Should I Purchase a For Sale By Owner property?
diddlydudette
Posted: Mon Jul 18, 2005 10:45 am
Post subject: Should I Purchase a For Sale By Owner property?
Ok, I'm 46 years old and I'll be a first time home buyer. I have good credit Equifax 807, Transunion I think is 853.
I won't be able to consider applying for until December when my lease is up in apt. She'll be about ready to move about that same time. I have a friend who's house I'd like to purchase. She is getting married. The house is in great shape...great lanscaping, well maintained, etc.
She is not dealing with a realtor. She said initially she would sell for 120,000 and I cringed and told her I thought I couldn't afford that. She then cringed back and said least she could sell for is 114,000. I can afford and really like the house and everyone who has seen pics of it thinks I'd be getting a good deal.
We really hadn't talked much about it. She cuts my hair and isn't a very close friend. I've just been going to her forever..5 years.
She did say when I went to look at it that we'd both pay our own closing costs.
Since I'm new to this and no realtor of my own, she wanted to work out the details of a contract. She said that's how she bought it. She and owner had dinner out and hashed everything out and it worked great. Of course I'd get it inspected and have a closing attorney.
Any great words of wisdom for me? What do I need to watch out for?
Author: Polonius
Posted: Mon Jul 18, 2005 1:39 pm
Post subject: Should I Purchase a For Sale By Owner property?
You can get a good deal--but there are so many risks and you're so inexperienced I'd advise against handling it the way you're planning. How can you determine a price without a careful comparative market analysis, which most realtors will give for free? (Traditionally, you get 3 CMAs if you're the seller.) What about title insurance?
Given this scenario, as a buyer I'd hire a licensed realtor to be MY agent--to arrange for the building inspection, title search/insurance, and closing documents. And I would pay for an independent appraisal of the property.
Author: Sarasotatony
Posted: Tue Jul 19, 2005 7:34 pm
Post subject: Getting Ready to Buy My First House
Polonius is 100% correct. As a first-time buyer, you need to realize that buying a home can be a complicated process. If she won't deal with a realtor, then you must hire an attorney who specializes in real estate. It should cost you $400-$500, for the attorney to put together the closing documents. You must also hire an appraiser (around $200) who will give you a certified appraisal of the property. This is different from a realtor's comparative market analysis. If you end up agreeing to pay more for the property than it is worth, than the bank won't go along with it. Regarding closing costs: they are often negotiated with the seller--often the seller will pay up to 2% of your closing costs. Your closing costs will run $5,000 to $6,000. This is separate from the 20% down you need to pay at closing. Remember, if you put less than 20% down, than you will have to pay PMI (private mortgage insurance). This should be around $75 a month. Try to avoid this ripoff. What are the costs of taxes and insurance? Make sure you close at the end of the month--never the beginning of the month. You also need to hire a home inspector, especially one that is A.S.H.I. certified. Look in your phone book. The cost is around $150. If the inspector finds anything that could be a costly problem down the road, then you have the right to ask the seller to pay for the repairs. If she will not, then you can walk away. A title search as well as title insurance is a must. This is part of your closing costs and your lender won't close without proof of a clear title. I suggest you check out www.bankrate.com--a very valuable web site. Type anything in the search box and you will get very valuable information. For example, type, how much home can I afford? and you will get a detailed analysis. Personally, I would never buy a home from someone I knew, in fact, when I sold real estate years ago I always kept buyers and sellers apart.
Author: Sarasotatony
Posted: Wed Jul 20, 2005 9:23 pm
Post subject: Getting Ready to Buy My First House
Clarification on the 2%. It should read: In your offer, ask the seller to pay 2 points of your closing costs. This is roughly around $2,000. However, if you are in a seller's market, the seller will often reject this request.
Author: diddlydudette
Posted: Thu Jul 21, 2005 3:19 pm
Post subject: Should I Purchase a For Sale By Owner property?
Thanks y'all. Yes, I was planning on getting an attorney for closing. I think she has pretty much stated that we each handle our own closing cost. She originally said 120,000 for asking, but after saying I couldn't afford, she said lowest was 114,000. The house will sell easily without a doubt because it's in great shape, etc. so I feel I can't ask her to help with closing. I do understand about inspection and appraisal. I know what I can afford and know to walk away if it gets to be too much money.
Actually, my sister is a realtor in another town so she said she'd help do a comparison of houses in area and she'll look over contract for me.
