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Should we buy a home without a real estate attorney?

Dr. Don TaylorDear Dr. Don,
My wife and I are considering purchasing a "Buy Owner" home without using a real estate agent. Our mortgage lender gave us a "Residential Home Purchase Offer" form. The form, which is typical for the state we live in, is for writing our offer to the seller and includes all the contract stipulations. We plan to use a FHA no-money-down loan. Should we pay a real estate lawyer or other real estate professional to review the offer, or is it OK to seek the advice of the mortgage lender of our choice to review this document?
Troy Trepidation

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Dear Troy,
You should pay a real estate lawyer to review the offer. There are plenty of knowledgeable people in real estate who can provide you with information about making an offer, but if you rely on their advice and they're wrong, then there's not much you can do about it.

You want someone in your corner who represents your interests and is obligated to provide you with competent legal advice. Even the folks at Buy Owner highly recommend that both buyer and seller use real estate attorneys.

It's best to have your attorney review the offer before it's presented. But if you write an offer using a standardized contract, add a contingency rider that makes the offer subject to the contract's review and approval by your attorney within five days of the seller's acceptance of your offer.

Not all contingency riders are created equal. The attorney approval contingency should be written so that an unfavorable review by your attorney allows you to revoke the purchase offer.

Some attorney contingency riders allow the buyer's attorney to review and approve the form of contract but not to address the terms of the contract. Other boilerplate attorney approval contingency riders may allow the attorney to modify the contract subject to the seller's acceptance of the modifications, but not to approve or reject the contract. If you want the contract to protect you, then you need to make sure that it's written to accomplish that goal.

The best way to have an appropriate contingency rider is to have your real estate attorney provide you with that language prior to making an offer.

While you're at it, make sure that the home inspection rider gives you a real out if the home has problems that crop up in the home inspection.

With these two contingencies in the offer, it would be a good idea to be pre-approved for a mortgage loan. It lets the seller know that you're able to afford the home, which gives you negotiating leverage as the buyer, especially with a for-sale-by-owner listing.

Remember that it's the seller who's trying to save money by marketing the home for sale by owner. I realize that you want to save money too, but it's more important to avoid making a mistake in the purchase of your new home.

 
-- Posted: Dec. 20, 2001
   

 

 
 

 

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