Buying house from neighbor without a real estate agent
Fort Worth, TX · Member since 2017 · 6 posts · 5 votes
Buying house from neighbor without a real estate agent
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Jason WrayPro Member
Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votesDominic,
You have a lot of questions which is great but the questions demonstrate this is your first REI and having partners can complicate things if not handled correctly. This is where having a seasoned real estate agent comes in handy. Realtors are well versed in contract law and verbiage to help avoid issues during and after closing.
Agents also work closely with the Bank/Lender to help the buyers and sellers close on time and without issues. The Bank handles the appraisal you cannot order one by law if financing is involved due to AMC rules under the Dodd Frank act. The Bank also communicates with the title company to order chain of title and require lender/title insurance. That will provide you with confidence knowing there are no taxes owned or unpaid liens.
I have worked with Lucia Rushton in DFW multiple times who can great agent and it is well worth using her to avoid painful mistakes! You can find her on Bigger Pockets as well reach out to @Lucia Rushton
12 Replies
- 2yJason WrayPro MemberBanker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
Dominic,
You have a lot of questions which is great but the questions demonstrate this is your first REI and having partners can complicate things if not handled correctly. This is where having a seasoned real estate agent comes in handy. Realtors are well versed in contract law and verbiage to help avoid issues during and after closing.
Agents also work closely with the Bank/Lender to help the buyers and sellers close on time and without issues. The Bank handles the appraisal you cannot order one by law if financing is involved due to AMC rules under the Dodd Frank act. The Bank also communicates with the title company to order chain of title and require lender/title insurance. That will provide you with confidence knowing there are no taxes owned or unpaid liens.
I have worked with Lucia Rushton in DFW multiple times who can great agent and it is well worth using her to avoid painful mistakes! You can find her on Bigger Pockets as well reach out to @Lucia Rushton
- Member since 2018 · 1k+ posts · 1k+ votes2yWhy aren’t you telling us whether you’re getting a mortgage? Are the three/four of you holding equal percentages of the title?
Quote from @Dominic Nguyen:
I was approached by my neighbor if I wanted to purchase their house since they plan to move in the next three months for new job opportunities. It will be an off market deal. To save on fees for both parties, we are planning to handle the transaction ourselves. I plan to form a partnership with three other friends for this deal.
1. When should I form this partnship and open a business bank account to pool capital?
2. What documents should we be prepared to fill out?
3. Should we work with a lawyer?
4. I assume we should get the property appraised? How else can we get the property valued correctly?
5. Should we remove the real estate agents from this transaction?
The most important question is should we do this at all?
You will need a lawyer.
You will need an appraisal.
You will need a home inspection.
You will need title insurance.
You will need a contract with the Seller.
You will need some sort of partnership agreement if not a bog standard common law agreement as defined by your state.
You will need a survey.
You will need to heed the advice of the attorney in whether you need any other documents, and in what any document must provide for.
You will need to have in your above documents what happens if you don’t like what is revealed or if there is a failure to get a document.
The presence of a real estate agent is irrelevant to those things.
Do NOT focus on saving the commission. Focus on the steps of a deal.
Make sure each partner has his money up front, and agree as to how you handle disagreements. - 2yTheresa HarrisPro MemberMember since 2019 · 15k+ posts · 11k+ votes
You can do this without a realtor. Contact a lawyer and have them draw up the agreements.
- Fort Worth, TX · Member since 2017 · 6 posts · 5 votes2y
Quote from @John Clark:
Why aren’t you telling us whether you’re getting a mortgage? Are the three/four of you holding equal percentages of the title?Quote from @Dominic Nguyen:
I was approached by my neighbor if I wanted to purchase their house since they plan to move in the next three months for new job opportunities. It will be an off market deal. To save on fees for both parties, we are planning to handle the transaction ourselves. I plan to form a partnership with three other friends for this deal.
1. When should I form this partnship and open a business bank account to pool capital?
2. What documents should we be prepared to fill out?
3. Should we work with a lawyer?
4. I assume we should get the property appraised? How else can we get the property valued correctly?
5. Should we remove the real estate agents from this transaction?
The most important question is should we do this at all?
You will need a lawyer.
You will need an appraisal.
You will need a home inspection.
You will need title insurance.
You will need a contract with the Seller.
You will need some sort of partnership agreement if not a bog standard common law agreement as defined by your state.
You will need a survey.
You will need to heed the advice of the attorney in whether you need any other documents, and in what any document must provide for.
You will need to have in your above documents what happens if you don’t like what is revealed or if there is a failure to get a document.
The presence of a real estate agent is irrelevant to those things.
Do NOT focus on saving the commission. Focus on the steps of a deal.
Make sure each partner has his money up front, and agree as to how you handle disagreements.The 4 of us each will own 25% of interest in this partnership. We definitely will seek to have a mortgage. I was thinking to get the price locked down through appraisal and negotiation, then we will pay the equity in cash to the seller and assume their mortgage. Have you seen that done?
