Our home buying process was very atypical. I thought I might share some of what I learned. If you aren’t buying a home, feel free to skip this post. If you are at all interested (and I think some people out there might be which is why I’m writing), read on. I spend many hours researching real estate transactions. It paid off, because we were able to buy our home without a real estate agent.
Reasons why not to use a real-estate agent:
- Cost: Although the seller usually pays the real-estate agent, it is still money they have to pay and without it, the buyer can have more bargaining power and reduce the overall cost of the home.
- Avoiding the middleman: A real-estate agent is a middle man. We were able to deal directly with the seller, and it simplified the process.
- Pointlessness: We found the house before we were even really looking for a home. Trying to then find a real-estate after we found a home didn’t make sense.
Reasons why you probably do want an agent:
- Less work: Searching for a home, figuring out all the paperwork, and all the business behind a real estate transaction is a lot of work. Real-estate agents know the market, the process, and will make an already daunting task much easier
- Legal worries: Real-estate agents will reduce the chance of law suits and other legal problems, since they actually know what they are doing.
- Add an middleman: Working directly with the seller or seller’s agent isn’t always desirable. Having a third person bargain for you can make a lot of sense.
- That’s my list at least, you could probably Google a lot more.
Desiring a Home
We wanted to buy a house. Joe had a good job, we knew the market was pretty good. We wanted to have somewhere where we didn’t have to answer to a landlord and could work on the projects we wanted to. Our family is going to get bigger (hopefully), not smaller, so we also needed more space. We decided to buy a home when our lease ran out. We talked about what we wanted, occasionally glance at signs and listings, but still had a couple of months before we really wanted to buy a home.
Finding a Home
A family from our ward (church group not hospital) was selling their home after moving far away. It was only three blocks from where we were living. It was still in the fix-up-to-get-ready-to-sell-stage, and my husband stopped by and looked around. Then we both went and saw it. It looked like a construction zone. We looked at it a few more times, and decided to buy it. We didn’t go through another home. The timing was sooner than we wanted, but the house was exactly what we were after.
Making an Offer
We talked to the seller (it was a FSBO), he told us the baseline he wanted for the house (around $7,000 under his initial listing). So we offered that amount. He accepted. No counter-offers, or any extended negotiation. It took 15 minutes. That is a horribly simple, but effective, way to negotiate. While making an offer, we used this purchase contract, and this addendum if you have a government loan. It has all the legal garbage in it, and it is the form used by real-estate agents.
Getting a Loan
I found my loan guy from an online ad. He responded to me the quickly, and we did all the paperwork over e-mail (there are secure ways to do so). I never met him. I contacted him initially before making an offer. I wasn’t pre-approved, more pre-qualified, but the home was far under what we were quoted as what we could afford. After making an offer, I sent him the purchase contract and got to work on all the paperwork he sent me. They sent an appraiser up as well, who appraised the home over our purchase price. In a little over a week, the loan was sent off the the USDA, for a rural-housing loan. Then the government shutdown, and we had to wait even longer than expected. Then meant filling out an addendum to the purchase contract, lengthening the deadlines. We finally had complete approval two months after beginning the process, which luckily fell right at the end of the month.
Seller Property Disclosure/Earnest Money
A disclosure is need according the purchase contract above, and if your seller isn’t on top of things, I recommend printing a form out and giving it to them, as soon as possible. We never paid earnest money, though not every seller is certainly not going to agree to that.
We talked to a friend, found an inspector, and got the place inspected. Told the seller what was wrong, gave him a list, and he fixed it. He was also doing a lot of improvements when we made the offer, so we spend a lot of time following up and seeing how everything was coming. It went rather slowly. And I also recommend bringing up anything you want done, even things like the neighbors cats. Go through the house a lot, and ask for everything to get fixed. They aren’t obligated to fix everything, but it never hurts to ask. I did, and although every tiny thing I found didn’t get done, I was a lot better off than not asking. (The cat concern sparked the process resulting in their eventual eviction.)
We were tired of waiting on the loan, tired of seeing little progress on the house, and needed to know what to do with our current apartment, so we decided we were moving on a specific date. We moved before our loan went through, and before the seller was completely done with moving out/fixing things up. (He did only have a shed in the back to clean out.) In some ways, this was nice. If we found any problems, we could talk to the seller who was still the owner. The work did finally get done as soon as there was a deadline as well.
The loan went through two days after we moved in. (Happy surprise) The next day, we were at the title company signing papers, and the day after that, we officially owned a home.
Our process wasn’t by the books. To re-cap, here are the thing you probably shouldn’t or won’t be able to do:
- Not get a real-estate agent
- Only look at one home
- Make an offer while the house looks like a construction zone
- Not pay earnest money
- Buy earlier than planned (before our apartment lease ran out)
- Never meet the loan officer, and send the majority of paperwork by e-mail
- Sit through a government shut down
- Move in before closing
But for us, it all worked. Any questions or suggestions, please comment away.
*This site is where I got most forms listed above, more are available.