We rent a condo and the owners want us to buy it from them. Are there any downsides of buying the place you currently rent? Any extra considerations?

Asked by Jena Beaver, Los Feliz, Los Angeles, CA Mon Apr 9, 2012

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Steve Mi, Agent, San Fransisco, CA
Sun Apr 15, 2012
there are several considerations, especially if you're a first-time buyer. first are the HOA docs, meeting minutes and other related documents. they tell you about the community and the building. more importantly, are the seller's disclosures. they tell you what the owners know that you may not already know... if you are seriously considering buying, you'll want to have a professional agent involved, as the buyer it shouldn't cost you anything to have one.

steve mi
lic# 01795584
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Stuart, , San Francisco County, CA
Thu Apr 12, 2012
You have received a great deal of good info. I bought my condo in Nob Hill from the owners I was renting from. It worked out well.

You need to see a CMA report, the CC&R's and bylwas from the HOA, the annual budget, reserve fund funding, any pending special assessment and last 6 months meeting minutes before you make any offers. Get a real estate agent you can trust

Coldwell Banker
415 309 4970
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, ,
Tue Apr 10, 2012
If you are going to finance the purchase with a traditional lender there are some rules depending on the circumstances. If you are using FHA there is a maximum loan to value limit of 85% unless you have lived there more than six months. They will require independent verification, not a regular verification of rent from the seller:

A current tenant purchasing the property that the tenant has rented for at least six months predating the sales contract. Evidence must be submitted verifying 6 months of occupancy (i.e., cancelled checks, utility statements, paystubs, etc.).

They could also ask for two appraisals and you can’t use a commission from the seller as a down payment, good luck,

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
Web Reference:  http://jamessimms.com/
0 votes
Great insights. I helped two folks with a similar situation a while back, only they had intended to buy under some lease option agreement, and the lenders were difficult with the funds the seller would credit the buyer for the purchase. You learn something new all the time.
Flag Tue Apr 10, 2012
J Mario Preza, Agent, Daly City, CA
Mon Apr 9, 2012
Buying any property you rent could be a windfall, however, you have to carefully evaluate many factors, among them how the purchase fits into your long-range financial goals, and how the purchase will change your present expense picture.

Buying directly from the homeowner poses a few challenges, but it also presents some great possibilities in the resulting buy/sell agreement. Challenge, separating the "friendship" (if this applies) from the business. While it may fit well for Pacific Bell to tout that "...the best business calls are personal..." making a major purchase, like a home, should never be left to taking things for granted just because "what will s/he think if I ask this or that..." Some of the biggest mistakes are made because of putting too much emphasis on trusting someone or something more than your best judgement may dictate. That said, you need to weigh the pros and cons carefully as they impact you. Sure an exceptional opportunity may have just landed on your lap, but don't take someone else's word for it without doing your due diligence.

What should you consider beside the way this buying decision (versus renting) will affect you present financial profile? Here's a brief (partial) list:

Is this place you truly would like to call home (for the longer term)
In a condo, be sure to study the condo complex's history, finances, governing board, policies, dues, proposed assessments and even the minutes of the meetings. If you can't get a hold of these important documents, think twice about making this sort of purchase.
Are you getting a better than market term or price?
Remember, you don't want to buy someone's headaches.

On the positive side, it is easier to get into a direct purchase from an owner -- you won't have to deal with competing offers, for instance.

Do plenty of research, and talk to a Realtor who'll talk to you without just looking for another pay day. What you need is honest, unbiased analysis, and any great Realtor may do that, but remember, Realtors earn money for putting buyers and sellers together, and usually get paid by the seller, unless you decide to retain one for your own sake.

I know you probably want a little more factual insights, but, you didn't give enough details or your circumstance to give you all but the most generic observations. Hope this helps.
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Robert Chome…, , San Diego, CA
Mon Apr 9, 2012
I think there are mostly upsides because you have already lived there and know what it's like. This is especially important with condos. Because if you haven't lived there, it's difficult to truely know how good the soundproofing is between walls, noise level from the street, etc... But since you live there you know these things. BIG advantage.
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Isaac Wigley, Agent, San Francisco, CA
Mon Apr 9, 2012

I agree that this is a great opportunity for you. Just make sure to get professional guidance along the way. If you have a great relationship with the owner, and you love where you live, I recommend seriously considering this as a great investment in your future. :)

I recommend your first step is to find an agent whom you trust, and then look at the comparable prices of homes that have sold, in order to better appreciate where a fair price can be determined.

