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I've been renting a condo for 10 years. The owner met with me and asked if I would be interested in purchasing it. I am. I'll be a first-time buyer. I will have 20% to put as a down payment, but will need to finance the rest. I don't think I'll have any problems qualifying.

The owner wants to have someone come through and assess the property so we can determine a price. We both have compiled our own lists of comps in the area. However, the comps generally are upgraded and improved units. This condo was built in the mid-80s and the landlord has never made any updates or done regular maintenance on it (she's an older lady). If it breaks, it gets fixed, but there has never been any proactive maintenance done. I've lived here 10 years and the carpets/flooring/cabinets/counter tops all need replacing (the counter tops/cabinets are original from when the condo was built). The hot water heater was replaced shortly after I moved in 10 years ago. I will absolutely get an inspection done, and will probably get specialists in to assess for mold and termites (which can be problems in this area).

The HOA fees are relatively high, but it's run by a professional company and they have not asked the residents for any special assessments that I am aware of (at least going back 4 or 5 years). I plan to, of course, go over their financial books and meeting minutes. The HOA fee includes water, garbage pick up, sewer, landscaping, use of private rec center/clubhouse. The roofs in the complex were replaced 1 - 2 years ago. By my calculations I would probably spend a couple hundred less in mortgage payments + taxes + HOA than I presently do in rent (I'm making an educated guess at the price we'll agree to).

Anyway the real question.... she has indicated that she would prefer using a real estate attorney rather than a realtor. I've done a fair bit of online research, watch HGTV regularly (lol), and have a few friends who have experience buying and selling homes that I can seek some guidance from, but the reality is that I am a first-time home buyer. Should I go along with this? She offered to have her attorney represent us both but I probably will decine that offer as I think it's smarter to pay an attorney out of my own pocket that is purely looking out for my interests. I think it's wise to get an attorney to review any finalized contracts anyway, but would it be a mistake for me as a buyer to not have a realtor involved? I know the seller pays the commissions, but as a buyer I can also use that as a negotiating tool. What are the pros and cons to this arrangement are there any potential pitfalls that I should be aware of?

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There are many resources available through the internet that offer advice for all sorts of buying and selling questions ... (more)

jacobwilson8 (Jun. 21, 2013 @ 7:20a) |

Why would you need a realtor involved? I did the exact same thing... I was renting the condo a I currently own, Emailed ... (more)

Genetics (Jun. 21, 2013 @ 7:38a) |

I would have happily gone with a real estate attorney instead but the owner wanted a realtor. She'd always used one, and... (more)

gooddealie (Jun. 21, 2013 @ 9:39a) |


gooddealie said:   She offered to have her attorney represent us both but I probably will decine that offer as I think it's smarter to pay an attorney out of my own pocket that is purely looking out for my interests. I think it's wise to get an attorney to review any finalized contracts anyway, but would it be a mistake for me as a buyer to not have a realtor involved?

A realtor allegedly helps buyers find a seller, or sellers find a buyer. Other than that, realtors are a parasitic drain on society.

Even assuming her attorney is stupidly willing to represent both sides, always get your own.

If you are concerned about not having relevant comps, pay for an appraiser on your own.

Always get your own attorney.

Since the owner is not paying 6% to a realtor, your purchase price should reflect all or most of the savings to the owner -- meaning, I would expect to pay about 6% less than the comps if you can find a truly comparable condo.

stanolshefski said:   Since the owner is not paying 6% to a realtor, your purchase price should reflect all or most of the savings to the owner -- meaning, I would expect to pay about 6% less than the comps if you can find a truly comparable condo.

That's the idea.... but I was wondering if that's being penny smart, pound foolish, with respect to not having a realtor involved. Do they provide anything useful to the buyer when the buyer and seller have already agreed on the property and a price?

A realtor would provide no value in this situation

In fact that's likely why the seller is simply using an attorney . Much easier to pay a flat fee of $500-1500 than a 6% commission

You need your own attorney , not a realtor
And the sales price should reflect a discount for not needing to pay a realtor to find a buyer . Maybe not a 6% discount but some discount nonetheless

BEEFjerKAY said:   gooddealie said:   She offered to have her attorney represent us both but I probably will decine that offer as I think it's smarter to pay an attorney out of my own pocket that is purely looking out for my interests. I think it's wise to get an attorney to review any finalized contracts anyway, but would it be a mistake for me as a buyer to not have a realtor involved?

A realtor allegedly helps buyers find a seller, or sellers find a buyer. Other than that, realtors are a parasitic drain on society.

Even assuming her attorney is stupidly willing to represent both sides, always get your own.

