Many of our clients prefer purchasing their dream homes without a realtor. Purchasing a home without a realtor is advantageous, especially when there are many buyers also interested in your dream home. The realtor for the Seller is more inclined to accept your purchase offer because the realtor will avoid splitting a commission with another Buyer’s realtor.
It is extremely important that you carefully negotiate with the Seller. There are many key terms and conditions that are important to include when you are ready to draft a Real Estate Purchase Agreement and make an offer on your dream home. All home purchases need a fully signed, written Real Estate Purchase Agreement that clearly describes all of the terms and conditions agreed to by the Buyer and Seller.
First Things First
Your first task is to carefully research all comparable sales of similar homes in the area of your dream home to determine a reasonable purchase price. You always want to lower your initial offer from what you have determined to be the average price of homes in the area of your dream home to give yourself plenty of room to negotiate with the Seller.
We always advise our clients to ensure that the Seller warrant the condition of the home and pay for a home warranty plan to cover any repairs that may be necessary to the home. Always be careful whenever a Seller tells you that he or she is making no warranties regarding the home (requiring that you purchase the home “as is.”) Purchasing the home “as is” means that the Seller makes no warranties regarding the home and is under no obligation in the event that adverse conditions exist on the property. Buying your home “as is” means BUYER BEWARE.
Negotiation Tips for FSBO Buyers
We wanted to provide you with some of the key terms and contingencies that are important to negotiate and reach an agreement with the Seller. Here are some key terms and contingencies that need to be discussed and agreed to.
- In the event that the Seller breaches any of his or her obligations, you need to ensure that you will be fully refunded for any deposit when you provide the Seller with your Real Estate Purchase Agreement.
- Your offer to purchase needs to be contingent upon all appliances, equipment, fixtures, and intangible assets transferring to you, the Buyer, at closing. The instruments shall effectively transfer to the Buyer, absolute full title to the assets free and clear of all liens. It is important that you use this type of language.
- Your offer should be contingent upon the Seller ensuring that the home is properly functioning and is safe from any defects and repairs to the Buyer’s complete satisfaction as determined in the Buyer’s sole and absolute discretion. It is absolutely important that you use this specific language.
- Furthermore, your offer should also be contingent upon review, acceptance and confirmation of all of the deed and zoning restrictions, covenants, easements, land surveys, survey maps, deed restrictions and plats to the Buyer’s complete satisfaction as determined in the Buyer’s sole and absolute discretion.
- Finally, any offer to purchase should also be contingent upon the Buyer being able to obtain financing within a desired 15 to 20 business days to the Buyer’s complete satisfaction as determined in the Buyer’s sole and absolute discretion.
If any of the above contingencies are not agreeable to you, the Buyer, you should add a contingency in writing that you will notify the Seller within a desired 20 to 30 business days after signing the Purchase Agreement. You should add to every purchase agreement that you will have the sole and absolute discretion to terminate the Real Estate Purchase Agreement if you are not satisfied with any of the contingencies recommended above.
Home Inspections & Repairs
Always hire a reputable home inspector to thoroughly inspect your dream home to ensure that the home is properly functioning and is safe from all defects and repairs.
If there are any repairs that need to be made to the property, make sure that your home inspector thoroughly documents all of the repairs that are needed and all of the necessary steps that need to be taken. Make it clear to the Seller that the Seller will be responsible for any and all repairs and costs.
Closing Costs
Try to get the Seller to pay for all of your closing costs. At a minimum, the Seller must pay for the cost of the title insurance commitment and policy. That is the closing cost that is traditionally paid by the Seller and is typically the most expensive closing cost.
Always negotiate and reach an agreement with the Seller on what fixtures and personal appliances and equipment will remain with the Seller or be transferred to the Buyer.
Real Estate Purchase Agreements
Once you have reached an agreement with the Seller on these important terms and conditions, we recommend that you hire an experienced Real Estate lawyer to draft a Real Estate Purchase Agreement for you that will outline these important terms and conditions and add any additional contingencies relating to the purchase of your dream home.
The Real Estate Purchase Agreement needs to carefully outline all of these important terms and conditions. It should include all of the terms and conditions regarding lender pre-approval, loan commitment, taxes and assessments, equipment and fixtures, inspections and tests, warranties, provisions regarding the deed and title insurance and provisions regarding who assumes the risk of loss in the event that your dream home is damaged or destroyed prior to the closing.
Preparing the Deed & Title
Once you are in contact with the Seller, you will need to select a title company that will prepare the deed and title insurance and perform a search of the title to identify all of the liens with the property. The Title Company usually prepares all of the closing documents and includes all of the finance documents that they receive from your lender. We recommend that you have an experienced attorney review all of the closing documents that are forwarded by your lender and prepared by the title agency. The most important closing document is the good faith closing statement that identifies all of the settlement charges for the Buyer and the Seller. All of these costs and expenses need to be carefully reviewed.
Talk to a Real Estate Attorney in Columbus, Ohio
Need help with buying or selling a home? Talk to our team at The Law Office of Tom Somos, LLC. We are very experienced with FSBO sales, both from a seller’s and buyer’s perspective. We’re always happy to help.