I'm not paying PMI at all. Let's just say I refuse. I think my FICO is high enough not to have to. I did get a mortgage estimate at my bank and was told it was a pretty accurate estimate. I will comparison shop, but wanted to get an idea of my payments. They suggested the 80/15/5. She said when they pulled my credit report and got down to business that if score was good enough bank might even lower interest more. I have 853 at Transunion, 807 at Equifax and something like 785 at Experian.
It was like 80% at 5.35, 15% at 8% and 5% down....paying NO PMI.
I gave her location of house and she calculated insurance and taxes, etc and came up with 757.00 a month as mortgage for 114,000. I'm thinking I may even be able to do better than their quote.
I just hope the interest doesn't go up much between now and the end of the year.
I have 20,000 in my savings acct. and that's about it except maybe a couple thousand in stock. I wouldn't touch any 401K or anything like that. I'm not one to want to buy beyond my means or get over my head.
It just seems if I were to pay 5% or more down and 6,000 in closing that it will take all my money. It's very scary to think I have to drain savings to buy my first home. Y'all think it's a good idea and think I can afford? I make about 38,000 + a year. Should I stay in apt. where I can budget and not have to worry about things breaking....extra costs and getting broke.
Sometimes I get so scared about thinking about all the money upfront and how confused I am, that I just want to forget about it.
Author: Sarasotatony
Posted: Thu Jul 28, 2005 1:38 am
Post subject: Getting Ready to Buy My First House
I know it can appear overwhelming, but you will never get anywhere renting. Try and see if you can qualify for 5% or 10% down, because you will be surprised at some of your costs after you move in. Appliances/window coverings are just a few. I certainly agree with you about PMI--avoid it if you can. Once approved, ask your lender how many days you can "lock in" your rate. Most lenders will give you a 30 day lock; a few will lock for 60 days. Some will lock you in for 60 if you pay a fee. Remember: That attorney you choose must be a specialist in real estate, he/she shouldn't be a standard attorney. Another suggestion: Go to www.bankrate.com and type in closing costs or junk fees in the search box. Some fees are negotiable with the lender. Some are tax-deductable. Closing fees can vary by a $1,000 to $2,000, depending on the lender. And: Close at the closest business day to the end of the month.
Author: jbrinson
Posted: Wed Sep 21, 2005 10:04 am
Post subject: 80/20 Loans no down payment or MI
I work at a mortgage company and we have 80/20 loans with no down payment at great rates, in which you can keep your 5%. Buying is always better with the tax advantage AND if you take an average appreciation of 8% a year on a house of 114k...considering it sounds like you are actually gaining additional equity immediately, in 5 years your house may be worth about 165k or more! Feel free to email me if you want more info on the 80/20 loans!!
Jen
Author: BestMortgageInfo
Posted: Thu Sep 22, 2005 7:56 am
Post subject: Should I Purchase a For Sale By Owner property?
Few comments on home value
Be careful here. Things to look for is to make sure that the properties that the appraiser is comparing (Comps) are
1) with in a mile of the home, and that the ages are close to this home
2) that the sizes of the homes, sales prices of the homes, number of rooms of the homes, are all "bracketed" meaning some lower some higher.
3) That the comps are fairly new, 3 months is best, 6 months normal.
Board Monitor
Board Monitor/ Administrator
Posted: Thu Sep 22, 2005 9:05 am
Post subject: Should I Purchase a For Sale By Owner property?
Charles,
Good tips on comps! What is the reasoning behind seeeking bracketed comps? Never heard of this.
_________________
Best Regards,
Curtis Arnold
Board Monitor
http://www.cardratings.com
(501) 663-0314
Author: BestMortgageInfo
Posted: Thu Sep 22, 2005 9:23 am
Post subject: Should I Purchase a For Sale By Owner property?
Well, I found out years ago, terrible experience, that appraisers can sometimes "give what someone wants". As long as it is not undergoing a review (lender or Loan officer or someone that knows what to look for) then they can come up with what ever value requested.
So, Bracketed is important:
Either one lower/smaller and the others higher/larger or the other way around. You want the home being appraised to be in the middle.
THere is a lot to reviewing appraisals. I forgot to include the GLA (Gross Living Area) factor. Should not be more than 20% difference. It is difficult to compare a home that is 1200 SQFT with a home that is 1800 SQFT. So difficult that lenders wont accept an appraisal like that.
