I. IF YOU’RE CONSIDERING PURCHASING A FSBO HOME, DON’T SIGN A BUYER’S AGREEMENT WITH A REAL ESTATE AGENT OR BROKER UNTIL YOU HAVE READ THIS PAGE FIRST!
If you are interested in purchasing a FSBO property, or even if you might purchase a FSBO, use caution when signing a buyer’s agreement (contract) with a real estate agent! Signing a buyer’s agreement typically guarantees the real estate agent a commission, even if the property you buy is for sale by owner. So, if the seller of the home refuses to pay the commission (which is possible, since they have chosen to sell their home "By Owner") you, the buyer, will have to pay the commission, and it may cost you many thousands of dollars!
II. ARE YOU AN OUT-OF-TOWN BUYER WHO NEEDS ASSISTANCE?
If you are shopping for real estate in the Walla Walla area from out-of-town, you may want a local real estate agent to assist you in locating a property that meets your criteria. Sandi Boone understands the FSBO market and would be happy to hear from you. Contact her today for assistance. 509.301.1325 or email.
III. KNOW HOW MUCH HOUSE YOU CAN AFFORD
As a buyer, you should know your price range when shopping for a home. Virtually all local and national mortgage lenders will pre-approve or pre-qualify you for a home loan, assuming an adequate credit history can be demonstrated. ("Pre-Approval" means that they have checked your credit history and approved you to a certain mortgage amount. "Pre-Qualified" means they have given you an estimate, based on an income-to-debt ratio.)
The process is usually quick, and many lenders have online forms that can be used to expedite the process. Once you have been approved, you’ll know what your price range should be, and what your approximate payments will be.
Being pre-approved or pre-qualified will let sellers know that you are a serious buyer, and will legitimize any offer you make on a home.
IV. FIND A HOME YOU’D LIKE TO BUY
Know what you want in a home. Establish minimum criteria (for example: 3 bedrooms, 2 baths, 1 acre, $300,000 maximum) and focus your search on homes that match what you want. Look at as many homes as possible, and try to take your time. Buying a home is a process that shouldn’t be rushed.
Advisory: While you don’t want to rush, don’t be indecisive! You don’t want to lose a property that you really want because you procrastinated.
V. ASK IMPORTANT QUESTIONS
Most FSBO home sellers will be more than happy to talk with you about the home they’re selling. Feel free to ask as many questions as you want, and if the seller can’t answer your questions, politely ask them to get the answers for you.
For a list of possible questions, click here.
VI. MAKE AN OFFER & NEGOTIATE
Once you’ve found a home you’re interested in buying, make an offer directly to the seller. Your offer can be either oral or written (including e-mail), but remember that only written offers that convey an earnest money deposit are binding on the seller and buyer. You are, of course, free to make any offer you want, but try to avoid unreasonable low-balling (offering much less than the value of the property) which will most likely only insult and/or irritate the seller.
It is perfectly acceptable to start with a (reasonably) low offer, but you should expect to receive a counter offer. Continue negotiations until an acceptable price is achieved, or until you decide to look elsewhere. Remember to keep emotions out of the negotiations. This is business, and there’s no point in anyone becoming upset. Either you will be able to agree on a price or you won’t.
VII. COMPLETE A PURCHASE & SALE AGREEMENT
A Purchase and Sale Agreement is a contract between the buyer and seller stipulating that the buyer agrees to purchase the seller’s home at an agreed upon price. (Other conditions or contingencies may often be included to protect the buyer and seller.) The seller will want earnest money (a deposit) from the buyer; the amount is negotiable and is typically applied to the buyer’s closing costs, including down payment.
Purchase and Sale Agreement forms should be available online. They are also stocked at many office supply or stationery stores. However, you should know that typically these online and office supply forms do not contain all the protection for buyers or sellers that are advised by legal experts. If you would like your Purchase & Sale documents professionally preparred, contact Sandi Boone at Walla Walla Real Estate Company.
VIII. OPEN AN ESCROW ACCOUNT AT A TITLE COMPANY
Choose a local Title Company and take the completed Purchase and Sale Agreement (signed by both the buyer and the seller) and the earnest money to their office to begin the escrow process. The length of the escrow period is usually negotiated between the buyer and the seller and can depend on financing, appraisal, home inspections, the sale of the buyer’s home, and other contingencies. A typical escrow period is from 60 to 90 days.
IX. INFORM YOUR MORTGAGE LENDER THAT YOU’VE FOUND A HOME
Call your mortgage lender and let them know that you have found a home that you wish to purchase. Be sure to have your Purchase and Sale Agreement available as they will need a copy to process your loan application. Once the loan processing has begun, it’s a good idea to check in with your lender periodically to make sure that everything is progressing normally.
X. SCHEDULE ANY REQUIRED (OR DESIRED) INSPECTIONS / APPRAISALS
Virtually all lenders will require an appraisal of the home that is being purchased. The lender will schedule the appraisal and it is usually the buyer’s responsibility to pay for it. There will also be a Pest Inspection, for which the seller usually pays.
As a buyer of real estate, you are within your rights to arrange for your own, more comprehensive, building inspection, which can cost anywhere from $350 to $500, depending on who is doing the inspection. This is a good idea for older homes and may uncover hidden flaws that could cost you thousands of dollars in future repair bills. A little bit of money spent on an inspection before purchase could save a lot of money after purchase. (Contact a local building contractor to see if they do comprehensive home inspections, and how much one would cost.)
If an inspection reveals any problems with the home, the lender may require that they be fixed prior to escrow closing. Repairs are, in general, the responsibility of the seller, but may be negotiated with the buyer in order to make the sale possible.
XI. MOVE PROGRESSIVELY TOWARD CLOSING DATE
Make sure that you (and the seller) are promptly supplying your lender and/or the title company with any required information, paperwork or funds. Check in with the seller, the lender and the title company periodically to make sure the transaction is proceeding normally.
XII. ENJOY YOUR NEW HOME!
Congratulations on the purchase of your new property! Regardless of how you purchase, we at Walla Walla Real Estate Company hope the process goes smoothly, and that you experience years of comfort and enjoyment in your Walla Walla area home.
Welcome to the Neighborhood!