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How to buy a FSBO home -- Page 2

Buyers "at a minimum, should be aware of local disclosure laws," says Eric Tyson, co-author of "Home Buying for Dummies." And you may well want to hire an attorney or agent just to brief you on local regulations, he says.

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A dirty little secret. Some people may sell a house themselves to get around disclosure issues. While an agent is required to reveal certain problems (and could lose his license for not doing so), it's a lot more difficult to get satisfaction from a seller who has just moved cross-country.

Make any deals contingent in writing on a clean bill of health from a home inspector that you select and pay. That way, someone working only for you will examine the home before you close.

Ask the owner to provide a warranty, says Sid Davis, broker and author of "A Survival Guide for Buying a Home." For $250 to $350, the seller can purchase a home warranty (basically a private insurance policy) that will cover the electrical, plumbing and heating systems for one year, he says. If the home is 10 years or older, you definitely need it, he says.

And request copies of recent electric, gas or water bills. Ditto the bills for any repairs. Who did them and when? Where's the paperwork? If it's a 10-year-old home and the furnace hasn't been replaced, that's probably something you need to consider.

After the offer
Once you've made an offer that's been accepted, you need to sign a sales agreement. Often provided by the sales agent, the agreement spells out all the terms of the deal prior to the closing.

If you're a first-time buyer, it might be worth it to have a real estate attorney or agent look it over before you sign. You can often hire an agent for a flat fee.

If you're an old hand at the home-buying game, try reading through it yourself. Some points to consider: Is it even-handed to both parties? Does it allow you to back out if the home inspection isn't favorable? Does it allow for renegotiating the price or canceling the deal if the house has conditions the seller hasn't disclosed? What happens if there are title problems? Does the contract make any onerous requests? Is the closing schedule convenient? If you need to sell your own home and can't, can you get out of the deal? What if you can't get financing that's acceptable to you? If you cancel the deal, what happens to the deposit, or earnest money?

The agreement should give you the right to see the home's current insurance record (often called a CLUE report), and let you back out if you can't get insurance at rates you find reasonable.

And if there is anything you don't recognize or understand, hire your own professional to navigate the paperwork for you.

Marching toward the closing
Some real estate pros caution that, without an agent, the "chances of having a failed transaction goes up," says Al Mansell, president of the National Association of Realtors. While the information is anecdotal, buyers need to stay on top of the details and look out for their own interests.

After you sign the sales agreement, it's time to hire a home inspector. The cost could run anywhere from $200 to $1,000, depending on the size of the house, says Tyson. The average is around $400.

Arrange to go through the house with the inspector. Not only should he give you a good understanding of the home's condition, he also should be able to tell you how much time is left on various systems, and what you can expect to repair over the next few years.

Before you can close, a title company will do a search to make sure no one else has any claims on the property. Without an agent, you need to give them instructions to call you if there are any problems.

Several days before the closing, get copies of all the documents you'll have to sign so that you can go over them. Again, if you're a newbie, haven't bought a house in a while or have any questions, it's a good time to have your own real estate attorney look over the paperwork. Not only do you walk into the closing confident in the deal, but if something changes, you'll have someone you can call at a moment's notice.

"What I generally ask people to do is to think through what a good broker could do for them," says Poorvu. "And then figure out, in the list of what the broker can do for them, can they really do this themselves?"

Dana Dratch is a freelance writer based in Atlanta.

-- Posted: May 16, 2005
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