Looking for advice on how to handle buying a property from a friend of a relative. What steps would I begin to take?
It is an old property (1880), is also a two family home, and in a high property value area with high rental rates. Will probably need a decent amount of repairs, but ARV's in the area can be over $600k.
Looks like they would be agreeable to sell to us when they are ready. Would like to know how to start the process when they give us the go ahead.
If anyone could point me to any resources that would be helpful.
When they are ready you can have the property appraised and offer them that. You could also find sales comps in the area from a Realtor (offer to pay them for their time since you are not using them to buy/sell) and figure out your offer from those.
@Kenneth Biason - I recently went through this same exact thing. I would see what they are looking to sell the property for and at the same time make sure to run your numbers. If they tell you a number that is around what you would be willing to pay, that is when I would move closer to the deal.
If you are comfortable moving forward without an agent, that saves the seller 6% on the overall deal, which typically means that you can ask for at least some of that money off of the purchase price. For instance, if they wanted to sell for $500K on the market and you proceeded with the deal without an agent, instead of them paying $30K in agent fees, you could ask to purchase the property for $475K and everyone wins because they would have netted less than that anyways.
Word of caution, if you do not use an agent, you will most likely have to do all of the work. Paperwork, set up with the title/closing company, etc. It's not unbearable and can save a lot of money, but you will need to do it so know that.
I would also make sure that they are comfortable with you having a home inspection and eventual appraisal so that you can get the bank financing and renegotiate if there are any other bigger items. With the property I purchased, it turned out after inspection that I needed a new $19K roof. I worked with the seller to pay $17K of it and I covered the rest to not let the deal fall through, but I don't imagine that would have happened had I had an agent involved.
You can find documentation online of real estate transactions that you can use, it's all pretty boiler plate.
Pay an agent or go through a title company for docs. Have time for due diligence and get bids.