Let’s say you were driving down the street and found a great Windsor house For Sale by Owner, would you consider it? For some, buying a home directly from the owner can be an unsettling experience. The myths include that homeowners must sell their property themselves because they need every ounce of money from the sale. However, there are homeowners that prefer to handle the sale themselves and many do a very good job. Surprisingly, even though For Sale by Owner homes generally get less than they would if they hired a real estate agent, you will need to make sure you protect yourself before finalizing the home purchase.
1. Offer less:
Once you make an offer on a home, you can’t go down, you can only offer more. So don’t start too high. Look at neighbourhood comps and determine what the prices are for similar homes in your area. If the owner of the property says his home is worth more than his neighbours because he made lots of home improvements, be careful. Not all extras and updates are created equal. A swimming pool for example doesn’t get much in return. Same goes for home theatres.
2. Add contingencies:
Make sure that you are protected. You don’t want to give up your deposit for making a silly mistake. You will want to make sure the inspection, appraisal, loan approval, clear title, disclosures, pest inspection and insurability are all covered. Of course, make sure you do plenty of research before making an offer. Protect all bases or you could lose some serious money.
3. Speaking of deposit:
Make sure that you give your deposit to a third-party, such as title or escrow company. Do not give to the homeowner.
4. Home inspection:
Make sure you get an inspection. Even if the owner paid for a professional inspection prior to listing his home, you need to get one with a company of your choosing. This should cost anywhere between $300-$600 depending on the property size. If repairs are discovered you will need to address this with the owner by either having them make the repairs (though you will have no say on who they hire), credit the cost of repairs to you at closing so you can handle yourself, or lower the sales price. Do your research and hire a professional inspector with a top-notch reputation. Plan to attend the inspection and take the time to ask questions. While an inspector should never refer you to a contractor or anyone else to make repairs, he can give you an estimate on how much repairs should cost.
5. Final walk-through:
Make sure that you conduct a final walk through prior to signing the final papers. As a buyer, you want to determine that property you requested is there, that any repairs you mutually agreed upon have been completed and the home is in good condition. There have been horror stories of buyers not doing this final step and walking into a home that they barely recognized. Any serious homeowner should never tell you that a final walk through isn’t necessary.
The very best advice I can give you when buying a Windsor house For Sale by Owner is to hire a lawyer to review and help draft any agreements or contracts. It literally is mind-boggling how many buyers leave it in the hands of the homeowners to come up with these forms and they just sign away. Everything should be reviewed by your legal representative.
Finally, stay away from owners that not only are unsure of what they are doing, but that they put high pressure sales tactics on you. Many do need to sell their home quickly, so they often will resort to sales techniques that can make you feel uncomfortable. Only work with those that have done their research and have prepared their home for sale. Look for:
1. Homes that are priced right. (Many can be overpriced).
2. Handle the negotiations in a professional manner. (Don’t take their word that all paperwork is correct. It bears repeating: hire a real estate lawyer).
3. Responds in a timely manner. (If it takes days to hear from them, reconsider. This is not what you want to see in a person that needs to be organized and on top of the escrow process).
4. Have no problems with inspections, final walk-thru requests.
While buying a Windsor house For Sale by Owner may not be for everyone, it is extremely important that you do your homework if you are in fact considering such a home purchase.