Expert: Jim Root - 12/14/2009

Question
My husband and I are from Nebraska and we are going to be buying my mothers house (she has decided to down size) in April of this year because that is when our lease is up at our apartment.  We are not planning on going through a real estate agent.  I was just wondering what steps we should go through in order to purchase her house.  We actually got a preapproval for a loan about 6 months ago but then decided to wait and buy my mom's house.  So we know that we can afford her house and there have not been any big changes since then that would affect us getting preapproved again.  Should we get preapproved again so that the loan process will go smoother or is there no need for that?  Are there any actions that we should be taking now?  Thanks in advance for your advice!

Answer
Dawn--
The transfer of ownership of a property is a complex set of activities involving the Lender(Loan Officer, Processor,Appriser,Loan Underwriter & Closing Clerk), Title Company(Title Officer & Title Insurace Underwriter)Escrow Company that ties everythng together at the end and closes both the loan and the trsfer of ownership of the home (May be an Attorney, a Licensed Closing Officer or a Title Offcer).ALL of this is W-I-T-O-U-T a REALTOR!

Dawn, you'll need help--a Realtor will coordiate ALL of the things that need to be done by the plethora of professionls I've listed above! Without the Reator's involvement, GOD knows the problems that may crop up and need solving by the Real Estate Agent!If your NOT usng a Realtor to save money,you'll LOSE MONEY in the long run! REALTORS TYPICALLY ASK FOR 6 per cent COMMISSION--BUT THAT"S FOR "FULL SERVICE," You don't need to pay that much--as you've aleady "found" the home you want, so the Realtor won't have the job of "searching" the Listings for what you want to buy.Wont have to "split" hs/her commission with the Listing Agent, etc!

ACTIONS YOU SHOULD BE TAKING NOW?

1, Find a Realtor who, for no more than 2 per cent, will provide "Deul Agency" for you and Mom.

2  Have the Realtor sit with you & Mom, and prepare a PURCHASE & SALES AGREEMENT(Too often buying from relatives without a professionlly prepared CONTRACT leads to misunderstandings, misinterprettions and probles at the "Closing Table!")

3. Go back to the Loan Officer(LO) that Pre-Approved you 6  months ago and present him/her with your Contract with Mom.(The LO will then begin the "process" and the Realtor will participate as necessary to help the Appraiser, Title folks, Home Inspectors, etc, get there jobs done and in your best interests.)

You've thanked me for my advice--please HIRE a REALTOR or use an Attorney who specialzes in Real Estate Law to draw up" a CONTRACT between you and your Mother--and follow the process to see that "all goes well!" But Attorney fees are high and Realors in Nebraska are Licensed by the State to "a LIMITED practice of Real Estate Law," and you CAN find Agents who'll step into a situation such as yours for avery NOMINAL FEE (And you can could put it into your Loan.)

GOOD LUCK!

--JIM