Profile picture for bschockmel

I want to buy a house "For Sale by Owner". What are the REQUIREMENTS & precautions are needed?

We are moving to TX from NY and need a house soon. We have very little money and need to know the best way to stretch what we do have. We have found a house and the owner will finance with $5000 down, split into two payments. She will hold the mortgage for three years and we will then have to get our own financing, but she said she works with a company who can help us do this. Can we offer less on a deal like this? What is the minimum amount of time it would take before we can move in? 
  • January 09 2013 - Brazoria
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Answers (8)

Get a Realtor to help you, it will save you a lot of heart ache and probably money too.  When I do a Owner finance I take it to a document prep attorney to make sure the loan is structured correctly and get the title company to do their thing, get a survey, inspections, etc. There are a lot of moving pieces to these deals and the seller pays the commission so get a Realtor to help you!
  • January 10 2013
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There are a lot of issues with "For Sale By Owner" or FSBO homes, not the least of which is the question of an underlying mortgage.
If there is an underlying mortgage on a property and it is sold FSBO with the seller carrying a contract, this could trigger a "Due on Sale" clause with the mortgage holder and if it does, where are you then?
Owner carry contracts can be very beneficial for someone with limited assets and credit issues, but there can be some huge pitfalls. You need someone on your side to review the title issues, probably an attorney and this may cost you more than you save with the transaction.
As stated below, good luck!
  • January 09 2013
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Profile picture for Ofe Polack
This type of contracts are very fragile, read all the advice given below.  If there is a mortgage, what guarantee do you have that the seller will continue paying the mortgage, since you do not own the property your $5000 could be lost. Why don't ypu rent until you are approved to buy?  Whatever you do, contact a real estate attorney to look over the contract and advise you.
  • January 09 2013
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Profile picture for vikkiiverson
I would definitely contact a real estate attorney in that area or a real estate agent. It seems odd that the seller's company would handle it, and that leaves you unprotected.
  • January 09 2013
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Does the home currently have a mortgage?  If so, how will you be sure that the seller continues to pay the mortgage?

Will the current payments cover principal and interest or interest only?

Since you did not state the terms of the agreement, will you be able (financially) to obtain your own mortage in just 3 years if you are paying your agreed to monthly payment?


Proceed with caution.
  • January 09 2013
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Just curious, is there a reason you want to purchase a for sale by owner property vs. going with a licensed Realtor?
  • January 09 2013
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Make sure you have an attorney review the paperwork (particularly since you are moving from another state and probably aren't familiar with local customs). Also, hire a professional appraiser to make sure the price you are agreeing to is not out of whack.
  • January 09 2013
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Profile picture for Outer Banks N C
good luck
  • January 09 2013
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