Legal News

07-Nov-2022

Mistakes You Should Avoid: Homes for Sale by Owner

There are a lot of reasons why buying a home directly from the owner instead of going through an agent can be appealing. Maybe you have a small budget and commissions might eat into your savings. Or perhaps you’re moving to another city or state and there aren’t many agents who can help you find the right place. Perhaps you simply don’t trust real estate agents and want to stay as removed from their tricks as possible. As it turns out, there are some downsides to buying directly from the owner. You will likely have less information about any potential problems with the property or the neighborhood; there may not be anyone looking out for your best interests; and in some instances, you may not even be able to get an unbiased inspection of the property before purchasing. The good news is that most people who buy homes directly from owners do so knowing what they’re getting into, avoiding these pitfalls completely.

Don’t Assume the Owner Repairs Everything Before Listing

Most people who sell their homes directly are motivated sellers. In some cases, they just really want to get out of a property so they can move on. And in most cases, they’ll list their home at a price that reflects the fact that they’re anxious to sell. If this sounds like what you’re seeing when you look at homes for sale by owner, don’t assume that the homeowner has spent a lot of money getting everything fixed. They may have spent $10,000 getting the roof replaced, but are selling the home for the same price as a comparable house with a new roof because they don’t want to take a loss on their investment.

Don’t Assume That What You’re Seeing Is What You’ll Get

Again, most homeowners who sell directly are motivated sellers. They’re likely to snatch up your offer if you make one because it gets them out of the home sooner. This urgency could result in the seller promising you more than they end up delivering. Again, if you’re buying a home that has been listed for a while, look at comparable sales in the area to get an idea of what the owner may have to deliver. Again, this is where a real estate agent can be helpful by helping you get the seller to some extent and finding comparable sales in the area. But remember, real estate agents have their interests to protect, which is why you should be careful about letting them do your negotiating for you. If a seller promises one thing to the agent but something different to you, the agent may not know about it. Again, if you’re buying a home that has been listed for a while, look at comparable sales in the area to get an idea of what the owner may have to deliver.

Don’t Assume That It Has Been Fully Inspected

If you’re buying a home that has been listed for a while you might want to ask for proof that it’s been fully inspected. If the owner has been repairing the house over a few years, there may be some serious issues that have been missed. In almost all states, a seller is required to inspect the home and note any issues they find in the contract. If they don’t, and you find out about it after you buy, you have the right to walk away from the deal without losing your deposit. But you might want to confront the seller and ask what their plans are to address the problem. If the seller has been repairing the house over a few years, there may be some serious issues that have been missed.

Don’t Assume That There Are No Issues With The Property

Some owners who sell their homes directly have done a ton of research on the property and have concrete reasons for selling. They might be relocating, downsizing, or upgrading to a different type of property. In these cases, direct sales usually work out better for both parties. The seller gets the highest price possible, and the buyer gets the property that best suits their needs. Direct sales also work well for households that want to keep their private information private. Many people choose to sell their homes directly because they feel more comfortable with this approach than with the idea of working with a real estate agent. Others don’t know much about the home and just want to get out from under it so they can move on. If you’re buying a home that has been listed for a while and there are no comparable sales in the area, you might want to look into the neighborhood anyway and see if there are any issues with the property.

Don’t Assume That You Can Get an Unbiased Inspection

If you’re buying a home that has been listed for a while, and there are no comparable sales in the area, you might want to get a home inspection before you put in an offer. An inspection will help you determine if the home has any major issues that will be very expensive to fix. If the inspection reveals problems that will be very expensive to fix, or if you just don’t want to deal with the hassle of fixing those issues, you can use that information to negotiate a lower price. Most sellers are willing to negotiate if the home inspection reveals major issues that will be very expensive to repair. But remember that if the owner is the inspector, they’re highly unlikely to find any issues with the property that they might have missed. You can ask for an independent inspection, but you might have to pay for it yourself. If the seller doesn’t want to pay for the inspection, you may want to walk away from the deal anyway.

Conclusion

As it turns out, there are some downsides to buying directly from the owner. You will likely have less information about any potential problems with the property or the neighborhood; there may not be anyone looking out for your best interests, and in some instances, you may not even be able to get an unbiased inspection of the property before purchasing. In some cases, you may not be able to get an inspection on a property due to a lack of disclosure from the seller. The risk of purchasing a “stealth condo” can be significant, especially if you are buying a second home. Conventional mortgage financing typically does not work for condos, so you will likely need to purchase a condo unit with cash. While there may be some condos that you can purchase with a conventional mortgage, you may need to get a mortgage waiver because condos do not have title insurance. The good news is that most people who buy homes directly from owners do so knowing what they’re getting into, avoiding these pitfalls completely.