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gpab.net
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Since November 20, 1999
Last Updated: November 03, 2007
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One Strategy for Buying a F.S.B.O.
- Expect to spend a lot of time looking at houses--you won't have anyone
screening properties for you. This is good; it is part of your
education on the local market. You might want to start a scrapbook
with information on houses you have looked at (clippings of advertisements,
etc.). Otherwise you will wonder if you should follow-up on some
advertisements--or have you already seen the house.
- If you are lucky, the vendor will have a appraisal for you to look
at. Unfortunately not all appraisals are accurate--the inaccurate ones
are often easy to spot, after you have been through a number of houses (see
point #1, above).
- Know what you can afford. The following link will help you determine
how much of a mortgage you qualify for. Royal
Bank Mortgage Calculator
(The seller may have an existing mortgage that the you can take over--but
you still have to be able to afford the payments.)
You probably won't find a deal better than 3 1/2 percent below appraised
value. Remember the seller is putting a lot of work into marketing the
house. Also, they are likely getting a bit fed up over people who say
the are coming to look, but do not show up (after the house is cleaned up
and everything).
Why is the seller going through all this trouble--it's not because the
Realtors don't want to show the house. Its because the seller is hoping to pocket the Realtor's commission!
So you are unlikely to save the full 7% commission. You will likely
share 50/50.
- Watch the "For Sale By Owner" section of the
classifieds, the listings every two weeks by "For Sale by Owner" (538-1475)
and of course the listings at this WEB site! Tell all your friends and
co-workers that you are looking for a new home.
- When you make an offer, remember price is not everything. Sure it
may be a few thousand more than you expected--but if the seller offers a
date
that mean you don't have to move twice (because your present home has been
sold), put your stuff into storage, rent a
home, lose that rental damage deposit, and finally move a second time into
your new place. Well, that is worth something.
Those appliances and drapes were not included in the appraised value.
The seller likely can't use the drapes in the next house--and if you
negotiate for them they can delay your having to buy new ones.
- When you make an offer that is accepted:
- write up a temporary contract immediately--so both parties know what has
been agreed to (be sure to show the price, appliances etc. included,
and a date the sale will be completed.) (An informal
contract can be found on this web site.)
- Make a deposit immediately, probably about $1,000 to $5,000, and give the rest to the lawyer.
- The vendor likely won't cash the cheque, but will hand it over to the
lawyer.
- Agree on a lawyer you can both see within a week to write up a formal
binding contract. One option is to share the lawyer to save on
disbursements (legal expenses). The down side is if the deal goes
bad--you will both probably end up looking for your own lawyers.
Don't even think of doing a real estate deal without a lawyer! The
lawyer will set out the fees for both parties. The buyer usually
pays more since there is a mortgage to be registered.
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