A Knoxville, Tennessee family has warned other homebuyers to exercise caution if they are planning on purchasing homes for sale by owner (FSBO). The Neal family issued the warning after they lost $150,000, which they put down as deposit for an FSBO house.
According to the Neals, they decided to purchase a three-acre home in West Knoxville right after moving to Tennessee from California. The family revealed that they put down the money as deposit for an FSBO dwelling and is now facing the possibility of losing that home because they did not make a proper search.
Jerry and Pam Neal revealed that they were initially planning to build another house, but upon chancing on the 4,000 square-foot FSBO structure being sold for $272,000; they decided to make a purchase instead.
The family’s problem started when they believed the former owner of the home, Chuck Farhat, who told them that they do not need to go through an escrow because he is a licensed broker. Farhat allegedly told the Neals that they can save a lot of money by not escrowing the money. The former owner of the house offered the Neals a contract instead which specifies that the buyers would pay Farhat a fixed amount of $1,044 each month for a period of 15 years.
The Neals found out that something was wrong when they tried taking out a home improvement loan in 2008. According to them, the lender told them that they do not own the property that they purchased and that Farhat defaulted on his loan. The bigger problem, the buyers revealed, is that there had not been any proper search conducted on the house.
The family regretted not having a homes for sale by owner search conducted since that would have shown them that a mortgage has already been taken out by Farhat on the house and that the former owner still owes back taxes on the residential property. They admitted that foregoing the search denied them the chance to discover that it would be trouble to purchase the house or put down a deposit on it.
Furthermore, the family discovered later that the property is actually less than two acres and not three acres as they were initially told. The Neals regretfully admitted that they would not have made the purchase if they knew all about these details beforehand.
Meanwhile, the Knoxville Realty Board had stated that new home buyers should always acquire the services of a title company that would search the for-sale property’s records. Title companies could have searched the deed and the history of the house and would have done a title abstract. Usually, such services range between $200 and $250.
The house purchased by the Neals just went into foreclosure a week ago. In the meantime, the family said they will be living in the residence and will make payments for Farhat, against whom they are preparing a lawsuit. They warned other buyers of homes for sale by owner to have an escrow and to hire a title company before making a purchase.