I'm confused, is this house also for sale by owner?

As long as you use a real estate attorney you should be fine. The attorney should have a copy of the standard purchase contract for your area, and the attorney should be able to take you through the contract, contingencies, etc.
Good luck!

Can I suggest that you do include an inspection in the mix? The people may be wonderful but the house may have deteriorated in structural ways over time that they're not aware of and you don't want to get stuck with problems out of a sense of friendliness.

The house is listed with an agent and is not FSBO. My parents are good friends with this family and they talk pretty regularly. I actually spoke with the wife a few weeks ago and congratulated her on getting a contract after only 7 days on the market when the house was first listed. (That should indicate how well-priced this house is for this market) Apparently they had 15 couples come through the first weekend, 3 of which were very serious. The guy who put the first contract in, negotiated them down 2% and he was offering to pay his own closing costs (which they certainly liked). However, his financing fell through late in the process.

So the house just went back on the market and Mom ran into the wife and learned the story then called me since she knows we've been looking for houses in the NoVA area for 3 years now and still think almost everything is overpriced here. The thing is, we'd feel financially comfortable buying this house. We have been in it recently and it shows very well. New paint and it's been well-maintained. I never doubted the condition of the house because I know the husband and he's a very able handyman. They've also had a couple of additions on the house over the years. There are a few pet peeves we have with some parts of the layout, but it's certainly a livable house, not requiring any work at the moment.

I was wondering since the last buyer had an inspection (and the guy spent 3+ hours doing it) if we could just look over his report or should we go through having it inspected again? (I would use that point to negotiate another $500 off the price).

Why should the last buyer give you his report? And why would that give you $500 off the price of the house?

The seller will still owe his agent 6% (or whatever the contract says) whether you have an agent or not.

You're not saving yourself 3% by not using a realtor to buy the home. The seller still has to pay the commission to the realtor, so you're not doing yourself any favours whatsover.

Also, the inspection report is the property of the previous buyer. I would be quite miffed if I found out a seller handed over an inspection report I paid for and then gave the buyer a discount for the amount I paid.

It honestly sounds like you want to cut corners to save a few bucks. You are making a huge mistake not using a realtor to look after your own interests - family friends or not.

Thanks again for all the advice. I wasn't aware about the previous buyer having ownership of the report. From what I heard, the sellers had paid $500 for the inspection so that's why I thought they could share the details and just give us that money back in the purchase price.

I also didn't realize that the seller had to give the selling agent a full 6% of their listing price. The sheet I have on the house lists "Sub Comp: 3%, Buy Comp: 3%".

It's not so much that we want to cut corners. It's more that we don't want to offend longtime friends of the family with a lower initial price. We were hoping that they could just shave off the 3% for the buyer's realtor fees after offering them the same price the last guy did. I guess it doesn't work that way. Sorry if these questions seem moronic, but it's really just because we're not familiar with the ins and outs of the process. We've saved up a 20% down payment and we're ready to buy and it's a house we could be happy in. We just thought maybe we could reduce the price that way and benefit both us and the seller. And we thought since we already found the house on our own, we'd only need to hire a real estate attorney at this point. I see we were wrong though and should probably do a bit more homework. Keep the advice coming if you have any to give!

Thanks everyone.

Make sure permits were pulled on all remodeling. Otherwise you will have to pay for them yourself.

I bought my first house from my grandmother. No RE agents and we used the same lawyer, it was my grandmother after all. I did not have an inspection, didn't want to insult grandma and also saved money. Within a year the furnace and the hot water heater died.

As has been suggested, he who pays for the report, owns the report.

And also as has been suggested, depending on the municipality, everything in that house may have to be up to modern codes though some partial grandfathering is not unusual. Most municipalities require a passing inspection prior to issuing a new occupancy permit, some will even try to stop the transfer. More rural areas do not have this buyer protection. Beware the handyman :-)

How to put this delicately ... You don't actually know why the previous deal fell through.

I've seen sellers use that term and allow an insinuation that the buyer was defective, rather than the house didn't appraise high enough or the inspections showed more problems than the buyer was interested in taking on.

Also that they had an offer early and fully priced_that fell through_is an abiguous clue but I'd be thinking about it marking the ceiling more than the floor.

Family and friend deals can be done but if they couldn't show me in the contract where it stated that the selling agent would forgive 3% even without a buyers agent, I would have a buyers agent, period. If you wan't to save inpection money (which I do not rec.), have the sellers run the city through there and issue a new certificate of compliance.

That at least should give you some breathing room but nothing beats having your own advocate who brings you a nice stack of recent comps to look at and a recent, detailed inspection report from a qualified inspector of your choosing.

You've worked hard the build up your 20% down payment money ... Protect it.

