Should I buy my friends' house? And how would you do it? (appraiser, mortgage)
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Exactly- this is a business transaction- keep personal feelings out of it.
The first thing you want to do is to physically see the house. Forget pictures- they can hide much. You need to get there and view the home inside & out.
Then you need to get good idea of what it is worth. Forget about what they owe on it- it has no bearing on today's value. If they are not willing to show you a current appraisal, then ask if you can have one done. Based upon an appraised value , hire a real estate attorney and have him/her draw up a contract. Make sure you include a home inspection clause, a financing clause, closing data, etc. - all to protect you.
Then present the contract to the sellers and see what happens.
Make sure to do all due diligence. This is an expensive transaction - protect yourself.
Very well said! You also SandyJet, I hate those bad dye jobs and cheesy clothes!
In a private transaction there is no need to pay a salesperson to drive you around so all you need is a good real estate lawyer and professional appraisal, not a guess.
Are you expecting to buy the house for what it cost ten years ago? If I were the seller, I would want current market value as ten years ago is, well, history and I prefer to not give away my equity.
Very well said! You also SandyJet, I hate those bad dye jobs and cheesy clothes!
In a private transaction there is no need to pay a salesperson to drive you around so all you need is a good real estate lawyer and professional appraisal, not a guess.
Are you expecting to buy the house for what it cost ten years ago? If I were the seller, I would want current market value as ten years ago is, well, history and I prefer to not give away my equity.
10 years ago was 2005.......with a few exceptions around the country...........housing prices haven't risen back up to 2005 levels.
If you are serious about wanting the house, you might as well go ahead and write off the friendship, because it probably won't survive the deal. Too much haggling involved in buying a home...and if you refrain from haggling for the sake of the friendship, then later you will resent the friend when you find things wrong with the house that were not mentioned, etc.
1. Go see the house.
2. If you like it hire a local appraiser to get market value or go to local open houses if you believe you are good at making your own comparisons
3. Go to a mortgage company and get prequalified if you need a loan
4. Make an offer on the house and use a proper form to submit the offier (any title company can give you the forms to make an offer, just tell the Title company you want to do a private sale) or use a RE Lawyer to help you complete the offer paperwork
5. Once the owner accepts the offer by signing the offer, have the house inspected.
6. Re-negotiate the deal if inspection shows problems and you stil want the house
7 Apply for a loan with mortgage company
8 Once approved, make appt with the Title company to close the sale
9 Go to title company and close the sale. If you dont know much about all this make sure to have a real estate attny to look over all the documents from offer on
Tell your friend that you understand they want to sell their house. Then tell them that you would like to buy a house and would consider buying theirs. Then line out the steps on your side of the process as above if they would consider selling their house to you. No guarantees because a lender will require you to jump through a lot of hoops. DO NOT jointly use a real estate attorney. Maybe pay for their appraiser to set a price but keep in mind the fact that the bank will hire one of their own as a part of the mortgage writing process.
You need your own attorney, but if you get one, he or she could deal with their attorney and put the deal together for you once you agree on the terms. If you can't you would be smart to get a realtor to do it for you.
You must see the house in person or have someone you really trust see it for you - it could stink, leak have holes in the walls or mold etc. Also have a home inspection (and any other inspection normal to the area done - termites, methane gas etc.?)
If I was a seller and had a buyer and all at once buyer introduces a realtor and expects me to pay a fee I would be pissed.
A professional appraiser, good home inspector and a good lawyer is more important. A realtor adds nothing to transaction except a bad dye job and cheesy clothes
That's uncalled for (and I'm not and never have been a Realtor). I have, however, purchased a home from a friend, so I have some experience with this. It turned out to be a perfectly good experience, given I lived in the house for 13 years and eventually sold it for a profit. But I would not do it again having found out since then how many things can go wrong with a real estate transaction ... with perfect strangers OR friends.
The thing is, if you have to pay an attorney, you may as well have a Realtor because the seller pays the Realtor. When I bought my house, my friends/sellers said we would just complete the transaction between us, but then they ended up getting a Realtor themselves because they needed one to complete the sale of the house they were moving to.
So, as it turns out, they paid a Realtor and I paid my own lawyer. So I wouldn't make that mistake again! Live and learn, although I am convinced they weren't trying to pull anything on me, they were just less experienced at real estate transactions than I was at the time.
I would agree that I would never buy a house without a current professional appraisal and a home inspection that I participated in personally (which I did that time, too). But I would also now engage a Realtor who had in-depth experience in the exact neighborhood in question (things can change VERY quickly in home values).
As for the OP's question, I would guess the friends are not in agreement about selling the house. Or at the very least the husband isn't emotionally one board. Or he would be providing the photos. Not that I would ever base a home purchase on photos ... OP, you have some good advice here. Take it. This isn't a place to cut corners.
Buying a home for any reason at all is a business transaction and you never mix business with your personal life. Selling a home, or buying one, is very stressful and one of you two is going to feel like you got the short end of the stick. They will find a buyer you don't need to be their banker. I suggest you keep the relationship simple; but if you must buy this house from them then you need to see it in person and be prepared to lose a friend. I can't think of a single real estate transaction I have done where I would ever want to see the other party again. Both sides of the transaction have to give a little to make it work and neither end up completely happy.
There are good reasons why it's often said that you should never do business with family or friends--at least if you want to remain on good terms. Nonetheless, if both you and your friend want to do this, you need as much objective interference as possible. This is one time when I would say that you need an appraisal to establish the price. An appraisal is only an opinion of value (hence my reluctance to ever use an appraisal to establish a price since I believe that is best negotiated) but, importantly, it is a third-party opinion of value. If you both obtain appraisals, agree ahead of time to average them to reach a price.
ESPECIALLY since you a dealing with a friend, you need to not skimp on your due diligence. Don't assume that they know the title is clear--have a title search done and get a title insurance policy (paid for by whichever party normally pays for title insurance in your state). Make sure that your inspections are thorough. Use a good real estate attorney to handle the transaction and have them handle any negotiations which may be needed as to the inspection results. I don't believe that you need a real estate agent to assist you in such a transaction...but if they use a real estate agent then you should, too--just for balance. And don't be afraid to walk away from this deal if it doesn't feel right for you.
If you want to keep a friend do not do business with them. It sounds like you are not even getting a deal,
Also it's easy to owe so much after 10 years, they probably bought when prices were high and might be underwater in their mortgage or just breaking even to get rid of it.
If they are not doing you a favor giving you a great deal do not do them a favor by buying it. No good deed goes unpunished.
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You also SandyJet, I hate those bad dye jobs and cheesy clothes!
