Steps to buy direct from seller?

Question

Seeking guidance... I’ve always purchased through the MLS but I’ve found an owner who will sell directly. I’ve listened to hundreds of hours of podcasts and read a ton of articles but most seem to gloss over the details... In Wisconsin, what do I need to do to make the offer, and then once accepted actually get the deal done? Does a title company handle everything if I talk to them? Will the bank that’s doing my financing guide me on everything I need to do? Do I need a real estate attorney?

Please, if anyone could share a step-by-step I would greatly appreciate it.

Sincerely yours,

Lost & Confused!

Lore Postman · Answer

Hi Jason,

Andy Crooks offers great tactics on what to do for your area/state. I'll offer a few bits from my own experience. There's no hard-and-fast rule for making an offer or getting a deal. In fact, of the 15 or so properties I've purchased in the last 10 years or so, in only 2 or 3 did I use what would be considered a traditional offer.

Right now I have a house in full renovation (in one of the communities north of Charlotte, NC) which I put under contract using a 1-page letter. I have 4 more parcels on track to close in a few weeks (also north of Charlotte) that went under contract with a 2-page letter.

I've had the best luck with offers by trying to learn what's important to the seller, and then shaping a deal that will work for both of us.

Check out J. Scott and Carol Scott's Bigger Pockets podcast on negotiating. I've had luck using a lot of the techniques they talk about. It's nice hearing their experiences in podcast format because you can replay sections multiple times as inspiration or to spark new ideas for yourself.

One of the parcels in the deal we're about to close is a 6-plex multifamily that's located near where the owners own and operate a small restaurant. They kept a small apartment in the complex for themselves (to avoid battling traffic between their "regular" home and the restaurant). The offer included letting them keep the apartment (and not pay rent) for about 4 years. We will get enough from other other units to cover our costs, and making this offer helped the sellers accept a purchase price that was many multiples lower than what they were originally asking.

I also have no hard-and-fast rules for how to find deals. The 6-plex was MLS, and for that reason I enlisted the help of a realtor I've known for years. If the seller has an agent, I always have one too. But so far I haven't brought an agent to a FSBO listing, mostly because I like to talk directly with sellers as much as possible so I can try to determine what's most important to them.

Best of luck! Keep asking great questions. The answers you receive will not only point you in a good direction, they'll give you confidence to start inking deals!

Lore

Andy Crooks · Answer

Jason,

Congrats on taking the plunge!

You can find the state approved forms online. Link below

https://dsps.wi.gov/Pages/BoardsCouncils/RealEstate/ContractualForms/Forms.aspx

After that you have an accepted offer which doesn’t have any contingency, you can send to a title and they will work up the closing info, although generally the seller would choose title co.

Your bank can tell you what if anything they would require (inspection, appraisal, etc). It is your duty as the buyer to check whatever those boxes are to move the deal forward.

Outside of the bank requirements it’s up to you to decide what contingencies you want if any. The potential contingency vary depending on the type of deal (condo, SFR, vacant land, etc). Just because you have found a deal off market doesn’t mean you should go in blind.

I’m a Broker based out of MADISON and I grew up in Wausau. Message me if you want to discuss further

Andy

Scott Schultz · Answer

in all reality, in WI if the buyer and seller are not licensed you can literally write out a contract on a bar napkin, not saying you would have protection if a dispute came up. that being said, if the 2 parties agree put it on paper, I recommend a meeting at the title company you will be using, they can help you with forms and some guidance on how to complete them, they usually dont charge a fee as they will collect a fee for title insurance, closing fees, ect.  its not rocket science, its not this big involved legal monstrosity. Consider this, I buy houses at the court house all the time, there is no contract, literally verbal, and a register reciept for payment.  The transfer of real estate is simple, the paperwork just clarifies who, what, when, and where, and what happens if someone  doesnt do what they said they would. If both parties agree and are willing none of it is a problem. (FYI I am a Broker so I have to use State approved forms by Law)

Caleb Heimsoth · Answer

@Jason Bilbrey

This will vary some as I am not in WI.  Here’s how I’ve done it, step by step.

1.  Talk directly to owner and make a verbal price.  Agree on price, and General terms.

2.  Use purchase agreement I found on the internet.  Fill it out.  Sign it.  Send to seller.  Her signed copy back.

3.  Send that to the lawyer as well as the banker if financing.

4.  Wire earnest money to lawyer.  Schedule inspection

5.  Wire more money and close on property

Steve Vaughan · Answer

Except for my first REO offer last week, I've offered solo for years.

I use the standard realtor MLS forms for my state like Andy linked to above and just put N/A in all the agency references.

I turn in the signed PSA with my earnest money to a title co to open escrow.  At that time you can ask them about any other standard disclosures  like condition and lead paint (if house built pre-1978) your seller should be completing for you.

Adhere to the contingency deadlines like inspection and financing and know the contract. Read it.

Keep your lender and title officer in the loop.  Cc them as you go through the stages. If you make it through the inspection contingency, have lender order the appraisal, but not before. Most appraisals are paid for by buyer up front.

Hopefully the seller can provide some purchase pppwk from when they bought. It will have the  legal description, parcel # etc. The county assessor website has that as well.  The title co can help with specific neutral issues and questions but not offer advice. Good luck!

Kent Nielson · Answer

Ditto what @Rebecca Knox said. The purchase contracts and anything you need are pretty accessible. But they do no good unless you know what to write on them lol. I would definitely talk to a real estate lawyer to help write up the purchase agreement/contract.

As far as your other questions, just replace "real estate agent" with "your lawyer" and the rest of the process is identical to a typical transaction. Your lender gets a copy of the contract and get's your home loan rolling. They communicate with the title company, yada, yada, a month later you close at the title company.

Rebecca Knox · Answer

Agree with Scott, the Title Company can help....also, many have an attorney as well on staff. In my experience, the bank will want a formal offer on the state issued form and Andy posted the link...there are 3 types of offer forms, wb-11 (residential), wb-15 (commercial) or WB-14 (condo). If it's a rental property, may want to use Addendum R and request Estoppels.

In Milwaukee, there are agents who will write up an offer for a flat fee. Since it's your first time, may be well worth looking in to this or an attorney so you have a template.

Steps to buy direct from seller?

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