Buying house direct from owner (Houston, Dallas: sales, real estate, renting)

[TBell22]

Hi everyone,

I’ve been renting a house, here in Houston, for almost 4 years and recently had a conversation with the owner about purchasing it from them. We’ve discussed a price that is acceptable to both parties (assuming no issues with the house) but I was wondering if I could get some feedback on the process of buying direct from owner as we have agreed not to go through a realtor (for his benefit obviously, but he has reflected the saving in the purchase price).

The purchase price is contingent on everything being good with the house (which was remodeled 10 years ago) but we are the very early stages of the process and I wanted to outline my initial plan to see if I’ve missed anything…

Engage with a real estate attorney – I’d prefer to do this as I’ve not purchased a house before and we won’t be using a realtor. My question is – Do attorneys offer this service (from offer to closing and paperwork) as a set fee or % of sale? If set fee, what is a ballpark figure?

Having already lived in the house for 4 years, will a C.L.U.E report be of any use to me? I think it only goes back 5 years and I’ve not noticed any issues with the house

Inspection – I’ve read it’s better to hire a home inspector and separate termite inspector. Is this a good idea or waste of money?

Surveyed – Is it prudent to have the property surveyed to ensure no encroachments?

As with many Houston properties the house is close to a bayou. Should I get an elevation certificate?

Is there anything or anyone else I should be looking to engage with as part of this process (mortgage adviser is already in place), or any words of wisdom/things I need to look out for?

Thanks!

[hendersj31]

A couple things I can comment on:
You should use the real estate attorney. There is quite a bit involved in buying a house as I am sure you already discovered. I can't speak of the costs involved in today's dollars but I purchased a small cottage home about ten years ago this way and I am pretty sure the attorney fees were less than a thousand dollars. That may have been negotiated by my wife form a higher price, but not sure.

I believe you will need to hire a separate inspector for termites. As far as I know regular home inspectors cannot give you any guidance on termites, I was told that they cannot even mention if they suspect termites.

You should definitely get an inspection. What if something major is identified? How else will you or the seller really be able to support the state of the home?

As for the survey and elevation certificate you should check with the title company and mortgage company. Is flood insurance required? That may give you some insight as well.

I would skip the CLUE, the seller has not been in the house in quite some time. What would they be able to disclose?

There may be more, but that is all i can think or right now. Hope it helps.

[cheryjohns]

Originally Posted by TBell22

Hi everyone,

I’ve been renting a house, here in Houston, for almost 4 years and recently had a conversation with the owner about purchasing it from them. We’ve discussed a price that is acceptable to both parties (assuming no issues with the house) but I was wondering if I could get some feedback on the process of buying direct from owner as we have agreed not to go through a realtor (for his benefit obviously, but he has reflected the saving in the purchase price).

The purchase price is contingent on everything being good with the house (which was remodeled 10 years ago) but we are the very early stages of the process and I wanted to outline my initial plan to see if I’ve missed anything…

Engage with a real estate attorney – I’d prefer to do this as I’ve not purchased a house before and we won’t be using a realtor. My question is – Do attorneys offer this service (from offer to closing and paperwork) as a set fee or % of sale? If set fee, what is a ballpark figure? Real estate attorneys aren't that prominent here. You can talk to a realtor about a set fee just to write up the contract and guide process. That is what I advised my son to do (in Dallas area), since the buyer is a friend. Also, ask for comp sales. You may think the sales price reflects a good value - you may be surprised.

Having already lived in the house for 4 years, will a C.L.U.E report be of any use to me? I think it only goes back 5 years and I’ve not noticed any issues with the house. Why not? Your insurance company will pull one for free. They do it anyway when determining whether to insure.

Inspection – I’ve read it’s better to hire a home inspector and separate termite inspector. Is this a good idea or waste of money? Definately do so. Maybe you have a serious issue that just has not reared its ugly head yet. Better to know now, so price can reflect it.

Surveyed – Is it prudent to have the property surveyed to ensure no encroachments? Yes, lender will insist - and seller may have one already that can be used.

As with many Houston properties the house is close to a bayou. Should I get an elevation certificate? Again, talk to your insurance provider. Is the house in the flood zone?

Is there anything or anyone else I should be looking to engage with as part of this process (mortgage adviser is already in place), or any words of wisdom/things I need to look out for?

Thanks!

Good luck.

[chris_ut]

Go to your local title company (I recommend Old Republic if you have a branch nearby) and they can handle all the paperwork for a small fee and point you to an attorney to draft the documents.

[sezzam]

Originally Posted by cheryjohns

...
Real estate attorneys aren't that prominent here. You can talk to a realtor about a set fee just to write up the contract and guide process. That is what I advised my son to do (in Dallas area), since the buyer is a friend. Also, ask for comp sales. You may think the sales price reflects a good value - you may be surprised.
...

I don't know about this advice. It is better to work with a real-estate attorney.

[MaryleeII]

Contact a title company, since you would close with one. They should have recommendations for attorney, inspection, etc.Whatever you do, make sure you get a title search AND title insurance. They are NOT one in the same. You do pay extra for title insurance, but you simply can't afford not to buy it, IMO.

We bought a new-built house, and insisted on title insurance. we were told not to worry, it was newly built, so there couldn't be liens against it. well, shortly after the purchase, liens were placed from builders, subcontractors, suppliers, etc---apparently the builder didn't make a habit of paying his bills! The title search didn't reveal liens, because no liens had been filed at that point. Our title insurance kicked in and protected us against those charges. BTW, this was not in Texas, but would probably work the same way.

[sezzam]

Originally Posted by MaryleeII

Contact a title company, since you would close with one. They should have recommendations for attorney, inspection, etc.Whatever you do, make sure you get a title search AND title insurance. They are NOT one in the same. You do pay extra for title insurance, but you simply can't afford not to buy it, IMO.
...

Good advice. Work with a title company and especially with the attorney through every step. Don't be shy; ask questions of the title company and the attorney. If you interact well, they will appreciate your interest and you will be glad you engaged.

[cheryjohns]

Originally Posted by SMUR

I don't know about this advice. It is better to work with a real-estate attorney.

Every state is different and has a different make-up of strength with real estate attorney/title company/realtor. Having located realtors in different states for friends and family, I was amazed to see the diferences. Examples - Pennsylvania - weak realtor/strong real estate attorney/strong title. Oklahoma - strong realtor/strong real estate attorney/very weak title. Texas - strong realtor/strong title/weak real estate attorney. It depends on state make up.

Most real estate attorneys here either work for the companies that have the software to spit out the docs - and have no further involvement - OR have a share of a title company ownership.

You have to know your state.

[JasonAndJulie]

Our regular home inspector also did a termite inspection. Your lender might require a termite inspection. Get one.

[sezzam]

Originally Posted by cheryjohns

Every state is different...

Most real estate attorneys here either work for the companies that have the software to spit out the docs - and have no further involvement - OR have a share of a title company ownership.
...

I agree, every state is different, but any real estate transaction is a legal contract and thus should have an attorney involved. A realtor is not an attorney; just like an attorney is not a realtor.

I also agree with you that (not just where you are, but pretty much anywhere) in most cases an attorney's job is done by filling the blanks of a template contract. Thus, the suggestion to OP to stay engaged and ask questions.