DO NOT worry more about offending these people than protecting your nest egg and future cash flow. Friends of Mom and Dad or not, they will NOT reimburse you for problems once you are in and they are gone. If they act in the slightest way, miffed, suggest that the family relationship is too important to stress with this deal, wish them well and WALK AWAY.

I bet they chase you down.

Depending on what state the house is in and who is listing it, the seller may be able to save money on commission as long as they've already spoken about it. With us, you would be an in-house sale and yes, the commission would go down by 1%, he gets 5 now, it would go to 4.

I can tell you that in most parts of the country the market stinks. We've had a lot of action in the last few weeks and one low-ball offer that we're still trying to work. We also have 2 other couples interested, one has a house to sell, the other will be another low offer from what we know.

Since it sounds like the sellers own the inspection report, are they willing to share it with you? That's the question. Then you have to take into account how well did this inspector do?

Sounds like there was a lot of interest in the house, and if you are right about 3 people being serious, where are the other two, and do you really have time to think about this? If two more people are interested, you need to move and figure out an offer.

good luck

And lastly (if you're not sick of all the advice yet :0) consider this: If this house had never come on the market, but you had made your own decision to buy new, have you considered just what you REALLY want in a house, rather than being drawn in to someone else's cozy friendliness that just happened along - In other words do you know for sure what you would look specifically for in a place to suit you, and not be taken in by nostalgia?

Not to sound like a broken record, but thanks again so much for all the advice. It's much appreciated and it's good to have neutral opinions out there on this type of a potential transaction. I'm certainly not sick of the advice! =)

Nostalgia aside, this house certainly falls into the specifications of what we were looking at (before it was listed). In fact, when it first came on the market we were a little blown away by the listing price because most others had been shooting for the moon in this area and were stagnating on the market (with the few well-priced ones going very quickly). But at that time we said we could never live in the same neighborhood as my parents!

It went off the market under contract and more houses came on at values we still didn't feel were appropriate. The houses we've visited in our price range up to this point have not pleased us. The ones that have pleased us have been either above our price range or else stretching it. Oddly enough, this is the first house we've looked at where we're actually happy with the value and how it's maintained. It just happens to be in the neighborhood I grew up in.

Of course we're worried about borrowing more than we should. If we do buy this house and put 20% down after a little negotiating, we could have a mortgage that is around 2 to 2.5 times our gross annual income. The monthly payment would definitely be achievable and would allow us to funnel extra money into our retirement accounts and children. So financially, this seems a good decision for us.

When the contract fell through and the house came back on the market, we sat down and re-evaluated whether or not living near my parents was really as bad as we made it out to be the first time. Oddly enough, it was actually my spouse who was the one who started seriously considering the house, not me!

I do trust the sellers that the first contract fell through based on the guy's credit score. Based on the things their family has done for mine in the past, they wouldn't come out and lie to us. In fact, my mom learned the details before they even knew we were seriously interested.

The guy who initially put in a contract brought his family over with him multiple times and even had his boys picking out rooms. We saw them over there once when we were at my parents' house and my parents saw them on separate occasions. The guy apparently loved the house and what items did come up in the original inspection were supposedly minor things.

A couple of other neighbors in the cul-de-sac are potentially looking to sell and were quite pleased with all the traffic this house got when it was first on the market. The traffic still seems heavy from what we've heard from my parents and other neighbors which makes us think that we're not alone in thinking the house is attractively priced.

I think Dave1MN2 hit the nail on the head regarding the comment about protecting the money we've saved and what to do if negotiations start to go south - i.e. say the family relationship is too important to stress with this deal.

I guess we should take a calm, collected approach with this and think everything through, and check out buyer's agents.

And on that note (if any of you have even read this far - sorry for the book!), would it be the end of the world if we used the same agent that is selling the house?

I guess the reality is we should keep ourselves emotionally indifferent and not get attached to the possibility of getting the house. With the current market conditions, it seems if we don't pursue this, prices will only go down with time and maybe we'll find another house for a better value later this year!

Since you know the sellers, I'd call them up directly and let them know you are interested in making an offer on the house. Then ask THEM if they have negotiated a discount with their Realtor if they bring in a buyer who is not otherwise represented. If they haven't, this gives them an opportunity to at least try to get one now. And if they have, you can reasonably deduct that savings from your offer price. Just bear in mind that if you do work with their agent, she is looking out for THEIR interests, not yours, and there may be some conflicts.

If there's no substantial cost savings between using their Realtor and your own -- get your own. The two Realtors will smooth over any number of potential issues to help the deal go through.

As far as the unpermitted handyman stuff, I've got two things to say about that:
-- The worst home repair work in the world is done by handyman homeowners, who don't know how to do things properly; and
-- The very best home repair work in the world is done by handyman homeowners, because they care more about the quality and durability than anyone else.