How to Buy a House For Sale by Owner

Our top advice on “how to buy a house for sale by owner” is to know the contract well. When you want to buy a house for sale by owner, although broker and Realtor fees are eliminated, there will be some costs. Also, keep in mind that there is a reason for an owner to go it alone, and one of many reasons may be that he wants a price too high for the conditions, such as the condition of the house or the value of comparable houses in the neighborhood. Never assume that the owner has chosen to sell on his own to lower the price on the market. Obtain a good assessment considering the house condition, the neighborhood, schools, and other pertinent information. The final contract is a series of negotiations that are in the end agreed to. These sealed agreements will decide who pays the costs of the various aspects involved – the buyer or the seller.

Some of the charges

Here we will consider some of the costs and fees involved to give you an idea of how important it is to become educated on all the aspects of buying a house for sale by owner, and especially with the many costs involved. The following three fees are generally paid for by the seller, but not necessarily. Again, be well informed of the details agreed upon in the contract. In fact, be certain of any paperwork that you sign along the way.

Loan origination fee: This amounts usually to 1% of the purchase price of the house and is paid to the lender for setting up the loan. For example, a $150,000 loan will cost about $1,500. This fee is often called a discount fee, which would be similar to, but not the same as, the discount fees called “points”.

Appraisal fee: An appraisal of the house and property is necessary for the lender to determine the amount of risk involved, which thereby determines the permitted amount of the loan.

Underwriter’s fee: This is a charge by the final lender for providing the money. It is generally $300-$500, but can vary.

Other charges

The following charges for such things involving title, title insurance, escrow, etc., will not be assumed to be the responsibility of either party (buyer or seller), nor of the lender, but are listed to demonstrate some other costs involved. In the agreement process, many options can be assumed by any of the parties involved. Know the details well. Naturally, we highly recommend a real estate attorney. Here are some of the other fees:

Title search – $100 – $200
Title insurance – $200 – $300
Document preparation – approximately $150
Government recording fees and taxes – approximately $100
Escrow account – This can be a very large amount and includes things like down payment, hazard insurance, mortgage insurance, property tax, etc. Be sure to have a real estate attorney to assist you to be certain that this held money is in the right hands. Never give the escrow or any part of it to the owner to hold.

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