Buying a Home Directly From an Owner

04Real Estate Agents are not necessary when it comes to selling or buying a property, they are simply middle men in a process that you could well take care of directly. About a fifth of all home sales are concluded directly between a purchaser and the owner of a property. There is no difficulty in this provided you utilize the services of experts to assist where necessary.

The first thing that you need to determine is how much you can afford and in which areas you would like to live? It is not always possible to have your dream home on a limited budget and you have to think of factors such as distance from work or schools as well. Travelling costs can be expensive and should be taken into account as you may need to purchase another vehicle or rely on public transport. Generally when working on a tight budget, it’s best to settle for a property in a good area that may need a bit of work as opposed to a neat house in a bad area. There are Affordability Calculators on most bank Websites that you can use to determine roughly how much of a bond repayment you can afford. Most banks prefer you to put down at least a 10% deposit, you should also note that there are transfer and bond registration costs to be paid to a Property Transfer Attorney. These rates are usually standard in accordance with the value of the property that you are purchasing and the cost can be obtained by calling any suitable Transfer Attorney’s offices.

You can apply to a bank or Bond Originator for a Bond Pre-approval so that you have an idea of the price range that you can afford to shop in. There is simply no point in looking at properties that are out of your price range although it must be noted that most property owners would grudgingly consider offers that are up to10% lower that their asking price, more than this and you are likely to meet with real opposition. Arming yourself with a Bond Pre-approval document is almost like having cash available and this could impress a seller enough to make them consider an offer from you more seriously.

There are many private property Websites that allow for you to search for homes for sale by owners. These Sites are your best source for dealing directly with a seller. Many of the larger private property Websites also allow for Agent advertised listings but these are usually clearly indicated as being the listings from a Real Estate Agency or group. When you arrange to see a property by either e-mailing or calling the owner directly then you must realize that the owner has emotional attachment to the property and in many instances he has created his dream home over the years. You will need to look past all the obvious features that are pointed out to you in order to see if the property has potential to meet your needs.

Before submitting an offer on a private property it is best to do some more homework regarding the value of the property. Again, there are Websites that offer online valuation reports based on a ‘Comparative Market Analysis’ of similar properties sold in the area, usually there is a small fee to be paid for this but it is well worth it. Even though such reports are used by Realtors as well, they usually only draw a comparison from the averages of properties sold in the area. They take building and stand size into account but not improvements. Some properties that have not been maintained would need to be priced below ‘market average’ whereas other properties that have been renovated and have a new kitchen and bathrooms, for instance may be priced above market average. It is seldom that a property should sell for more than 15% above the area average for similar sized properties. In cases where a property may be priced way above average you must be cautious as the owner could have over-invested for the area. If you have any reason to doubt the value of a home based on a market related report then it is best to use the services of a professional Property Appraiser.

It is probably best to have a verbal agreement with the seller on a possible offer for his property before you both go along to a Transfer Attorney. The Attorney will have the necessary ‘Offer to Purchase’ documents and go over any legal issues with you. Make sure that any special conditions are covered in the documentation such as the seller’s agreement to carry out certain repairs or to leave certain furnishings on the property.

Be sure to check over any building plans for the property to ensure that all building regulations have been met for any additions or alterations to the property. Have the property professionally inspected from foundations to roof. If the inspection report shows that there is rising damp, for instance, then you can re-negotiate with the seller to lower the price to compensate for the necessary damp proofing repairs. The seller could also arrange to do repairs at his own expense as part of the Agreement.

Once an agreement has been reached and an Offer submitted then you can either submit bond applications to a few banks of your choice or you could give this to a Bond Originator who will do this for you. Bond Originators usually negotiate the best interest rates for you via the various banks but you can also do this yourself. Once you have settled on a bank of your choice that have granted you a home loan (in principle) then they will send an Appraiser to the property to ensure that there is value in the property for your application to be finalized. This is reassuring as a bank will never provide a loan for a property that they determine is over-valued. In a case where the bank has rejected a loan for a property the seller must be contacted so that he can reconsider his expectations and given the option to drop his asking price for the sale to proceed.

The Transfer Attorney will tend to all the legal paperwork and contact you should they require additional documentation, payment or endorsement of paperwork from you.

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