If you are concerned about not having relevant comps, pay for an appraiser on your own.


I would always get my own attorney - it's common sense. The attorney's loyalty is to the person paying them.

Getting my own appraiser is an interesting idea. In this case would it make sense to have the inspection done before the appraisal?

A realtor allegedly helps buyers find a seller, or sellers find a buyer. Other than that, realtors are a parasitic drain on society.

That is exactly what I need to know. Wasn't sure if they had another function.

gooddealie said:   HOAget out while you still can

gooddealie said:   BEEFjerKAY said:   gooddealie said:   She offered to have her attorney represent us both but I probably will decine that offer as I think it's smarter to pay an attorney out of my own pocket that is purely looking out for my interests. I think it's wise to get an attorney to review any finalized contracts anyway, but would it be a mistake for me as a buyer to not have a realtor involved?

A realtor allegedly helps buyers find a seller, or sellers find a buyer. Other than that, realtors are a parasitic drain on society.

Even assuming her attorney is stupidly willing to represent both sides, always get your own.

If you are concerned about not having relevant comps, pay for an appraiser on your own.


I would always get my own attorney - it's common sense. The attorney's loyalty is to the person paying them.

Getting my own appraiser is an interesting idea. In this case would it make sense to have the inspection done before the appraisal?

You are getting a loan so your lender will hire the appraiser

Ask for a copy of the appraisal

In the old days a lenders appraisal was worthless since they just agreed the condo was worth the contract price. They used appraisers who made the deal close . Lenders can't do that anymore and must use an appraisal management company selecting random appraisers, so these days they have no problems listing a lower appraisal value if the condo isn't worth the contract price .

Your attorney will certainly suggest including an appraisal contingency in your offer, so if the lenders appraiser comes in low you can use that as a negotiation tool to lower your offer or walk away from the deal

The idea of appraisal was to assist in formulating a sales price... but I dont think that is necessary in a condo development, esp if complex has many units/sales. It is also possible for the OP to leave thousands on the table in the hopes of the mortgage appraisal coming in low. Id suggest OP, and seller if necessary, go look at some existing units for sale. That will help with coming to terms on price. By the sound of it, it should sell on the lower end of comps. Of course keep in mind that floor level and view are considerations in price.

More than 6% off your appraisal discount --there is no hassle of preparing for sale, uncertainty as to when it will sell and for how much, seller must need to unload for some reason rather than hold which you cannot know about.

Unless you are getting a honey of a deal why not look for a better condo elsewhere?

Can your landlady provide you with the financing? (Maybe you can get something better than the bank; but of course she'll probably want to cash out, but doesn't hurt to ask)

You should use a realtor to see what is available on the market currently and base your price (unless you find something else you really like) on that. As for comps, as you said, it'll probably be of placed "fixed up" so that may not be of comparing apples with apples.

OP, if you're considering buying, I would cast your net out and see what else is on the market. Your current place is known and comfortable, but if you're going to make the decision to buy, you should see what else is out there. If you still like your current place and can get it for a reasonable price, go ahead. But make that decision fully informed, having seen what else is out there.

JaxFL said:   The idea of appraisal was to assist in formulating a sales price... but I dont think that is necessary in a condo development, esp if complex has many units/sales. It is also possible for the OP to leave thousands on the table in the hopes of the mortgage appraisal coming in low. Id suggest OP, and seller if necessary, go look at some existing units for sale. That will help with coming to terms on price. By the sound of it, it should sell on the lower end of comps. Of course keep in mind that floor level and view are considerations in price.

There have not been "a ton" of sales in this complex in the last two or three months. I think there were only two, and they were short sales. My concern is that all of the comps both inside the complex and outside of the complex are for updated units and I think an appraisal prior to setting a price will be advantageous for me, since this unit has had no upgrades. I think it will help keep things "real" from the get-go. I want the starting point of our negotiations to be realistic because there are going to be a number of things revealed in the inspection that I'm sure I'm going to want a price reduction to cover. Plus some portion of that 6%.

I will keep my eyes open for any other units in the complex or semi-sort of nearby and check them out for comparison sake, but my decision will probably be a simple yes or no to this unit. If the answer is no, then I'll start a new search for a place in earnest. The owner of this place is not in a hurry to sell. She told me that she doesn't need to sell. Her husband passed away recently, and she feels she is getting older and just doesn't want the responsibility (or heartburn) of being a landlord on her own. Or at least that's what she's telling me, and there's a good chance that's true because I do think she's quite financially secure. She certainly hasn't indicated that there is any kind of tight timeline. However, prices are going up now, and I don't think it would be in my interest to drag it out, especially since summer is coming and home sales will start picking up (and so will prices).