Posted: Mon Jul 18, 2005 10:45 am
Post subject: Should I Purchase a For Sale By Owner property?
Ok, I'm 46 years old and I'll be a first time home buyer. I have good credit Equifax 807, Transunion I think is 853.
I won't be able to consider applying for until December when my lease is up in apt. She'll be about ready to move about that same time. I have a friend who's house I'd like to purchase. She is getting married. The house is in great shape...great lanscaping, well maintained, etc.
She is not dealing with a realtor. She said initially she would sell for 120,000 and I cringed and told her I thought I couldn't afford that. She then cringed back and said least she could sell for is 114,000. I can afford and really like the house and everyone who has seen pics of it thinks I'd be getting a good deal.
We really hadn't talked much about it. She cuts my hair and isn't a very close friend. I've just been going to her forever..5 years.
She did say when I went to look at it that we'd both pay our own closing costs.
Since I'm new to this and no realtor of my own, she wanted to work out the details of a contract. She said that's how she bought it. She and owner had dinner out and hashed everything out and it worked great. Of course I'd get it inspected and have a closing attorney.
Any great words of wisdom for me? What do I need to watch out for?
Author: Polonius
Posted: Mon Jul 18, 2005 1:39 pm
Post subject: Should I Purchase a For Sale By Owner property?
You can get a good deal--but there are so many risks and you're so inexperienced I'd advise against handling it the way you're planning. How can you determine a price without a careful comparative market analysis, which most realtors will give for free? (Traditionally, you get 3 CMAs if you're the seller.) What about title insurance?
Given this scenario, as a buyer I'd hire a licensed realtor to be MY agent--to arrange for the building inspection, title search/insurance, and closing documents. And I would pay for an independent appraisal of the property.
Author: Sarasotatony
Posted: Tue Jul 19, 2005 7:34 pm
Post subject: Getting Ready to Buy My First House
Polonius is 100% correct. As a first-time buyer, you need to realize that buying a home can be a complicated process. If she won't deal with a realtor, then you must hire an attorney who specializes in real estate. It should cost you $400-$500, for the attorney to put together the closing documents. You must also hire an appraiser (around $200) who will give you a certified appraisal of the property. This is different from a realtor's comparative market analysis. If you end up agreeing to pay more for the property than it is worth, than the bank won't go along with it. Regarding closing costs: they are often negotiated with the seller--often the seller will pay up to 2% of your closing costs. Your closing costs will run $5,000 to $6,000. This is separate from the 20% down you need to pay at closing. Remember, if you put less than 20% down, than you will have to pay PMI (private mortgage insurance). This should be around $75 a month. Try to avoid this ripoff. What are the costs of taxes and insurance? Make sure you close at the end of the month--never the beginning of the month. You also need to hire a home inspector, especially one that is A.S.H.I. certified. Look in your phone book. The cost is around $150. If the inspector finds anything that could be a costly problem down the road, then you have the right to ask the seller to pay for the repairs. If she will not, then you can walk away. A title search as well as title insurance is a must. This is part of your closing costs and your lender won't close without proof of a clear title. I suggest you check out www.bankrate.com--a very valuable web site. Type anything in the search box and you will get very valuable information. For example, type, how much home can I afford? and you will get a detailed analysis. Personally, I would never buy a home from someone I knew, in fact, when I sold real estate years ago I always kept buyers and sellers apart.
Author: Sarasotatony
Posted: Wed Jul 20, 2005 9:23 pm
Post subject: Getting Ready to Buy My First House
Clarification on the 2%. It should read: In your offer, ask the seller to pay 2 points of your closing costs. This is roughly around $2,000. However, if you are in a seller's market, the seller will often reject this request.
Author: diddlydudette
Posted: Thu Jul 21, 2005 3:19 pm
Post subject: Should I Purchase a For Sale By Owner property?
Thanks y'all. Yes, I was planning on getting an attorney for closing. I think she has pretty much stated that we each handle our own closing cost. She originally said 120,000 for asking, but after saying I couldn't afford, she said lowest was 114,000. The house will sell easily without a doubt because it's in great shape, etc. so I feel I can't ask her to help with closing. I do understand about inspection and appraisal. I know what I can afford and know to walk away if it gets to be too much money.
Actually, my sister is a realtor in another town so she said she'd help do a comparison of houses in area and she'll look over contract for me.
