When you’ve saved up the money for a down payment and have your finances in order, you may be tempted to use a private sale to buy a house. There are indeed some definite advantages to a private sale. One of the chief ones is that it can save you money: you’ll likely pay a lower purchase price because you’ll avoid the real estate agent commissions and fees. It can also streamline and speed up the whole purchase process. But you do have to be careful to avoid the pitfalls, especially if you’re a first-time buyer. Read on, then, to find out about the top 5 mistakes buyers make when using a private sale to buy a house in New Jersey.
1. Not Doing Pricing Research
If you don’t want to be taken in on the purchase price – that is, paying more than market value – you’ll need to do a good amount of pricing research to buy a house in New Jersey. And here’s why . . .
“Most homeowners who sell their houses have no experience in real estate. With little knowledge of the housing market, homeowners may have unrealistic ideas about what their home is really worth. This could spell trouble when it comes time for the home appraisal – and of course, it could mean you’ll pay more for the home than you should.”
When you use an agent, your agent will typically do all the pricing research for you, bringing to bear her knowledge and extensive experience and performing a comparative market analysis (CMA). This CMA helps determine fair market value by investigating the prices of very similar homes in the neighborhood and immediate area that have recently sold.
Without an agent, though, you need to do all this on your own to ensure you’re not overpaying. To find out more about this, contact a New Jersey agent at 855-966-DEAL.
2. Accepting Sellers’ Disclosure Statements
Also, sellers may not, through inadvertence or calculated deceit, make a full disclosure about problems with the home. They are required by law to do this during the sale process – disclosing any known defects, such as roof damage or plumbing issues, before closing. Unfortunately, though, it doesn’t always happen.
One of the top mistakes, then, buyers make when using a private sale to buy a house in New Jersey is simply accepting at face value sellers’ disclosures. But this can wind up being a terribly costly mistake.
“[I]independent sellers aren’t always honest and may hide problems from buyers. If you uncover a problem with the home after closing, you may be able to sue the seller, but the process can be difficult and expensive. You have to be able to prove that the problem existed before you bought the home and that the seller knew about it but didn’t disclose it.”
3. Skipping a Home Inspection
A related mistake buyers make when using a private sale to buy a house in New Jersey is to skip the inspection. Whether required by your lender or not, you shouldn’t skip this step.
“Always,” industry pros advise, “get a home inspection by a reputable inspector. Too many deals go south when a bad home inspection involved. Ask for credentials and ask the inspector whether they belong to an association, [and] then follow up on both to confirm.”
If the inspection does turn up major problems (which is often the case), you have three basic options:
- Get the seller to make the necessary repairs
- Push for a credit so that you can later hire a contractor to make repairs
- Negotiate a price reduction to cover the cost of repairs
4. Giving Earnest Money Directly to the Seller
And you certainly don’t want to give the earnest money deposit directly to the seller, which some buyers make the mistake of doing in a private sale.
When using a private sale to buy a house in [ you should place the “earnest money deposit (the money you submit with your purchase offer) [with] a third party to hold for you, such as a title or escrow company. Normally, the listing agent would place it in their escrow account for safekeeping.”
But if you give the earnest money to the seller, you’ve lost all control of it. There’s really nothing to keep the seller from spending it. Then if the deal falls through and you have the proper contingencies in place, you’ll simply be out that money – with very little recourse short of going to court.
5. Writing the Purchase Contract Themselves
The purchase contract is a legally binding document that specifies the terms of the sale. So unless you’re an agent or a real estate attorney, it’s usually a mistake to try to write it yourself to buy a house in {market_city].
You have a couple of options for generating a purchase contract in a private sale. “Many lawyers will draw up a purchase offer and other documents for a reasonable fee, and it’s usually money well spent. You can also find real estate purchase contracts online, but you might be better off hiring a professional if you don’t have the expertise to complete the forms correctly.”
A Better Way to Buy a House in New Jersey
As you can see, then, the process of buying a house in a private sale is littered with pitfalls for buyers. Really, most buyers are better off using a local real estate agent to avoid these mistakes and to have a skilled negotiator in their corner. So if you’re ready to pursue a better way to buy a house in New Jersey, contact us today at 855-966-DEAL.