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Answering
Your Questions about Buying and Selling Real Estate is a document from the
Wisconsin State Bar Association.
The guide below was submitted to us for inclusion
in the website in the hope that it would help de-mystify the process of buying directly
from an owner. We think that it does this and we hope that you find it useful.
This is intended as a general guide, not as legal advice.
For Sale By Owner Info
It's Easy to Buy from an Owner
by Lucy Harr
Perhaps you're
wondering how to work directly with an owner in purchasing a home. Here's how the
process works.
To make an offer, ask the owner for the
"Residential Offer to Purchase" form. This is a legal form you use to
offer a purchase price and also describe the contingencies of the sale.
Contingencies include such items as obtaining financing, having the home inspected,
selling another house and so forth. This is a standard legal form used in almost
every home sale, but you need to read it carefully and fill it out completely.
You'll also receive a "Real Estate Condition Report" which provides details on
various defects. (This report must be provided to you in any real estate
transaction.)
Return the offer and an earnest money
check. Earnest money represents your good faith in going through with the
deal. The amount of the check varies, but is typically no less than $1,000, and
often is about 1% or more of the purchase price. If you buy the house, you'll
usually have the amount credited to the purchase. If the contingencies identified in
your offer to purchase are not met, you will get your money back. But you will not
get the money back simply because you've had a change of heart. Ask whom to make the
check payable to; often it's a trust fund.
If necessary, a counter-offer will be
made. Sometimes, counter offers are countered as well. Both the offer and
counter-offers spell out the various conditions of the sale, and must be adhered to.
The contingencies have deadline dates. Neither party can ignore the deadlines.
If there's a problem in meeting one, however, both parties can agree to an
extension. The contingencies are removed by filling out a legal form describing the
action that's been taken. For example, once you obtain financing, that contingency
is satisfied.
Shop around for a mortgage. If you
need assistance in comparison shopping, check out the following websites: Quicken Mortgage E-Loan homepath.com
You also will need to provide proof of homeowner's insurance; your insurance agent will
have the proper forms. (Comparison shop for insurance, too!)
If your offer is subject to an inspection,
you usually are responsible for making the arrangements and paying for the service,
although sometimes it's negotiable. A list of home
inspectors can be found in the yellow pages; ask for references.
The owner will make the arrangements for
closing the deal, including title insurance, meter readings, etc.
Often, the owner works with an
attorney. You also may want to consult with an attorney
or legal services agency. This need not be expensive, especially if you get
organized before you seek advice. Write down your list of questions ahead of time
and have copies of any pertinent documents with you. Your attorney and/or the
owner's attorney also may attend the closing.
Remember, no one knows more about the
house than the owner. Buying from the owner gives you the chance to ask questions
directly.
Copyright c 1998 Providing Solutions
Lucy Harr is the
proprietor of Providing Solutions, a communications consulting firm specializing in
personal finance topics.
She sold her Madison home through fsbo Madison in 1998.
All pages on this web site are copyright © 1998 - 2008 by fsbo Madison. All Rights Reserved. Please read our Terms of Use. Site map.
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