I'm not paying PMI at all. Let's just say I refuse. I think my FICO is high enough not to have to. I did get a mortgage estimate at my bank and was told it was a pretty accurate estimate. I will comparison shop, but wanted to get an idea of my payments. They suggested the 80/15/5. She said when they pulled my credit report and got down to business that if score was good enough bank might even lower interest more. I have 853 at Transunion, 807 at Equifax and something like 785 at Experian.
It was like 80% at 5.35, 15% at 8% and 5% down....paying NO PMI.
I gave her location of house and she calculated insurance and taxes, etc and came up with 757.00 a month as mortgage for 114,000. I'm thinking I may even be able to do better than their quote.
I just hope the interest doesn't go up much between now and the end of the year.
I have 20,000 in my savings acct. and that's about it except maybe a couple thousand in stock. I wouldn't touch any 401K or anything like that. I'm not one to want to buy beyond my means or get over my head.
It just seems if I were to pay 5% or more down and 6,000 in closing that it will take all my money. It's very scary to think I have to drain savings to buy my first home. Y'all think it's a good idea and think I can afford? I make about 38,000 + a year. Should I stay in apt. where I can budget and not have to worry about things breaking....extra costs and getting broke.
Sometimes I get so scared about thinking about all the money upfront and how confused I am, that I just want to forget about it.
Author: Sarasotatony
Posted: Thu Jul 28, 2005 1:38 am
Post subject: Getting Ready to Buy My First House
I know it can appear overwhelming, but you will never get anywhere renting. Try and see if you can qualify for 5% or 10% down, because you will be surprised at some of your costs after you move in. Appliances/window coverings are just a few. I certainly agree with you about PMI--avoid it if you can. Once approved, ask your lender how many days you can "lock in" your rate. Most lenders will give you a 30 day lock; a few will lock for 60 days. Some will lock you in for 60 if you pay a fee. Remember: That attorney you choose must be a specialist in real estate, he/she shouldn't be a standard attorney. Another suggestion: Go to www.bankrate.com and type in closing costs or junk fees in the search box. Some fees are negotiable with the lender. Some are tax-deductable. Closing fees can vary by a $1,000 to $2,000, depending on the lender. And: Close at the closest business day to the end of the month.
Author: jbrinson
Posted: Wed Sep 21, 2005 10:04 am
Post subject: 80/20 Loans no down payment or MI
I work at a mortgage company and we have 80/20 loans with no down payment at great rates, in which you can keep your 5%. Buying is always better with the tax advantage AND if you take an average appreciation of 8% a year on a house of 114k...considering it sounds like you are actually gaining additional equity immediately, in 5 years your house may be worth about 165k or more! Feel free to email me if you want more info on the 80/20 loans!!
Jen
Author: BestMortgageInfo
Posted: Thu Sep 22, 2005 7:56 am
Post subject: Should I Purchase a For Sale By Owner property?
Few comments on home value
Be careful here. Things to look for is to make sure that the properties that the appraiser is comparing (Comps) are
1) with in a mile of the home, and that the ages are close to this home
2) that the sizes of the homes, sales prices of the homes, number of rooms of the homes, are all "bracketed" meaning some lower some higher.
3) That the comps are fairly new, 3 months is best, 6 months normal.
Board Monitor
Board Monitor/ Administrator
Posted: Thu Sep 22, 2005 9:05 am
Post subject: Should I Purchase a For Sale By Owner property?
Charles,
Good tips on comps! What is the reasoning behind seeeking bracketed comps? Never heard of this.
_________________
Best Regards,
Curtis Arnold
Board Monitor
http://www.cardratings.com
(501) 663-0314
Author: BestMortgageInfo
Posted: Thu Sep 22, 2005 9:23 am
Post subject: Should I Purchase a For Sale By Owner property?
Well, I found out years ago, terrible experience, that appraisers can sometimes "give what someone wants". As long as it is not undergoing a review (lender or Loan officer or someone that knows what to look for) then they can come up with what ever value requested.
So, Bracketed is important:
Either one lower/smaller and the others higher/larger or the other way around. You want the home being appraised to be in the middle.
THere is a lot to reviewing appraisals. I forgot to include the GLA (Gross Living Area) factor. Should not be more than 20% difference. It is difficult to compare a home that is 1200 SQFT with a home that is 1800 SQFT. So difficult that lenders wont accept an appraisal like that.
posted by CardRatings.com at 12:59 PM
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