5 Questions to Ask Yourself Before Buying a Home That’s Off the Market

You’re in the market to buy a house, and you’ve heard through the grapevine that one of your friend’s neighbors it looking to sell. You begin a conversation about a potential real estate transaction for a property that isn’t even on the market. Where do you even start, and how do you make something like this work without exposing yourself to risk?

There are definitely some advantages and disadvantages to buying a house off the market. To make the most our of a deal like this, ask yourself the following 5 questions first before you jump in with both feet.

How Should You Decide What to Pay For the House?

If you’re serious about buying a certain home, and the seller is more than willing to sell it to you, now is the time to decide how much to pay for the house. But things can get pretty sticky if what you’re willing to pay for the house is totally out of whack with what the seller wants.

At the very least, the price needs to be within a negotiable range. If you can’t agree on a price, consider having an unbiased appraiser value the home. If the seller isn’t satisfied with this number and feels that it’s lower than the property’s actual market value, then you’ll probably need a real estate agent to come into the picture.

Are You Really Saving Anything on Real Estate Commissions?

Many sellers choose to sell off the market and advertise their properties on their own in hopes of saving some cash on real estate commissions. But oftentimes this decision is not well thought-out.

First of all, real estate agents often wind up being brought into the transaction at some point anyway (more on that later). Secondly, as a buyer, you might assume that the seller will let the house go at a reduced price considering they’re saving on real estate commissions, but most of the time the sellers won’t see it that way. If the house is really worth $400,000 according to current market conditions, for instance, and the home owner ends up selling for $380,000 ($400,000 minus 5% in realtor commissions), then the seller really isn’t saving anything at all.

Should You Get a Real Estate Agent Involved?

Many buyers and sellers quickly realize after dipping their toes into a DIY real estate deal that they simply don’t want to go it alone. All the uncertainty that plagues an inexperienced buyer or seller just isn’t worth the possible savings that are perceived to be made without enlisting the services of an experienced real estate agent. Either party just might want the comfort of having an agent work with them to offer advice as needed.

Real estate agents will provide an opinion of value of the property, negotiate a fair price, help with the purchase agreement paperwork, and recommend certain clauses to protect both parties, such as a home inspection or financing condition. While the services of a realtor come with a fee, they are well worth it at the end of the day.

It’s worth noting that the buyer generally does not pay commission to a realtor anyway (as it’s typically paid out by the seller), so you’re really better off using a realtor to help you navigate the waters of a real estate transaction.

Are There Any Risks Involved? If So, What Are They?

When it comes to real estate deals, risk is always present. What if you wind up paying more for the house than what it’s actually worth in today’s market? What if their are liens on title? What if there are defects with the house that you weren’t initially made aware of?

The same is true on the part of the seller, who will probably wonder if they could have gotten more money if they had just placed the home on the market in the first place. It’s important to feel comfortable about a transaction before signing a contract, which is why a real estate agent is often consulted at the end of the day.

What Other Professionals Should Get Involved?

In addition to seeking advice from a realtor, you might want to consider getting other professionals in on the deal. A lawyer should be part of the picture to help ensure that the paperwork isn’t missing any pertinent information, and make sure that it doesn’t include anything that would put you in a position of risk. Attorneys will also check the title of the property, and help to make sure that all the money exchanges hands fair and square.

While not exactly a common scenario, there are times when a buyer happens upon a home that the seller is ready to part with. If both parties are serious about making a deal, a transaction could take place without the property ever hitting the market.

However, just because no MLS listing was ever drafted up, that doesn’t mean you should go it alone. Always enlist the help of professionals, including a real estate agent. The role of a realtor isn’t just to show you houses available for sale. In this case, a real estate agent can help you iron out all the details of the deal so you can be completely protected throughout the entire transaction.