I see this as an opportunity to enter the market at a good price. The average rent in this complex is almost twice as much as the mortgage will be. Even with the HOA and taxes added, I'll be paying out hundreds of dollars less than I am now, and writing off the mortgage interest. I'm hoping to do some upgrades to the place and eventually in a few years if I decide I want to move, I'm kind of hoping I'll be able to hang onto this place as an investment, and rent it out to someone else.

So yes, if the numbers start climbing too high (or if the list of stuff needing fixing in this place starts getting insanely long or complicated), then it won't be worth it to me and yes, I'll walk away.

So you're hoping for a price lower than all the recent comps , based on your argument those units were updated , plus a further discount for needed maintenance , plus a further discount for lack of realtor commission ?

That's going to be a toughie

Unless the seller is sympathetic to selling to you, expect a price in the middle of the recent comps and not any lower than the lowest comp

I'd be happy with something near the low end of the comps (because seriously, nobody else in this complex appears to have left their 30 year old suite completely unimproved and unmaintained. So middle of the pack... would take some justification as far as I'm concerned). Honestly, that minus the required maintenance, I think I could be good with. The discount for the lack of realtor commission I'd play by ear.

Otherwise... if another unit in the vicinity with a similar floorplan came onto the market, and it had been upgraded and didn't need half the work.... why wouldn't I buy it instead if the price is going to be the same?

My landlord is going to have to inject a lot of time and money into the unit to get it into a saleable condition that would attract anyone other than myself. And then the unit still would have no upgrades when compared directly with all of the competing units in the development that will start to pop onto the market in spring and summer. There should be value in it for her to make this transaction be attractive enough for me so that I'll take on doing all the work, and she won't have to worry about doing a thing to get the place in shape to show and sell. Because it will cost quite a bit of time, money, and effort to even do the basics like replacing the carpets (10 yrs old), floors (10 yrs old), cabinets (original), and counters (which are tile and have cracked as they've settled over time), and paint the whole place. My landlord is at least in her 70s. And that doesn't even include the cost of fixing anything else the inspection reveals.

Also, if there isn't any financial incentive in it for me to take on a suite that needs so much work, why would I choose to do it? Middle of the pack wouldn't be much of an incentive.

Your points have merit, but it may be very possible that the current owner could list that property, as is, in the mid range of comps and it'd sell. It all depends on the market. Also consider that if this is a desirable complex, the fact that few units are available or are ever available, can translate in to the seller getting a higher price and a quick sale. Just like you expecting prices to increase another buyer may see the value being offered.

What is the sales price we are talking about?

The sales price is probably around $200,000 (California). This is a good price in a good area. But for whatever reason the units in this development typically sit for a lot of months on the market, and usually reduce price a time or two, or have the owners remove it from the market after a number of months. I can't remember having seen a unit get snatched up quickly since the market crashed. I'm not entirely sure why.

What I would do is get a broker(s) to give you a BPO report. You do have access to the property . A BPO will certainly cost you less than appraisal. Id then let the LL know that you do have an interest in purchasing and present that BPO report to her...to move things forward. The seller could get one as well if desired. Certainly at that price range a percent or two difference in value will justify the cost, even a full fledged appraisal. I just wanted to make sure we weren't talking about a $50k condo.

You have a lot of leverage if there is still time on your lease. The LL can't make significant improvements, like replace the carpet, without your consent while you occupy the property. If she's anxious to sell and it needs improvements it won't happen while you're living in it. Most states she can't break your lease either.

Have you seen the HOA/Board rule book? The owner should have it but I would ask for the newwest one to make sure there are no rules the current owner was breaking, or you were, and were not aware. Those could come up when ownership changes let alone add cost and headache. Also ask for the finincial books for the HOA/Board to make sure you are not buying someone elses money pit.

Marlin1975 said:   Have you seen the HOA/Board rule book? The owner should have it but I would ask for the newwest one to make sure there are no rules the current owner was breaking, or you were, and were not aware. Those could come up when ownership changes let alone add cost and headache. Also ask for the finincial books for the HOA/Board to make sure you are not buying someone elses money pit.

I was given the rule book when I first moved in, and the HOA posts it and all the various updates on their website. There are also about 2 years worth of monthly meeting minutes posted and all sorts of other documents. I've lived under the rules for 10 years so I'm not really worried about being surprised by anything. I know their little quirks. And they will actively assess owners fines if rules are broken, so it isn't all that likely you could be breaking rules for a long period of time without knowing it (besides, like I said she's done almost nothing to the unit since it was bought new). I don't love HOAs, but as long as this one is solvent and doesn't have a history of special assessments, I can live with them. Heck, I will most likely want to run for a position on the HOA council if I do decide to buy. I think it makes a lot of sense to have direct input into any group that has the ability to make financial decisions for you. My LL also gave me her copy of the most recent annual financial report (23 pages worth) to peruse.

