Helpful Tips for Buying From an Owner

The following is not meant to be taken as professional legal advice; it is meant only to give the buyer an idea of how the process of buying from the seller typically works. SoCoByOwner does not offer legal advice. We are not real estate agents/ brokers or real estate attorneys. Our intention is only to de-mystify the for-sale-by-owner real estate transaction.

Buyers Can Get More for their Money Buying from an Owner

Remember that the seller is able to offer more value for the money when there are no real estate agent/broker fees involved. Buying directly from an owner can eliminate the time-consuming and frustrating back and forth of phone calls and negotiations between agents. Buyers can ask the owner questions directly, address concerns, and often more easily reach an agreement that satisfies everyone involved. When a real estate agent brings the buyer to the seller, although there will be a fee for the buyer’s agent, the seller will still be saving the listing fee, and so is often willing to negotiate with the buyer’s agent.

Get Pre-qualified

Consider getting pre-qualified if financing is needed (See Lenders). This puts the buyer in a much stronger position and greatly simplifies and speeds things along. Getting pre-qualified also shows the seller that the buyer is serious. Websites such as E-LOAN have made mortgage-shopping easy. Others include LendingTree, QuickenLoans, and Countrywide.

Make an Offer

Making an offer directly to the owner is not a difficult process. To determine what a property is worth, check other homes for sale and recent sales in the area, newspapers, or check out the county assessors website. There are now websites to help you value property as well. Type the words home values into Google or another search engine.

Sellers listed with SoCoByOwner are able to access the proper forms from our site and can fill them out for the buyer, and/or furnish them to the buyer to complete.. Included will be the amount of the sales price, any contingencies such as a home inspection, or the selling of another property, obtaining financing, or any other items upon which the buyer wishes to make the sale contingent. At this time the seller also needs to provide the buyer with the Seller’s Property Disclosure Form.

The Seller May Return with a Counterproposal

If the buyer writes the offer, the seller may accept the offer or return with a counterproposal. Sometimes the counterproposals are countered as well. At this point the negotiation between parties can be a straightforward and friendly process if everyone involved remains flexible and open-minded.

The Signed Contract and Earnest Money

Once an agreement has been reached, and the contract has actually been signed, it is the usual practice for the buyer to offer the seller “earnest money”, which may be at least 1% of the purchase price. Earnest money can be paid to the seller, the real estate agent if one is involved, or perhaps preferable to most buyers, to a title company.

Four signed copies of the contract are usually made, more if a real estate agent is involved. The buyer and seller will each get two copies of the contract. The buyer will keep one and may take one to the lender. The seller will keep one copy and take the other to the title insurance company.

Arrange for a Home Inspection

Once the contract has been signed, the buyer should immediately hire a home inspector to inspect the property as soon as possible. Usually there will be no more than 10-14 days to accomplish the inspection. Consult the yellow pages for home inspectors.

Time Lines are Critical

During the usual 30 to 45 days from contract to closing, everything must be accomplished with deadlines in mind. Avoid confusion and delays by providing the lender with all information requested as quickly as possible. This is the time for the buyer to remain unflustered! It cannot be over-emphasized: Do not procrastinate in getting information to the lender. It is not uncommon for information to be requested up until the last few days before closing!

Closing

Closings are typically conducted by title insurance companies. It is absolutely your right to have an attorney present at closing, if you wish, although many, if not most, for-sale-by-owner transactions in Colorado are performed with only a title company.

Congratulations on the Purchase of Your New Home!