An individual just responded to your "i buy houses" mailing & would like to sell to you. You determine it's a great deal & agree to purchase the house. A friend is willing & ready to be your private money lender (instead of a conventional loan). No RE agents were involved. What's next? Here is my understanding of the steps (this is probably a mess) , can someone help fill in the blanks for me?
- Although a friend, you should still have a contract with you lender.
- IF a RE agent was involved, they would submit a formal offer for you.
- Once accepted, you both sign a memorandum of understanding.
- A title company arranges a title search, title insurance, & an earnest money deposit to be held in escrow.
- You have the home inspected (Septic/Water/Radon if needed).
- An appraiser visits the house.
- A Building inspector (from town hall) visits the house.
- A surveyor visits the house.
- If any major issues, the price can be negotiated.
- Confirm starting date of your homeowners insurance (you already contacted a company beforehand).
- Once finalized you both enter into contract (which is provided by the real estate attorney).
- Do the final walk-through.
- Closing. Bring a certified check for the down payment.
My questions are 1) Does a memorandum of understanding need to be notarized? 2) Is there a difference in a memorandum of understanding & memorandum of agreement? 3) Does the RE attorney usually pick a title company for you? 4) Who's responsible for contacting the appraiser, surveyor, building department inspector? 5) What documents are signed at closing? 6) What is the exact transfer of money? Investor > escrow > seller & buyer > escrow > seller?
Side note, i fully play to use a RE agent & attorney, just wondering how it works behind the scenes.
In New York, after the MOU, the attorney will usually engage the title company for you, but as the buyer you can direct title to whomever you choose.
Definitely have a contract with your friend. If you want to know more, I recently closed on a purchase in NY State.