I told my LL I would need 2 weeks to "tidy up" before the appraiser comes through my unit (she's already said she'd pay for it). The reason I wanted 2 weeks is not because the place is that messy, but because I wanted some time to get my own ducks in a row. Also, I've been here 10 years and accumulated a lot of stuff that I should get rid of. What I will really be doing doing a massive sort and thinning through my stuff so that I'll be ready to pack up quickly if I do have to move. If the deal goes through and I don't have to move, well I'll call it "spring cleaning". No harm, no foul. Since I'm technically limited to one garbage can full of trash per week, it's reasonable to need a little time to get it all done.

CptSavAHo said:   You have a lot of leverage if there is still time on your lease. The LL can't make significant improvements, like replace the carpet, without your consent while you occupy the property. If she's anxious to sell and it needs improvements it won't happen while you're living in it. Most states she can't break your lease either.

No lease at the moment. I only get a new 1-year lease when she bumps the rent and she's left it alone for the last two years. But she's said she's not in a hurry to sell. Remember, the reason she gave me for selling in the first place was because she didn't want to have to deal with the responsibility of being a landlord. And she's at the very least in her 70s, and living alone, so I don't imagine she really wants to be jumping into doing tany work on the suite at all. I think she's very motivated to deal with me so she won't have to worry about doing any work on the suite at all.

gooddealie said:   The owner wants to have someone come through and assess the property so we can determine a price."We" don't determine a price. She does. Beat her to the punch and make her an offer. If she says no, start telling her about all the deferred maintenance, the slow sales in the complex, all the money she'll save with no realtor and a quick sale, etc. Wear her down.

gooddealie said:   ...Because it will cost quite a bit of time, money, and effort to even do the basics like replacing the carpets (10 yrs old), floors (10 yrs old), cabinets (original), and counters (which are tile and have cracked as they've settled over time), and paint the whole place...Big deal. This can be done for ten grand and wouldn't take more than a week. Lowball her on the price, and then have all this done yourself.

Don't make this more difficult than it is.

I would prefer to do all of the work myself - mostly because I want to have it done the way I want, and not just done the absolute cheapest way possible, which is how it will get done if she does it. I want hardwoods, not carpet (my allergies will be much happier, and many of the other units have them - buyers find them very desirable here), and I want tile in the kitchen/bathrooms instead of linoleum. Counters and cupboards - I'm less particular about right now and may or may not choose to wait and make them part of a nice upgrade in the future. However in the condition they're in, they age the suite, and don't do much for making it show well, so they are probably things that she as the owner couldn't leave as-is without substantially affecting the price she could get for the unit.

I'm dealing with one person, but the "owner" really is a family trust. There are other out-of-state individuals who will have to sign off on the deal. Bullying is a bad way to go because I need her to advocate for this deal with the other individuals involved. Presenting an assessment and an inspection result that backs up the offer OTOH probably will work as they will be a logical backup for the offer made.

Deja Vu. Similar thread linked below. The OP there had a similar line of thinking.

Buying the rental from the owner

I would hold back the inspection report and other documentation. Make the lowball offer first, then use the supporting documentation to negotiate. People like to feel like they got something out of the negotiation process.

I had a home inspection done. Nothing deal-killing found, but there are several points I plan on using to negotiate price. I gave the owner a copy of the report.

The owner wants to hire one realtor for the transaction and negotiate the 6% commission significantly downwards as they would only be doing the paperwork. That doesn't thrill me, but if that's what she needs to complete the deal, well ok. I'll still hire my own real estate attorney to make sure I have someone working exclusively for me looking over the paperwork/deal - it's my first home purchase and I know this is not the place to cheap out.

Next up: I'm going to get an independent (read: non-realtor) appraisal company to do a formal appraisal on the unit. Especially with the owner bringing a realtor into the mix (that she will be paying), I want to make sure we have an accurate starting point for price negotiations. I don't want a realtor who may have their own agenda to be the one determining the price for the unit. I want to limit the possibility of the agent trying to convince the owner to list the unit with her (at full commission) instead of completing the transaction with me, by trying to convince the owner that the unit is worth much more than it really is. Coming up with comps around here is tricky. The floor plans and square-footage of the units in this development are not identical, the immediate area has many developments that cater to different economic levels, and the units being sold both inside and outside the development all have dramatically different levels of upgrades. So one 2 bed, 2 bath unit is not directly comparable to another in a different development. I want to make sure that the comps are adjusted properly, and the price is determined based on fact rather than emotion by someone who does not have incentive to skew the numbers upwards. And I want to make sure that there is some back-up to the price determined. The prices vary a LOT around here and this unit is 30 years old with no upgrades at all, and several semi-expensive items on the inspection report that are going to need to be corrected. I want to make sure we're operating in the same universe when it comes to deciding on price.

