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Information for Buyer and Seller

Perhaps you're wondering how to work directly with an owner in purchasing a home. Here's how the process works.

It’s Easy to Buy from an Owner

To make an offer, ask the owner for the “Residential Offer to Purchase” [or “Offer to Purchase Real Estate”] form. This is a legal form you use to offer a purchase price and also describe the contingencies of the sale. Contingencies include such items as obtaining financing, having the home inspected, selling another house and so forth. This is a standard legal form used in almost every home sale, but you need to read it carefully and fill it out completely. You’ll also receive a “Seller’s Disclosure Statement” [or “Real Estate Condition Report”] which provides details on various defects. This report must be provided to you in any real estate transaction. [There is also a deadline to returning the offer, which must be adhered to.]

Return the offer and a deposit money check (also called earnest money). Deposit money represents your good faith in going through with the deal. The amount of the check varies, but is typically no less than $1,000, and often is about 1% or more of the purchase price. If you buy the house, you’ll usually have the amount credited to the purchase. If the contingencies identified in your offer to purchase are not met, you will get your money back. But you will not get the money back simply because you’ve had a change of heart. Ask whom to make the check payable to; often it’s a trust fund.

If necessary, a counter-offer will be made. Sometimes, counter offers are countered as well. Both the offer and counter-offers spell out the various conditions of the sale, and must be adhered to. The contingencies have deadline dates. Neither party can ignore the deadlines. If there’s a problem in meeting one, however, both parties can agree to an extension. The contingencies are removed by filling out a legal form describing the action that’s been taken. For example, once you obtain financing, that contingency is satisfied. [Please be aware that once a counteroffer is made, the previous offer is null and void, regardless of whether the counteroffer is accepted or not.]

Shop around for a mortgage. You also will need to provide proof of homeowner’s insurance; your insurance agent will have the proper forms. [Comparison shop for insurance, too!]

If your offer is subject to an inspection, you usually are responsible for making the arrangements and paying for the service, although sometimes it’s negotiable.

The owner will make the arrangements for closing the deal, including title insurance, meter readings, etc. [Title companies have very reasonable packages for handling all the closing paperwork.]

Often, the owner works with an attorney. You also may want to consult with an attorney or legal services agency. This need not be expensive, especially if you get organized before you seek advice. Write down your list of questions ahead of time and have copies of any pertinent documents with you. Your attorney and/or the owner’s attorney also may attend the closing.

Remember, no one knows more about the house than the owner. Buying from the owner gives you the chance to ask questions directly.

[Note: Some fsbo web sites have Service Directories of these providers.]