Question regarding home purchase from neighbor

We were interested in a house down the street from my inlaws as we heard that they would be looking to sell in the near future. My inlaws spoke to their neighbors and they seemed interested in possibly selling the house to us and we went to the home this afternoon to have a look at it. My question is, what should I be keeping in mind if we were to go forward? What process would generally be followed and how would we generally determine what the house is worth? Are real estate transactions common without the seller listing their houses on MLS? The sellers had mentioned they got an appraisal a little while back, but I have to assume we would want to get our own appraisal too. Any insight would be greatly appreciated. Thank you!

Also, they mentioned that they wouldn't want to close until at least June to keep their children in the school district. Could you even go into contract on a house that would not close until June?

Re: Question regarding home purchase from neighbor

Some sellers do sell as a "for sale by owner," versus listing with a realtor on MLS. The only reason for a seller to do that is to avoid paying a realtor a fee. Most people who start out trying to sell without a realtor usually wind up using one (a realtor can market the home for maximum exposure and draw more buyers in). Those sellers who do sell on their own usually wind up selling to someone they know (a friend, relative, neighbor) versus a true "arms' length" transaction.

You will need a real estate attorney to prepare the contracts for you and handle the closing. Make sure you find someone who you trust and who will be accessible to you, given that you won't have a realtor to guide you through the process.

You will want to have a home inspection done on the house before you go to contract. There is no reason why you can't go to contract even if the negotiated closing date is in June. Keep in mind that, as a buyer, there is a potential downside to you -- mortgage commitments and rate locks expire, and if you wait to get them until closer to June, the interest rates may go up and that can really impact your monthly payment.

As far as figuring out what you want to pay, it depends on what the home is worth to you. As far as looking at objective date - - You can look on websites like zillow, but the info on closed sales on there isn't always accurate. Assuming you are getting a mortgage, the bank will send an appraiser in to appraise the property prior to giving you a loan. So that is sort of a built-in check to prevent you from grossly overpaying. If you know a realtor who can provide you with recent comps before you make an offer, that would help.

If you want to FM me more details, I could pull some comps for you (sales of comparable houses that closed within the last few months in the same neighbhorhood). Many of the for sale by owners I've encountered are unrealistic about the value of their home. Not to say that's true of your situation, but I've seen many sellers try to sell on their own at ridiculously high prices.

Re: Question regarding home purchase from neighbor

Thanks so much Christine! Very helpful information.