Are you thinking of buying a house from someone you know? There are a few things you need to keep in mind before taking this step. In this blog post, we’ll discuss the steps to buying a house from someone you know, as well as the benefits and drawbacks of doing so. You might be tempted to do it without a realtor, and that’s fine, but there are still some critical activities to complete, and a real estate agent might still be required to make sure it’s legal, and everyone’s happy.
Check Legality
Check with your local government to ensure that home-buying transactions between friends or family members are allowed in your area. There may be some restrictions in place that you’ll need to be aware of. By taking this step first, you can be sure that buying a house from someone you know is a smooth and stress-free process.
Meet Realtors
Meet with a real estate agent to get an idea of what the current market value of the house is. If you’re thinking about buying a house from someone you know, the best place to start is by meeting with a real estate agent. They can help you understand the process and advise you on what to look for when purchasing a home. It’s also important to get an idea of the market value of the property. This will also give you a good starting point for negotiations. If the seller is expecting to get more than what the home is worth, they may be less likely to sell to you. However, if they’re motivated to sell, they may be willing to negotiate a lower price. Realtors can provide a lot of advice based on a wealth of experience.
Qualify for a Mortgage
Get pre-approved for a mortgage loan, and have your lender inspect the property – and get pre-approved for financing. This will give you an idea of how much house you can afford and help you secure financing before making an offer on a home. Once you’ve been pre-approved, work with your realtor to find properties that fit your budget and needs. When you’re ready to make an offer, be sure to have your financial information in order so the deal can move quickly. Without a mortgage in place, you might stall the whole process unless you’re paying in full!
Agree on Price
Agree on a purchase price and sign a purchase agreement – and get a lawyer to draft a purchase agreement. It’s crucial to have everything in writing in order to avoid any misunderstandings later on. Once the purchase agreement is signed, you’ll need to arrange for a home inspection and appraisal. This is important in order to ensure that the property is in good condition and worth the purchase price.
Price can get a little murky if the relationship is one between family members, and it looks like there isn’t entirely arm’s length between the buyer and seller. Fair price and market value are two things you’ll need to prove as satisfied on any sale agreements between family members, especially where it looks like one could have unfairly influenced the other.
Investigate Title
Have the title company conduct a title search and prepare the closing documents. The title company will research the public records to make sure that there are no liens or other claims on the property and will also prepare all of the documents necessary to complete the sale. There are horror stories out there of friends having to sue each other after hidden disclosures were discovered well after the sale closed.
Close the Sale
Close on the property and transfer ownership. Finalize the sale paperwork and take possession of the property. Celebrate! You’re now a homeowner!
Buying a home is one of the biggest and most important decisions you’ll ever make in your life. If you buy it from someone you know, you might be tempted to cut corners, but you really shouldn’t. Buying a house is a huge commitment, so it’s important to do your homework and make sure it’s the right decision for you and that personal relationships don’t get in the way. At the end of the day, bringing a realtor in for both the seller and the buyer could make everything a lot easier.
