So I came across a potential deal for a 2/2 condo that is for sale by owner. The numbers seem to work and I'm trying to look at it early next week before the holiday.
My question is if it's FSBO, does that mean I can't use a realtor either? Is there even a reason for a realtor at this point? I guess I would simply find my own inspector and attorney to make sure the property and paperwork are all good. Is there anything else I should be aware of when going this route?
A Realtor is not necessary to close a transaction, but for newbies, they are often helpful to have engaged in the process as they can flag unusual items in the sales agreement.
Is the seller using a standard sales agreement or do they have something they made up or pulled off the internet? I would definitely engage a lawyer on a non-standard contract and possibly even on a standard one. Just make sure they are a lawyer who is regularly engaged in real estate transactions.
You didn't ask about this, but have you done full due diligence on the condo's HOA fees? Many HOAs keep their monthly fees low but have regular "special assessments" for big projects. You don't want to think you are getting $500/mo cash flow and then have a $6K special assessment every year.
@Greg Scott I'm not sure I will have to ask him what type of sales agreement it is. The owner is a retired lawyer, hence why he doesn't want a realtor and feels he can do it all himself.
If I decided to use a realtor would I then be forced to pay the commission? Typically in a sale the seller pays both fees but I'm assuming if he doesn't want realtors involved he can simply dismiss my offer altogether right?
I haven't done any in depth research yet until I get to see the place. At that point I would research the HOA fees. Thanks for your input on this I wasn't aware there could e special fees levied by HOAs randomly throughout the year.
As long as you are comfortable with the process, that you've received proper disclosures, understand your rights for condo resale disclosure laws in NC, are very clear on the terms and contingencies, and have a good inspector and attorney, you should be fine. I believe you must use an attorney to close in NC, anyway, so if you already know one, ask them to review the contract before you sign it or ask how much to draw one up if you don't have one yet. Condos can be tricky, so make sure you actually review the resale disclosure packet in detail, especially about finances, insurance, rules about renting units, and then ask the neighbors about any special assessments they've paid, if they've increased the assessment recently, if they know of any problems with the neighborhood (like sewer backups they keep paying for, unresolved drainage or flooding issues, things not in condo docs but can be a future problem). I've only purchased one condo as an investment, and I would not purchase another one unless I could purchase the majority of units. The Board has too much power, usually makes expensive and stupid decisions on repairs and maintenance, can change rules on whether rentals are allowed or not with enough votes, and can make your life miserable if they don't like tenants in their units. And that's in addition to them letting the FHA or VA loan approval lapse for the condo complex, ruining your chance of selling easily and driving prices down.
If this guy is a retired lawyer, I would DEFINITELY have my own lawyer look it over. You likely won't have an issue but you don't want to get suckered by a devious lawyer who knows how to use legal mumbo jumbo to create problems later.
Yes, a Realtor will want, and should get compensation if you bring them into the deal. I'm sure you can have the seller pay for it out of proceeds but only if you raise your purchase price to cover that cost.
I agree with your assessment on condos. I owned one as a rental that worked out fine, but have seen the downside too.
My wife lived in a condo before we got married. She had carefully budgeted her expenses but got socked with almost every year with two large and unexpected "special assessments". That property would have looked like a good rental on paper but would have been terrible in reality.
@Lynn M. is the resale disclosure something they are required to provide? Wouldn't there also be some sort of documentation on the HOA like what's covered and any special assessments that may come up?
@Ryan Vellia , +1 on getting your own attorney. If the seller is an attorney, you need one to look after your interests.
@Ryan Vellia they are required to provide those disclosures for any sale. The HOA documents will include meeting minutes, the financials, and CC&Rs, etc. You want to look at the overall health of the reserves and the budget most closely. An agent will be able to give you an idea of a healthy or unhealthy HOA. I specialize in condominiums in my area and at this point I've looked over so many disclosures and financials, I can tell pretty quickly based on the number of units and cost of cap expenditures about how likely they are to have an assessment in the near future and for what (roof, elevators, etc.) even if it's not on the agenda.
Hi @Ryan Vellia , I am an attorney in California who writes FSBO contracts all day. I strongly agree with everyone here who recommends that you get your own attorney. At least hire a local real estate attorney to read over the contract and interpret it for you. A few hours work could save you a whole lot down the road when you find out that you promised to never sue even if everything goes wrong, or you promised some unreasonable amount of liquidated damages, or you promised that you would take responsibility if the place burned down before the sale was finalized, or a whole lot of other things that are comfortably tucked into that contract.
Remember, there is no such thing as standard or boilerplate language in a real estate contract. There are different version of language that favors either the buyer or seller.
There is no reason to hire a realtor, because their greatest assets are their ability to market and access the MLS. That's not what you need in this circumstance. You need legal expertise to make sure you are protected during the transaction.
Jen (and everyone else who's responded) - thank you all very much for your input. I can start by contacting the attorney we used to purchase our primary residence and if I don't feel they're fit I'll start my own search.
You can hire a Realtor and they will charge commission. This is fine.
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