sale By Owner...need some questions answered and advice please

[leeland]

Hey all
well me and my fiancee finally found a house we both liked after looking forever, Originally we were looking through a realtor, so they would have to deal with all the bull of paperwork and negotiating...because we have no idea all the things that go into that.

So here is the dilema, we found this house and it is being sold by just the owner. so i have no idea where i should begin. This house hasn't been assessed since it was built, and the guy has done a bunch of lawn work and finished about 70% of the lower level.


here is the link to the home
Home we like

anyways i found this assessment from the city assessor's office in my town which the taxes are based on
tax assessor information

from what i can see on the assessors office...

they paid roughly 124,900

given increases in value of roughly 5% every year...12,500

he has figures on the things he improved

Additional Time and Costs of New Construction:

Air Conditioning - $1,500-$2,000

Landscaping (final grading, black dirt, seeding, fertilizing, edging, rock, bushes, trees, additional watering, increasing
size of patio to make it useful) - $3,000

Finishing Basement (materials only) - $7,000 (+$8-13,000 with Labor).

Total Additional Costs $11,500 - $12,000 (without additional basement labor) Time to finish all this 2 Years!


so here is a round about figure i have come up with that i think the house is worth

124,900 + 12,500 + 11,500 = 149,000

the appiances suck and they are not in the deal so do you think it would be outrageous to bid 145,000

what are some of the contigancies we should be doing ?

we figured contigant on house inspection, financing, home apprasial...


sorry this is so long but i am kinda overwhelmed


thanks in advance

leeland

 

[KenGr]

I don't mean to be flip, but you're going about it pretty much completely wrong. You seem to be trying to assess what would be fair to the seller. As the buyer, your only concern is how much it's worth to you.

He may have overpaid originally or he may have stolen it. He may have done a great job or a shoddy job on the improvements. To you the important issue is how much would a comparable house go for on the market and is this really the house you want. This is the great value of a good real estate agent. They give you comparative values and explain the fine points of the market.

However, keep in mind that almost all agents really favor the seller. They need to sell houses. I always retain an experienced real estate attorney prior to making any offers. They will provide all the necessary conditions and make sure they take care of your interests. They work on a fee for effort basis instead of a percentage so the cost is not too high.

 

[PlatinumGold]

Did you sign a contract with the realtor? Are you sure you don't have to pay the realtor?

 

[Thegonagle]

Originally posted by: KenGr I always retain an experienced real estate attorney prior to making any offers. They will provide all the necessary conditions and make sure they take care of your interests. They work on a fee for effort basis instead of a percentage so the cost is not too high.

What he said.

 

[leeland]

Originally posted by: KenGr
I don't mean to be flip, but you're going about it pretty much completely wrong. You seem to be trying to assess what would be fair to the seller. As the buyer, your only concern is how much it's worth to you.

He may have overpaid originally or he may have stolen it. He may have done a great job or a shoddy job on the improvements. To you the important issue is how much would a comparable house go for on the market and is this really the house you want. This is the great value of a good real estate agent. They give you comparative values and explain the fine points of the market.

However, keep in mind that almost all agents really favor the seller. They need to sell houses. I always retain an experienced real estate attorney prior to making any offers. They will provide all the necessary conditions and make sure they take care of your interests. They work on a fee for effort basis instead of a percentage so the cost is not too high.

as far as what he paid, i believe that is the appraised value of the home when he bought the home brand new. the figures i posted were guesses, i am trying to figure out what a good idea is for an offer...As for the improvements he has done, i am definately going to get a home inspector to cover those bases. I am loosing my patience with realtors, the one's we have contacted are a waist of skin...we have been the ones finding the homes we liked, not them...so we wanted to give this a try as an attempt to save some money.

hypothetically how would you recommend going bout purchasing this home ? do you think there is any other special way of coming up with a fiqure ?

if it means anything, the improvments looked very professional

 

[rh71]

You're in the same situation we were back in Dec. 2002. We had been looking with a realtor but saw what crap they had to offer (MLS means you better be quick or it's off the market). So we found a place For Sale By Owner.

The process is simple.

- Make an offer based on what you think it's worth (compared with homes of the same style/area/condition).
- Engage a trustworthy and DEPENDABLE lawyer.
- Bring in an independent inspector for a full report on the house.
- Based on this report, you may want to negotiate price drops here and there.
- No amount negotiated is "final" until it goes UNDER CONTRACT - get there ASAP if you really want the house
- Appraisal for financing/mortgage.
- Negotiate Closing date.

