BUYING A RESIDENTIAL PROPERTY
BUYING AN OFF-MARKET RESIDENTIAL PROPERTY
Usually, people don’t start out with the intention of buying a house that’s off-market. Instead, most buyers start their home buying journey by working with an agent who shows them properties that are listing on the market. This is because on-market properties are the only way that the agent can ensure that they will be compensated for their work.
To be clear, there are usually three situations that arise where the buyer will purchase an off-market property directly from the seller, with no agent involved.
1. FOR SALE BY OWNER (FSBO)
Sometimes, a prospective buyer may find their dream home through off-market websites such as Craigslist or FSBO.com. Or, they might be driving around their desired neighborhood when they spot a “For Sale By Owner!” yard sign.
Another common scenario of when a purchaser buys the property from the seller occurs when a landlord decides to sell the property to his or her tenant. This can either happen due to local rules that give the tenant the First Right of Refusal, meaning that before the owner places the property on the market, they must first give their tenants the opportunity to purchase. Or, this may happen when the landlord and tenant have a close relationship and through discussions, the landlord offers to sell the home to the tenant before he or she places it on the market.
3. FAMILY OR FRIEND
Or, perhaps a friend or family member decides to sell the property to another friend or relative. Sometimes, when this happens, the friend or family member will sell the property to the buyer for far less than market value, especially when it is a family member.
When any three of these scenarios occur, the question becomes,
“Do you need an agent?”
Obviously, under these three scenarios, there is no reason for the seller to hire a listing agent. However, often times, the seller is willing to pay a buyer’s agent. If you already have an agent, your agent can contact the seller on your behalf and get the contract under way. However, you should note that most buyer’s agents aren’t always thrilled to work on off-market properties since without a listing agent, there is more work for not necessarily more money for the buyer’s agent. When only one agent is involved, that person often ends up doing the work of both sides since someone is going to have to assume the responsibilities of that missing listing agent.
As for your needs, having an agent can be extremely helpful throughout the entire process, and the seller typically pays the agent’s commission, so there’s no reason not to try to work something out with someone. Why should you go it alone if you don’t have to?
However, if the seller refuses to provide a commission to a buyer’s agent, it is absolutely critical to have an attorney by your side through the transaction. First off, using an attorney can actually be a win-win for both the seller and buyer – the seller does not have to pay the commissions and as a result, the buyer is often able to purchase the property at a lower price point. Secondly, an attorney can make sure that specific provisions are included in the Purchase Agreement that meet your specific needs and protect your interests. Finally, it is easy to make a mistake or leave out crucial information when trying to prepare the agreement on your own, even if you use a pre-printed form. The failure to have all of the details spelled out in the agreement of sale often leads to serious problems which can cause delays and lead to extra expenses before the sale can be closed. Bottom line, this isn’t a time to be penny wise and pound foolish.
When you hire our firm, we can draft the contract, explain it to you, and make sure you know your obligations, when you must perform them, and what happens if you don’t.
There are also many provisions that you need to be aware of, such as:
- How much is the deposit or “earnest money”?
- Who holds the earnest money deposit?
- Under what situations will the buyer be entitled to receive the earnest money deposit back?
- What other items, such as appliances, window treatments or lighting fixtures are included?
- Do the buyers need an appraisal contingency?
- What inspections will be necessary, e.g. roof, wiring, plumbing, termites, etc.?
- Should the house be purchased “as-is”?
- What duties are owed to the buyers if the seller is selling “as-is”?
- Who pays the cost of needed repairs if the inspection turns up problems?
- Is the home located in a condominium, planned community, or part of a home owners association?
- What if the buyer can’t get a mortgage?
- What if you want to back out?
- Who pays the costs of any state or local deed transfer taxes or fees?
- Who pays for title insurance?
- When do the buyers take possession?
- What happens if the house burns down the day before settlement?
- Can the sellers place money in escrow for repairs that were not completed?
As you can see, the process can be complicated and there are a lot of details that need to be properly addressed. For a buyer on their own, the process can be confusing and frustrating and it is very possible key details may be overlooked. It is important for a buyer to work with a real estate attorney to ensure the entire process goes smoothly and efficiently, especially when the seller will not compensate your buyer’s agent.
Alternatively, even if the seller does compensate the buyer’s agent, it is still good practice to have a lawyer review your contract before you sign it. Even though your agent represents you, you should never forget that agents make their living selling real estate and have an interest in selling as many properties as they can as fast as they can. Your attorney has no independent interest, and will be able to advise you if there is a problem with the agreement before you sign it. As such, if you are a buyer that is purchasing a property that is on the market, we can still help! Our firm will also be able to review your contracts for a flat fee, even if you are working with an agent.In fact, if you are interested in purchasing a property that is on the market or if the contract on the property that was listed by a For Sale By Owner falls through, we can still work together with Saman Saba representing you as your agent. Under this scenario, Saman will guide you through the purchase of your home like any other full service brokerage while also providing you with the insight and protection of an attorney.
To learn more about the hidden benefits of working with an agent who is also an attorney, please be sure to download our informative guide, “The Hidden Benefits Of Working With An Agent Who Is Also An Attorney.”
HOW MUCH DOES YOUR OFFICE CHARGE?
At Saba Law Group, LLC, we can appreciate that every transaction is as unique as the property being sold. As such, we created an incredibly unique yet competitive pricing model in order to better serve you. We understand that you want a transparent way of doing business and that the model of giving an attorney a retainer without knowing exactly what you are getting in return can be scary. What if the attorney charges for every second we are on the phone? What exactly does the retainer include? How much more will the attorney require if we use up the retainer?
We want you to have peace of mind.
This is why we offer several different options, you may either pay us upfront in the form of a flat fee, in which case the fee is not contingent upon the transaction successfully closing OR you may pay us only once if the transactions successfully closes.
Please keep in mind that typically, as mentioned above, some most sellers do offer a buyer’s agent commission, which means that you will not be responsible for any fees. We will always start the discussion with the seller by asking if the seller will provide a commission. If so, then you will not have to pay any attorney fees to us since Saman Saba, Esq. is a licensed real estate agent.
However, under rare circumstances, the seller will not agree to give a commission to the buyer’s agent. Under this scenario, you will have to hire an attorney to make certain that your interests are protected. Again, we offer different packaging options so that you may pick the one that best fits your unique needs.
To learn more about our services for residential buyers, please download our pricing sheet below.
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