Good luck!

Isaac wigley
Realtor bhg mason McDuffie
0 votes
David Tapper, Agent, Burlingame, CA
Mon Apr 9, 2012
Good for you, Jena. It's sounds good looking from the outside. The only thing you should do is to make certain you have someone representing you and your best interest to navigate the offer and terms of the contract and to also get the proper inspections and disclosures from the HOA.


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Rena Levy, Agent, Las Vegas, NV
Mon Apr 9, 2012
There are no downside and its a great oppertunity for you to purchase the condo that you allready lives in and used to.
With low interest rates and low prices making it affordable. Take advantage of the offer and just get the help of a Realtor or attorney to assist you with the offer and the proccess.

Good luck to you!

Rena Levy
Broker/Associate in Las Vegas
Realty Executives
Web Reference:  http://www.cvegashomes.com
0 votes
Lance King, Agent, San Francisco, CA
Mon Apr 9, 2012
There is actually a lot of upside to doing this way. You won't be in a competitive offer situation and you know the property well (presumably). However, you should have representation to make sure you get all the required/necessary disclosures, you're not overpaying, etc....

Happy to help if you want.

Best Regards,

Lance King/Owner-Managing Broker
DRE# 01384425
0 votes
Marc Dickow, Agent, San Francisco, CA
Mon Apr 9, 2012

I did exactly the same thing only with a single family home. It's great because you already know everything about the place. If you love living there then it's a great opportunity. You don't have to deal with all the multiple offer situations that we have going on right now. It was a definite sign for us that it was time to buy when the opportunity was presented to us.
If you have specific questions or would like assistance with the transaction, I would be happy to help. There are definitely things I would have done a little differently if I had known what I know now.

Please feel free to contact me anytime.

Good luck,

Herth Real Estate
0 votes
Oggi Kashi, Agent, San Francisco, CA
Mon Apr 9, 2012
Things to consider,

- You know the property very well and that should help you feel confident.
- You don't have to deal with showings and open house while the condo is on the market.
- You don't have to deal with new owners and the possibility of having to move out later on.
- If the condo fits your needs (for now and long-term) and you like where you live then there is a price for convenience.
- If you are buying without the property hitting the market then you have no competition and that's worth something.
- As long as you have a good grasp on the market value of the property, you should be in a very good position to take advantage of this opportunity.
- You and the seller are in a position to maybe use one agent to represent you both and therefore save quite a bit of money.

If you can negotiate well, I don't see any downsides to this situation. Feel free to contact me with any questions.

Oggi Kashi - 415.690.3792 direct
Broker Associate, Paragon Real Estate Group CA DRE 01844627
All data from sources deemed reliable but subject to errors and omissions, and not warranted.
Web Reference:  http://www.oggikashi.com/
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Don Tepper, Agent, Burke, VA
Mon Apr 9, 2012
No real downsides, and some definite positives.

You should protect yourself just as you would buying from a stranger. As Terri suggests, you can have an agent represent you. And you certainly need to know the fair market value of the condo. Also, make sure you examine the condo association's financials, to make sure it's in decent financial condition.

On the other hand, you're familiar with the condo, the building, and the neighborhood. That's all good, especially if you like them. And you must be on good terms with the owners, so that can't hurt.

So if you like the place, can see yourself living there for a few years (at least), determine a price that's fair, it sounds good.

Hope that helps.
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Terri Vellios, Agent, Campbell, CA
Mon Apr 9, 2012
The benefit is that you already know most of the condition of the interior and surrounding neighborhood. Also, you may not have to compete with other buyers. Even thought you are purchasing from the owner, you can still have an agent represent you in respect to the contract, title, escrow, inspections, estimated values, lenders, etc.. In fact it is highly advisable to have some one review your contract and use a local escrow provider.

Congratulations the process of home ownership.
Web Reference:  http://www.TerriVellios.com
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