I cannot stress how important our lawyer was in this process. Get someone who is knowledgeable, experienced, and easily available/reachable. Since we had no realtor, we had to make sure everything was accounted for and done by the book. Our lawyer went after all the paperwork checks... and we didn't have to do a thing but sign at the closing. He was worth every penny of the $1k. Paying a realtor 6% (and it is every bit of the buyer's money) is laughable... they are not as important as they used to be since the invention of the Internet.

 

[leeland]

Originally posted by: PlatinumGold
Did you sign a contract with the realtor? Are you sure you don't have to pay the realtor?

i am not sure what you are asking, this home is not listed by a realtor, it is only listed by the owner...as for the worthless realtor we were working with the contract we had was a non binding agreement...

 

[leeland]

Originally posted by: rh71
You're in the same situation we were back in Dec. 2002. We had been looking with a realtor but saw what crap they had to offer (MLS means you better be quick or it's off the market). So we found a place For Sale By Owner.

The process is simple.

- Make an offer based on what you think it's worth (compared with homes of the same style/area/condition).
- Engage a trustworthy and DEPENDABLE lawyer.
- Bring in an independent inspector for a full report on the house.
- Based on this report, you may want to negotiate price drops here and there.
- Appraisal for financing/mortgage.
- Negotiate Closing date.

I cannot stress how important our lawyer was in this process. Get someone who is knowledgeable, experienced, and easily available/reachable. Since we had no realtor, we had to make sure everything was accounted for and done by the book. Our lawyer went after all the paperwork checks... and we didn't have to do a thing but sign at the closing. He was worth every penny of the $1k.

ok now here is a tricky part of this deal, the guys father is a laywer and had said he has been helping them through the process...so i don't know what to think about that ??? should I still go and get my own lawyer or have his father handle things ???

i am open to suggestions

 

[rh71]

Originally posted by: leeland
ok now here is a tricky part of this deal, the guys father is a laywer and had said he has been helping them through the process...so i don't know what to think about that ??? should I still go and get my own lawyer or have his father handle things ???

i am open to suggestions

Who's father? The seller's? You need your own lawyer. The two lawyers talk things out (once the contract write-up phase begins)... they handle the dirty work and the bickering...

Our seller's lawyer happened to be his sister. They end up saving a buck or two since they don't have to pay for one, but they are not always the most experienced or knowledgeable. You should have an advantage if you spring for a good one.

 

[Cyberian]

Originally posted by: leeland

ok now here is a tricky part of this deal, the guys father is a laywer and had said he has been helping them through the process...so i don't know what to think about that ??? should I still go and get my own lawyer or have his father handle things ???
i am open to suggestions

I really don't think that anyone should allow any lawyer to represent both sides of any case, litigation, etc.

 

[PlatinumGold]

Originally posted by: rh71

Originally posted by: leeland
ok now here is a tricky part of this deal, the guys father is a laywer and had said he has been helping them through the process...so i don't know what to think about that ??? should I still go and get my own lawyer or have his father handle things ???

i am open to suggestions

Who's father? The seller's? You need your own lawyer. The two lawyers talk things out (once the contract write-up phase begins)... they handle the dirty work and the bickering...

my post regarding realtor is just simply a legal question. i don't actually know what the contract between a buyer and realtor means.

also, negotiation between you and the buyer will primarily be price, once a price is determined the lawyers (yours and theirs) will negotiate many many details.

 

[leeland]

Originally posted by: PlatinumGold

Originally posted by: rh71

Originally posted by: leeland
ok now here is a tricky part of this deal, the guys father is a laywer and had said he has been helping them through the process...so i don't know what to think about that ??? should I still go and get my own lawyer or have his father handle things ???

i am open to suggestions

Who's father? The seller's? You need your own lawyer. The two lawyers talk things out (once the contract write-up phase begins)... they handle the dirty work and the bickering...

my post regarding realtor is just simply a legal question. i don't actually know what the contract between a buyer and realtor means.

also, negotiation between you and the buyer will primarily be price, once a price is determined the lawyers (yours and theirs) will negotiate many many details.

ya it is his father who is the lawyer, i was planning on consulting or getting a lawyer to help work through things if we actually deciede to purchase this home

 

[QueHuong]

Bump...I'd like to know about the processes people go through in buying a house.

 

[leeland]

Originally posted by: MindStorm
Bump...I'd like to know about the processes people go through in buying a house.

it is frigging stress city, on top of trying to buy this house or a home in general we are getting married in less than one month...i am starting to hear voices and stuff lol

 

[HappyPuppy]

Hire a real estate attorney to represent you. If you don't, you are buying a pig in a poke and will be left holding the bag. Never trust ANYONE when making a land/home purchase. What looks good to you may not be up to code, cheap or defective. You do not have the knowledge or education to do this on your own.

