How to buy an FSBO in California

[Somdeb Majumdar]

Hello BP - I have an interesting situation. While doing rental history check of a potential tenant, I find out the owner is selling. I popped the question if he is willing to sell direct - and he says yes! It's not on MLS yet. Problem is - I have no idea how to buy direct from owner; all my rental properties have been through a realtor.

I am Googling furiously as we speak - but it would be super helpful if you folks can guide me into how to go about it. This is in San Diego

I guess I need a real estate attorney to draft a purchase agreement? Does the attorney also write addendums and counter offers?

How about escrow - do we just mutually choose one that has nice Yelp reviews?

Anything else I should be Googling? This has to be direct sale for the numbers to work for me.

[Nathan Gesner]

Yes, you would use an attorney to draw up the contract, addenda, or any other document. Seller should get their own attorney, but that's not your concern. You just make sure you are protected.

Find a Title Company that is well recommended. Once you have the contract signed, you submit everything to Title company.

More importantly, you need to determine the value of the property before making an offer. There are two values to consider: what it's worth to you and what he wants for it. Let's say you determine market value is $200,000. Ask him what he thinks it's worth and you may be surprised to learn he thinks it's only worth $160,000 and you can pick up a really good deal. Or maybe he thinks it's worth $240,000 but you're only willing to pay $200,000 and decide to walk away.

Remember there are no REALTOR fees involved so the owner should be willing to sell at least 5% below market value.