- Fort Worth, TX · Member since 2017 · 6 posts · 5 votes2y
Quote from @Jason Wray:
Dominic,
You have a lot of questions which is great but the questions demonstrate this is your first REI and having partners can complicate things if not handled correctly. This is where having a seasoned real estate agent comes in handy. Realtors are well versed in contract law and verbiage to help avoid issues during and after closing.
Agents also work closely with the Bank/Lender to help the buyers and sellers close on time and without issues. The Bank handles the appraisal you cannot order one by law if financing is involved due to AMC rules under the Dodd Frank act. The Bank also communicates with the title company to order chain of title and require lender/title insurance. That will provide you with confidence knowing there are no taxes owned or unpaid liens.
I have worked with Lucia Rushton in DFW multiple times who can great agent and it is well worth using her to avoid painful mistakes! You can find her on Bigger Pockets as well reach out to @Lucia Rushton
Thanks, Jason, for the referral. This will be my first REI. I decided to pull the trigger after a few years of listening to this podcast and reading up on posts in this forum.
- Fort Worth, TX · Member since 2017 · 6 posts · 5 votes2yThank you, Ken. I will look for a real estate attorney in DFW area. Do you have any recommendations?
Quote from @Account Closed:
Yes. You can do this. Contact a real estate attorney to draw up the paperwork. Have the attorney order a title report if they don't do that in-house. Make sure you order Homowner's Insurance.Quote from @Dominic Nguyen:
I was approached by my neighbor if I wanted to purchase their house since they plan to move in the next three months for new job opportunities. It will be an off market deal. To save on fees for both parties, we are planning to handle the transaction ourselves. I plan to form a partnership with three other friends for this deal.
1. When should I form this partnship and open a business bank account to pool capital?
2. What documents should we be prepared to fill out?
3. Should we work with a lawyer?
4. I assume we should get the property appraised? How else can we get the property valued correctly?
5. Should we remove the real estate agents from this transaction?
The most important question is should we do this at all?
Have an appraisal done. Have an inspection done if you choose to. (optional, but many choose to have it done.)
Real estate agents are good for finding buyers, negotiating price and details. If no real estate agency has been established, you are good. If the seller has signed an agreement with an agent, you have to follow the contract.
But if you already have a buyer and seller and everyone agrees on the price and details, then you just need the attorney. Always ask the attorney if you are missing anything and if there is something else you should know. Make them "think" for their pay. Let them teach you the process. - Investor · Richmond, VA · Member since 2023 · 459 posts · 474 votes2y
Use a RE attorney for the closing - they will ensure that all of the right forms are handled properly.
I have always used an attorney, even when we have had a realtor and it has saved me money on multiple occasions.
- Fort Worth, TX · Member since 2017 · 6 posts · 5 votes2y
Quote from @Glen Wiley:
Use a RE attorney for the closing - they will ensure that all of the right forms are handled properly.
I have always used an attorney, even when we have had a realtor and it has saved me money on multiple occasions.
Do you have any recommendations for a RE attorney in DFW area? What has been the cost estimate in your experience?
- Investor · Richmond, VA · Member since 2023 · 459 posts · 474 votes2y
Quote from @Dominic Nguyen:
Quote from @Glen Wiley:
Use a RE attorney for the closing - they will ensure that all of the right forms are handled properly.
I have always used an attorney, even when we have had a realtor and it has saved me money on multiple occasions.
Do you have any recommendations for a RE attorney in DFW area? What has been the cost estimate in your experience?
Sorry - I am in Virginia. We have spent about $500-$800 on attorney costs at closings depending on the complexity. Ask for references from a few realtors.
I will say that the front office/paralegals are the people you actually want to get. The lawyer usually does very little apart from signing a few forms and a cursory review. The front office staff do the heavy lifting of chasing loose ends, checking details, etc. We stayed with our attorney for 20 years due to this one person he had in the front office who was a superhero. - Investor · Irving, TX · Member since 2015 · 34 posts · 16 votes2y
@Dominic Nguyen
Yesef Cordero in Grand Prairie. We did one transaction with them.
- 2yPreston DeanBusiness MemberRealtor · Fort Worth, TX · Member since 2021 · 779 posts · 368 votes
Quote from @Dominic Nguyen:
I was approached by my neighbor if I wanted to purchase their house since they plan to move in the next three months for new job opportunities. It will be an off market deal. To save on fees for both parties, we are planning to handle the transaction ourselves. I plan to form a partnership with three other friends for this deal.
1. When should I form this partnship and open a business bank account to pool capital?
2. What documents should we be prepared to fill out?
3. Should we work with a lawyer?
4. I assume we should get the property appraised? How else can we get the property valued correctly?
5. Should we remove the real estate agents from this transaction?
The most important question is should we do this at all?
@Dominic Nguyen It can be done but just from what it sounds like you have a lot of good questions! And this won't be the last of the questions. Something to think of is a title policy and a title search. What if you go through the contract and find out that there is a lein on the property... if that happens then you might wish you have worked with an agent! There's nothing out of your pocket to use a RE agent.
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