 

[leeland]

Originally posted by: HappyPuppy
Hire a real estate attorney to represent you. If you don't, you are buying a pig in a poke and will be left holding the bag. Never trust ANYONE when making a land/home purchase. What looks good to you may not be up to code, cheap or defective. You do not have the knowledge or education to do this on your own.

I totally agree with you, based on what people are replying here and advice i have been getting from co-workers tongiht have also told me to get an attorney

thanks for the info

 

[rahvin]

Originally posted by: leeland

Originally posted by: HappyPuppy
Hire a real estate attorney to represent you. If you don't, you are buying a pig in a poke and will be left holding the bag. Never trust ANYONE when making a land/home purchase. What looks good to you may not be up to code, cheap or defective. You do not have the knowledge or education to do this on your own.

I totally agree with you, based on what people are replying here and advice i have been getting from co-workers tongiht have also told me to get an attorney

thanks for the info

Anybody with 2cents for a brain can decide on the value of a home. Any contract should include the provision to back out due to anything discovered by a home inspection. It's pretty simple, look at a lot of homes so you get a good idea of the value of homes. Decide on the value of the home you want (don't do some hokey half assed value assesment based on the previous buyers purchase price). Offer what you are willing to pay, based on what the home is actually worth, and sign a contract with clauses like the ones pressent in this contract:

Utah's Required Real Estate Contract.

 

[Yossarian]

I am worried leeland that from your posts here you have no idea what you're doing!!

 

[leeland]

Originally posted by: PipBoy
I am worried leeland that from your posts here you have no idea what you're doing!!

i don't really have a firm grasp on the total picture yet, i am not clueless though...i am asking opinions from people who have experience so i know which direction to go. This is the first time we are buying a home and there are alot of questions to ask.

I really don't think the line of questions i am asking are way off base, but then again i have been totally wrong before...but thanks for your point of view

 

[IamElectro]

For this being a first time purchase and involving that kind of money you will want somebody who can explain what every aspect and peice of paper means. A home is a large investment and things could be slipped buy you and you would not know it. An attorney is there to protect you and your investment. The seller has a attorney helping him as should you. Dont sign anything or make any offers verbally or written as some state a oral contracts can be binding. Get and attorney and let them be the middle man.

 

[rh71]

I also suggest you check out a few links from a simple google search.

EDIT>> One other thing nobody's mentioned thus far... getting a pre-approval. While this isn't a requirement, it shows the seller that you are financially ready to purchase a home of X amount. This way, they will take your bid more seriously as opposed to someone else who places a bid without being pre-approved. This is good in the seller's mind because they know you are not simply wasting their time and that you are ready to buy. It depends on the competitiveness of the market there and then. We went through the process without a pre-approval, but it doesn't hurt to do it. I believe there was a very nominal fee.

BTW, don't tell the sellers the amt you're pre-approved for, but rather just tell them that you already are. It isn't any of their business how much - and they could play the price game with you if they know.

 

[leeland]

Originally posted by: rh71
I also suggest you check out a few links from a simple google search.

EDIT>> One other thing nobody's mentioned thus far... getting a pre-approval. While this isn't a requirement, it shows the seller that you are financially ready to purchase a home of X amount. This way, they will take your bid more seriously as opposed to someone else who places a bid without being pre-approved. This is good in the seller's mind because they know you are not simply wasting their time and that you are ready to buy. It depends on the competitiveness of the market there and then. We went through the process without a pre-approval, but it doesn't hurt to do it. I believe there was a very nominal fee.

BTW, don't tell the sellers the amt you're pre-approved for, but rather just tell them that you already are. It isn't any of their business how much - and they could play the price game with you if they know.

thanks for the info, we have been approved already, now we are just shopping around for the best interest rate

 

[Vic]

Originally posted by: leeland
thanks for the info, we have been approved already, now we are just shopping around for the best interest rate

sigh... no offense, but people like you never cease to amaze me. Interest rates are currently rising faster than any normal differences between lenders. Meaning that if you keep shopping and don't lock in a rate, you're going to end up with a much higher rate regardless.
As for the house, FSBO's are quite often rip-offs. Follow KenGr's advice. It doesn't matter jack what the seller has put into the house, all that matters is what comparable homes in the area sell for.
IMO, this house could not have appreciated as rapidly as it did. Hire a good buyers realtor or real estate attorney. If the seller doesn't want to deal with a broker or attorney, buy another house. You should not do this on your own though, because you are (excuse me) obviously in over your head.

 

[MrYogi]

nice house and cheap too

 

[cliftonite]

Thats probably a 300 to 400 thousand dollar home in NJ