I'm putting in an offer on a house in Greeley CO that is off-market, but that I know the owner has expressed interest in selling. I've spoken with the owner, and they were receptive to an offer and are hoping to save on realtor fees (as am I). If they accept my offer, what steps do I need to take to "lock" the transaction down? If I write up a contract stating the purchase price, appraisal/financing/inspection contingencies, and time line and we both sign, is that sufficient?
Follow all of the terms of the agreement and it's "locked" (don't forget earnest money, lead paint disclosures, etc). You need to know your rights if there is a breach of the contract by the seller. Look at the language in your contract. If the seller defaults do you have a right to cancel the contract plus damages or a liquidated damages amount, or a right of specific performance (force sale)?
Based on the way you ask, I'm assuming CO doesn't require hiring a real estate attorney for house purchases? While it may not be required, but you're at the beginning stages of your investing career, I'd suggest you still hire one to help you draft the contract and facilitate the process. You can then leverage this experience for your future deals.
@Sam Rust the state of Colorado has standardized forms. Real Estate agents are really good at filling them out. However, the Department of Regulatory Agencies provides these forms to the public:
Check out the contract to buy residential.
I'm from Greeley. Do you mind if I ask what your plan for the property is?
Thanks for the feedback, I will look into the forms you mentioned Joshua! I'm planning on renting out the property on a room by room basis, one of my sisters will be living in the house as well. I'm not sure if it will be a long term investment, but the deal was too good to pass up.
I recently did an off market deal here in NJ. It's very common in NJ to use a lawyer and so that's exactly what I did. I paid about about $1,100 for the whole transaction (don't know prices in your area but should be somewhat comparable) and he took care of everything else. All I had to do was the initial negotiation on the property. In m opinion, it might be worth it to hire an attorney especially if you don't have a lot of deals under your belt because there's a lot of moving parts. Best of luck!
@Sam Rust I second the thought of hiring an attorney to review your contract. Just make sure they know real estate. For a few hundred dollars you can get someone to referee the transaction. That said, you can do it on a napkin and hire a title company to prepare all the closing docs and provide title insurance. If you both show up and sign and the money changes hands, that's all that matters.
I agree that getting a title company involved is a good idea. If you get any kind of a mortgage you are going to need title insurance. I almost never buy property without title insurance. It's like going outside in winter without pants; sure you can do it, but it is not a very good idea.
In CO title companies do closings, not attorneys. Simplest thing is to use the standard contacts, write it up, and give it to a title company and they will take it from there. Of course, they will need various inputs from you and the seller, and your lender if there is one. Hiring an attorney to check documents and explain anything you don't understand is good protection. But its not required. And, absolutely, you want an "owner's title policy".