How to buy direct from seller (with a bank loan)??

6 Replies

This is my first real estate transaction made without an agent, and I'm not sure what steps I need to follow to do it right. I've looked in BP files and forums and am not sure what examples to follow.  

I've made an offer directly to the seller (we have a previous relationship) on a property in Franklin County, TN, that I plan to lightly rehab and offer as a rental.  I'm pre-approved from a local bank for a loan.  In my 5 previous RE purchases, all the paperwork has been handled by others (RE agent, or loan officers, or both).  Now I realize I'm not sure who does what and how to proceed, and if the process is different in Tennessee than it is in Atlanta.

1) I am offering "as is" (I've had an inspection and know what I'm getting into).  At what point do I need to put it all in writing?  During negotiations, or when/if we come to a sales agreement?

2) Since I will be using a bank loan, does the lender usually take it from there -- arranging the appraisal, title search, etc?  or do I need to do that?  Should I be talking to him about these specifics already?

3) What about earnest money?  Is it expected/required?  The seller hasn't mentioned it yet and I just don't know, or how to offer it securely w/o the RE agency as middleman.  

4) What have I not even though to ask yet?

Thanks for any advice or shared experiences!

You and the seller sign a basic purchase and sale agreement. 

Once you have both signed it send it over to your closing attorney and the lender.  

If you want or do end up putting down earnest money you give it to the closing attorney to hold onto. 

From there the lender and closing attorney will work it out.

Good luck

Thanks Curt (the @mention simply will not work for me  :-((( .  

One thing I'm not clear about in the differences between TN and GA --  in Georgia, purchases have always been at a closing attorney's office, but both RE transactions I've done in TN have been at title companies, though the person in charge was an attorney.  

Is this a state-to-state legal difference?  Do I go to the title company for all that paperwork?

As stated above, you and the seller need to sign a contract, pick a closing attorney and a lender. 

Earnest money is a security for the seller. If they don't ask for it, I wouldn't offer it. But it does make you look like a more serious buyer if you have. If there is earnest money involved, let the attorney hold it not the seller.

The lender will coordinate anything they need to complete the loan process, such as a termite inspection or an appraisal. The attorney will reach out to HOA, if there is one, and the sellers mortgage company. But if you want any home inspection or repairs, it is up to you to coordinate those items.

@Anna Watkins, there is a high chance that there is differences in those states. There can even be differences from county to county or city to city within the same state.  If you are not as familiar with the laws in a particular jurisdiction, I would suggest hiring either a Realtor, or a real estate attorney who will make your transaction a lot easier.  You do not need to pay the Realtor a commission on the house, but perhaps you can work out a set fee or hourly wage for them to facilitate the transaction.  Spending an extra $1,000 or so here can help alleviate a lot of stress, as well as making sure everything that is occurring is legal.