Across the Picket Fence - Issues of Concern to BuyersReturn to article list
Across the Picket Fence
Topics: Pricing | Contracts | Disclosure | Offers | Financing | Buyers | Agents | Buyer Issues
Issues of concern to buyers
Buyer: Buying a home is new to me. How can I be sure the (for sale by owner) seller knows what he's doing? How can I be sure I'm not being "taken to the cleaners" or being sold a lemon?
First, buying a home is not complicated. Once you and the seller agree on a price and any other conditions of the sale, the lawyers and lenders more or less take over. There are several things you can do to protect yourself, however. (1) Make your offer contingent upon a satisfactory housing inspection (which you pay for). Be sure to include the maximum amount you will be willing to pay for needed repairs in the contract. (2) Make your offer contingent upon the property appraising for the sales amount, or more. (3) Consult your attorney about any concerns you have with your offer before signing the contract.
Price Issues, Buyer
Q: Buyer: How am I supposed to know how much a property is worth? I'm afraid I might unknowingly pay too much for a property.
One way to gain a sense of a property's worth is to look at similar properties for sale in the same neighborhood, or town. While it is often difficult to find an apples-to-apples comparison, this will nontheless give you a feel for the appropriate price range. Also, the town clerk's office has records of all sales if you want to look up a particular property sale.
An easy way to save yourself a lot of worry is to simply make your offer contingent upon the appraisal value equaling or exceeding the amount of your offer. This will provide you with an opportunity to re-negotiate your offer if the appraisal comes in lower.
The most important thing to remember, however, is that there is no such thing as a price tag or "right price" for real estate. Even a professional appraisal is just an estimate of what today's buyers -- the "market" -- would be willing to pay for. And that includes you!
Contracts, Buyer Issues
Q: Buyer: I've found the house I want. Now how do I decide how much to offer?
First, ask the sellers if they have had a recent appraisal done on the property. They may be willing to share the appraisal figure with you. If not, find out when they purchased the property and look up records in the town clerk's office. Check to see how much similar styled homes in the neighborhood or immediate area have recently sold for to get an idea of the going rate. Be sure to ask the seller about any improvements made to the property since they purchased it, or since the appraisal was done, since this will give you an ider of how much they have increase the value. (keep in mind that certain cosmetic improvements, such as wallpapering, may increase the home's desirability to you, but not necessarily improve the value of the property. The same is true of inground pools or excessive bathrooms.) Finally, compare this home with others that you've looked at and compare asking prices. Does it seem overpriced, about right, or under priced? Remember, the value of the home you are purchasing is based pimarily on market demand.
Q: How can I be sure the Private Sale homeowner knows what he's doing? How can I be sure I'm not being "taken to the cleaners?"
First, buying a home is not complicated. Once you and the seller agree on a price and any other conditions of the sale, the lawyer and banks really take over. There are two things you can do to protect yourself: 1) make your offer contingent upon a satisfactory housing inspection (which you pay for) and 2) Have your lawyer look over the Purchase/Sales agreement contract before you sign. he or she will advise you on any concerns you have, and will advise you on any additional contingencies you should add.
Buyer: Isn't it risky buying direct from a homeowner without an agent? What if the Private Sale homeowner isn't disclosing the full truth about the property?
Since most real estate agents are representing the seller in a transaction, they are not looking out for your interests anyway. They are trying to get the best price for the seller (the exception is the buyer's broker, who represents the buyer). However, both agents and homeowners are legally required to be truthful when disclosing facts about the house.
When you purchase a home with the assistance of an agent, he/she will ask the homeowner to fill out a disclosure form about the property. Whether you are purchasing direct or with an agent, you still must rely on the homeowner to give you the details about the property. When buying direct from the owner, it is a good idea to request a property disclosure form. Also, you can make your offer contingent upon a satisfactory housing inspection (which you arrange and pay for). The attorney that draws up the Purchase/Sale contract can advise you on this or other matters, and will specify any special conditions of the sale that you and the seller decide upon.
Buyer: I'm using a buyer's broker to help me find a home. How do for-sale-by-owners feel about this arrangement? I've noticed that many specify "no realtors" in their classified ads. Does this apply to buyer's brokers too?
Very few - if any - sellers will turn down an interested buyer! Not everyone is aware of the role of the buyer broker however, and may think that they will have to pay a 6% commission if you buy the home. It is a good idea to contact the homeowner directly yourself first, and explain your arrangement. You will find most, if not all, may gladly welcome a tour by both of you.
Seller: How does it work with a buyer's broker, anyway?
A buyer broker represents the buyer, and acts on the buyer's behalf in negotiating the price and conditions of the sale. Technically the buyer is responsible for paying the commission to the agent (usually around 3%), although it is usually requested that this be paid by the seller in the buyer's offer.
Picket Fence Preview helps homeowners sell real estate on their own without being alone with comprehensive marketing, information, documents and support material. For sale by owner homes, condos, townhouses, land, commercial, investment and rental property.