Buying The Condo I've Been Renting From My Landlord

[CJ M.]

My landlord has approached me about buying the condo that I've been renting from her. I'm interested. This is in SoCal. The area is very good, the school district very desirable, and I would likely be able to eventually rent the unit out for $300 - $400 more per month than my monthly costs on it would be (mortgage + taxes + insurance + HOA); however, I intend to live there for 5 -10 years. I have been renting the unit from her for many years, so I have a pretty good understanding about what I'd be getting into with both the unit and the development/HOA. My landlord is elderly and wants to slow down and enjoy her retirement without the responsibility of being a landlord. She is not under financial pressure to sell.

I'm a first time buyer and my landlord would like to proceed using real estate attorneys rather than relators. I'm ok with her saving the 6% commissions, and I would expect to get a reasonable discount on the price in exchange. However, that means I need to make a fairly big effort to educate myself on what I need to do during this transaction. So I need some advice.

The unit is 30 years old. It's in pretty decent shape. However, it has no upgrades and nothing has been regularly maintained. If things break, they get fixed, but there has been no regular or preventative maintenance done on anything within the unit in at least a decade if not longer. Yes I have an inspection scheduled. I also will do a mold and termite inspection if any damage from either is found during the inspection. The seller is required to pay for a termite inspection before closing, but depending on what the home inspector finds, I may choose to pay for one or both kinds of detailed inspections before making an offer.

I have checked out the HOA's finances. The HOA fees are on the high side, but it looks as though they manage their finances well. The HOA has not approached the owners for any special assessments in the last 30 years that it has existed. HOA fees include garbage collection, water, fitness facilities, insurance.

I'm on the fence about paying an appraiser to appraise the unit. I may pay for the appraisal ahead of the financing in order to make sure that the owner has a realistic opinion of what the unit is worth at the time we haggle price. I expect to negotiate down from there because the unit will need a fair bit of work/upgrades. If I can get the unit within the price range I'm hoping for, I will have a 20% down payment. I just don't want her imagining that she could get an unrealistically high price if she listed it instead.

I have started shopping lender rates. I have a friend who strongly recommended I use a broker, but I have other friends who say they felt burned/taken advantage of when they used a broker, especially when they were an inexperienced buyer themselves. So I'm not sure whether to use one or not. For now I'm doing some legwork and checking various bank and credit union rates out. I intend to get a pre-qualification letter from one of them. My understanding is that I have 14 days once I start getting hard pulls on my credit, in which all inquiries are considered for credit score purposes as one hard pull, so I might try to put off getting a pre-approval letter for a bit if I can.

I don't have a real estate attorney yet, so lining one up is one of the next things on my list.

Have I forgotten anything? Any advice on other things I should do or keep in mind?