How do I make an offer on a Condo?

GameHat

I started this discussion earlier - see OK, I need help purchasing a condo. A great deal approaches?

The condo in question is pretty great. I'm reasonably sure I could get it at a steal ($140-$150k when the owner bought it at $210k just a few years ago).

I want to buy this condo.

The owner wants to cut out realtors, he says he would take the condo off the market (been there two years) so as to eliminate the 6%-7% commission.

I'm ok with this, but without realtors involved I'm afraid of neglecting some important steps in negotiating the purchase.

What should I require before signing anything? I suspect at minimum an inspection to see if there are any problems with the unit.

I have some legal representation options through my employer (benefit plan, legal option) - should I have them look over the paperwork?

What else am I missing?

Betelgeuse

I can't offer much on the specifics of the actual purchase, other than 1. yes you should definitely have it inspected, and 2. it would be a good idea to have an attorney look over everything. I do want to ask though--have you checked what comparable properties in the area have sold for (actually sold for, not their current listing prices) recently? Just because he is offering it at $60,000 less than he paid for it a few years ago doesn't necessarily make it a steal at all.

MichaelLC

Absolutely have it inspected. You said the seller is a friend/acquaintance, but doesn't matter. Inspections are usually required for a mortgage anyway.

I don't know if it's required by law, but we all met at the title office (Chicago Title Co.) to sign the 12,000 documents. They of course got their $ cut too.

You'll need a lawyer at the signing, minimum. Ours was someone my wife's uncle knew local - i.e., someone I had never met before. If you don't have any connections, contact the title office, and see if they have a recommendation. Pretty much just there for beer money/act as a witness to you signing and in case the other party screws with you.

Title company will sort out who gets what copies, etc.

Sir Headless VII

Having just purchased a condo (as in I moved in yesterday) while I did use a Realtor I can see it working without one. It seemed to me most of the heavy lifting was done by my lawyer. I didn't get an inspection on my condo (which was my Realtor suggestion) because most of the things that would be wrong with a house in a condo is usually covered by the condominium association (the exterior walls, windows, and roof). You should find out what your condo fees are and what they cover, you should find out if there are any special assessments pending (special assessment are when the condo association asks for more money to cover repairs that are unexpected and cant be covered by the condo fees) and if there are ask to include a term in the purchase agreement that it be paid by the seller, you should find out any rules and regulations of the condo association. Those things were handled mostly by my lawyer though (although it may be a bit of work for the seller to gather all the info a good lawyer will ask for). In short get a good lawyer.

Also when I was looking for a place and nervous about if i had missed anything (ok that hasnt quite gone away yet) This Site was helpful. It is a realistic and fairly comprehensive look at buying a home.

illig

definitely invest in a lawyer... he'll review the contract prior to signing to make sure you're not signing something stupid... he should also tell you how financially stable the condo association is (i.e. whether you're likely to get hit with huge assessments if something expensive breaks)

your bank will likely force you to pay for appraisal of the property, a title/lien search, and THEIR lawyer, which takes care of a couple of other things

you may want to invest in an inspector anyway, just to see if the condo was built well, or if it's shoddy and will fall down in a few years (in this case, walk away from the deal... there might be a reason why he's willing to sell a $210K condo for $150K)

Djeet

Here's Freddie Mac's simplified explanation on making an offer. The important thing is that it's written to let you out of the deal (or renegotiate if you still want the property but at a reduced price) in case your home inspection find issues or if you cannot secure adequate financing.

Here's a few links regarding buying (PDF) a FSBO (For Sale By Owner). Include the term "FSBO" when googling for information.

It's not voodoo, or rocket surgery, and every day real estate is likely transacted between people without the aid of agents (though likely without financing, and by people who're experienced in real estate), but taking on 6 figures of debt is a big deal, and if you don't know what needs to be done to ensure that a piece of real estate is properly transacted then I highly recommend you secure the services of a professional to help you out. Even if you cut out agents, you're going to need a home inspector, a lawyer, and probably a title/title insurance company. Your best bet may be to talk to whoever's going to finance the deal and tell them you're working with a FSBO. Since it's your 1st buy, it's very likely worth it to have help even if you're the one footing the bill.