Client Question: Thoughts on FSBO For Sale By Owner & an Offer Process

(This is my opinion)

 

We were wondering if you had any thoughts on what to include in an offer? we can find sample offer letters online. I assume that since it's FSBO it doesn't have to be anything formal...just offer amount and any contingencies (appraisal, home inspection), details on loan (down payment), and proposed earnest money amount to take it off the market (which I assume should go to the title company to be held in escrow)...Back in 2004 I was apart of a FSBO purchase on a home.  We went and looked at the home.  We got it inspected.  We met them at a starbucks coffee shop and he made them an offer on a piece of paper with the number on the paper of what he wanted to pay for the home.  He had already been prepapproved so he knew what he could spend.  The deal was made and they used the state form for purchasing a home which is different from state to state I would think.  Here we use a Buyers Agreement form established by TREC our governing agency.  It would be easy to find out; pick a title company which I can help you do as well and the title company will tell you what forms to have or even possibly help you fill them out after you and the Owner have decided on terms. 

If you are getting your money from a bank you will do your business money wise with the bank.  The bank writes the Owner a check at closing (at the Title office I believe) and you don't need to discuss anything except how much you want to pay for the home. I DON'T ADVISE any home owner financing PERIOD! 

To make sure the person doesn't sell the house on you while you are getting it inspected you could say just that.

So steps:

PREREQUISITE; Get a PreQualified VA loan letter for an amount you are able to spend.  If the home is selling for 600,000 but you are qualified for 750,000 ask your banker to have the VA prequalified letter say 600,000 ( no need telling everyone what you can qualify for).  VA loans make you do several things different including sometimes using their own inspector.  Make SURE you understand this before you go to the house you want to buy; miss steps and you might have to go out of pocket on somethings. 

1) Find a Title Company you want to use.  I'll forward you three in another email.  Find out what forms the title company needs you to fill out with the owner when the buy is going through while you have them on the phone.  You'll need the form for Number 5.

2) Find a home.  Schedule to look at it.

3) If you want the house, I mean if you make an offer and they say yes you are ready to buy it.  Then in writing, offer them a X amount to take off the market as an option period so they don't sell the house while you are arranging and having a home inspection done. 

Example Letter can clearly say:

I, STATE YOUR NAME, current address and phone number, with STATE YOUR COMPANY are interested in residential property at X.  We would like to have an opportunity to have the home inspected.  By doing so we would like to ask you to take the home off of the market by giving the Owners X and X option money in the amount of X dollars.  Home offer will be contingent on home inspection. 
Option money will go towards the purchase of the home in any case the home is purchased by STATE YOUR NAME.  Otherwise, if we do not purchase the home, the option money is given to the home owner. 
We ask to allow X (ten ?) days to have the home inspection done.  As a Veteran's Loan may be used their criteria may not be determined......

4) Get home inspected.  Check with Lender / VA banker to make sure you follow or use who the VA needs you to use based on the type of loan you need.  Since time is of the essence DO NOT PROCRASTINATE.  Inspectors take time, reports take time, bankers take time, which can exhaust all the time you have allotted and weekends take time off your time too.

5) If the inspection comes back excellent and you are following through with the buy.  Meet in public or even at the Title company so you can move forward right then-but MEET and write your offer in writing and sign your name and date it or have all this ready.  It doesn't need to be a big thing, just the offer on paper.
See if they accept.  You can go back and forth.  Once agreed upon finish the form the title company needs you to have (which you asked at #1) and plan to go to the Title company to finish everything up. 

TITLE COMPANY WILL MAKE SURE THE HOME HAS A CLEAR TITLE; NO LIENS ON THE HOME BEFORE YOU MOVE IN.  THEY SHOULD HAVE A LAWYER ON STAFF TO DOT THE I'S AND T'S TO MAKE SURE ALL FORMS ARE RIGHT AND FILLED OUT CORRECTLY.  BAM....done! 

With all the scams going on that people are selling homes that are not even theirs it wouldn't hurt to run a city check on the owner's name to make sure you are talking to the owner of the home not someone that is just acting like they live there and acting like they own it.  I can check owner's name in my city here in FORT WORTH TEXAS through the tad.org site just by the property address and It wouldn't hurt to ask for a copy of their drivers license or AT LEAST to look at it and vice versus.