The other thing I will be working on concurrently is to line up a mortgage broker. I've spent a few hours with 4 different banks and credit unions, and besides being really time consuming, I am not convinced that this is the way to get the best deal possible.

The thing is, I don't have anyone to ask for recommendations for the appraiser and the mortgage broker. Friends of mine have generally dealt directly with lenders and have had the financing companies arrange for their appraisals. I've done some Yelp searches... but without direct recommendations, what is the best way to find reputable people/companies to do this work? I looked at Angie's List this weekend and then saw a lot of negative opinions about it posted around the web, so I don't think I'll be trying that. Are there other places that offer more reliable/unbiased recommendations?

Edit: Yes this purchase process is moving slowly. I have relatives staying with me for another week, and once they leave, I plan to start getting things moving again towards completion.

An appraisal is a lot of money to spend considering you might not buy the unit. Don't fall in love with this particular property.

I've been living in the unit for 10 years so yes there is of course going to be some attachment, but I'm not going to jump into anything that doesn't make good financial sense.
I think I've also got a good opportunity, and an owner who would really like to sell the unit to me. And I'm in the favorable position of not having to compete with other buyers.

I'm already in for $450 for the home inspection. I think spending an additional $300 for an appraisal that could well save me a ton of money on the purchase price is worth the investment. The alternative would almost certainly be the owner asking the realtor that she's hiring to determine a price. The realtor has a stake in the fire. I'd rather that someone without an interest in the transaction (i.e., commission) help determine the starting point for the negotiation of the price.

The problem without having someone advise you as the buyer is that you might pay too much. Saving 6% on the transaction isn't much comfort if you pay 10% too much for the property. Be careful.

You're already in the property, so time is on your side. Start low on your bid and let the seller come to you. I am assuming you are under a lease with some time left on it, so you do have some power in this transaction. It's much harder to fix a place up to sell to a retail buyer if there's someone living there. Use this to your advantage. The only people who are going to buy a property with a tenant in place are going to be investors. And they're not going to overpay.

All of this assumes that the owner can't void your lease upon sale. Varies by state.

I'd bid below the low end of the comps and see what they counteroffer. You really have no way to tell how bad he wants out of the property.

No lease. I've lived here 10 years and I've only been given new leases when the rent has gone up.
We've been moving slowly and the owner has asked me to get a letter of pre-approval , which I'm good with doing. I would like to use a broker, but am not sure of the best place to find one. I've been told by friends that they wish they'd used one instead of dealing directly with a lender. However I don't have any specific recommendations from anyone. What is the best way for me to find one?

No lease. I've lived here 10 years and I've only been given new leases when the rent has gone up.
We've been moving slowly and the owner has asked me to get a letter of pre-approval , which I'm good with doing. I would like to use a broker, but am not sure of the best place to find one. I've been told by friends that they wish they'd used one instead of dealing directly with a lender. However I don't have any specific recommendations from anyone. What is the best way for me to find one?

There's a couple brokers in the mortgage sticky thread if you don't have local contacts

There are many resources available through the internet that offer advice for all sorts of buying and selling questions you may encounter through the process. Whether you decide to hire or a realtor or go with an attorney, you should feel comfortable and well-represented through the process. Best of luck!

Why would you need a realtor involved? I did the exact same thing... I was renting the condo a I currently own, Emailed the landlord about wanting to sell, He emailed me back a fair price. We agreed he wrote up the contract and I went to my lender/title company. The property appraised above the sale price.

I would have happily gone with a real estate attorney instead but the owner wanted a realtor. She'd always used one, and she wanted to feel reassured that the price agreed to would be reasonable. She's elderly and I was having difficulty trying to get her to set a price. We got the same realtor to represent both of us and substantially reduce her commission, as the unit wasn't going on the market and no advertising, staging, prepping or open houses would be required - just the paper pushing. And the savings in commission was taken into account when the price for the unit was set.

I was pretty lucky as the realtor involved had worked with the seller before and did not try to convince the seller to put the unit on the market because she could get more for it. The realtor actually convinced the seller to go with a very fair price (IMO) - one that was substantially lower than the appraised value of the unit.



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