How to buy a house for sale by owner

When a house is for sale by owner (often abbreviated to FSBO), it means the homeowner is selling the house without the help of a real estate agent. The most common reason someone would opt to sell on their own is because they want to save money on Realtor fees: By selling the home without an agent, they don’t have to pay an agent’s commission.

Buying a FSBO home has both advantages and disadvantages, but knowing more about the process can help you decide if it’s the right option for you. Whether you are looking specifically for a FSBO home or you simply fell in love with a home that happens to be FSBO, here’s how to buy a house that’s for sale by owner successfully.

What to know about ‘for sale by owner’ homes

Buying a FSBO house requires knowledge of the homebuying process and attention to detail. One thing to be aware of: A home for sale by its owner may be listed for a lower price than agent-represented homes. In 2023, the typical FSBO listing sold for $310,000, compared to $405,000 for sales assisted by an agent, according to the National Association of Realtors.

Saving money is a big plus, but purchasing a FSBO home also comes with some risks that buyers wouldn’t face when purchasing a traditional listing. When a seller uses an agent, that agent helps get the listing ready for sale. This includes crucial steps like setting a list price based on research and local market knowledge, submitting all necessary paperwork and disclosure forms and crafting a complete, accurate listing. An owner who sells without this professional help may miss some steps — the buyer must be vigilant to make sure all of these things are completed properly and legally.

Can you buy one without a buyer’s agent?

A FSBO seller doesn’t have an agent representing them, but do you need an agent of your own to buy it? Technically, you do not: Homebuyers are not required to use a real estate agent. But it is usually a good idea — and especially so in the case of a FSBO transaction. With no agents involved on either side, it would be very easy for steps to get missed and mistakes to be made.

A buyer’s agent will help protect your best interests. “It’s beneficial for buyers to have a vetted, licensed Realtor on their side,” says Keri Rizzi, a Realtor with HomeSmart Homes and Estates in White Plains, New York. “With a Realtor to guide them through the process, buyers can rest assured that they’re following the appropriate steps to ensure that they’re treated as honestly and as fairly as possible.”

However, keep in mind that your agent will be owed a commission, even though the seller is not paying an agent of their own. Be sure to work out ahead of time how much this amount will be and who will cover it — if the seller is not willing to pay your agent’s fee, you’ll have to pay it out-of-pocket.

If you do want to purchase a FSBO home without using a Realtor, Rizzi recommends that you do your research:

• Pull data on nearby comps for homes in the same size, style, school district and price range.
• Visit the town hall in person or online and submit a FOIL request for all documents, deeds, plans, permits, surveys and miscellaneous reports on file for the home.
• Request the property’s current title status as well.
• Visit FEMA.gov to verify whether the property is in a flood zone.
• Commission a thorough home inspection, including water, well and septic testing.

How to buy a house for sale by owner: 7 steps to follow

1. Get preapproved by a mortgage lender

Getting preapproved for a mortgage helps you stand out as a buyer and lets sellers know you meet the financial requirements for the purchase. It also helps you set a price range that you’re likely to be approved for when it comes time to officially apply (see Step 5).

2. Consider a buyer’s agent

A buyer’s agent works with the seller on your behalf. Their job is to make sure that the process serves your best interests and proceeds as smoothly as possible. Finding an agent you click with and feel comfortable working with can be a big help.

3. Find a home

If you work with an agent, they will talk to you about your preferences for a home and help you find listings that match up. Otherwise, you can search online or even drive around the area you’re interested in to look for homes.

4. Make an offer

When you find a home you love, you will need to formally make an offer. If you’re using an agent, he or she will help you with this — if not, research similar listings in the area to determine if you should offer at, above or below the listing price. You’ll also need to decide if you want to include any contingencies in your offer. A contingency allows you to back out of the home sale if those specific criteria are not met. For example, many offers contain a home inspection contingency (see Step 6).

5. Apply for a mortgage

Even if you are preapproved, you will need to officially apply for a mortgage — and be officially approved — once your offer is accepted by the seller. You aren’t obligated to go with the same lender that preapproved you: Shop around for lenders who can offer you the best rate and terms.

6. Get a home inspection

If a home inspection was included your offer, schedule it as soon as possible after your offer is accepted. Your agent can help you arrange it.

7. Close on the home

Once everything is in order, it’s finally time to close the sale. You will want to work with a title agency to help transfer the title and complete the closing process. And don’t forget to be prepared for closing costs — your lender should provide documentation on these.

Pros and cons of buying a FSBO home

Pros

• You may be able to get the home for a lower price.
• Avoiding an extra person in the communication process can help streamline the buying process.
• You could face less competition from other buyers. “Since FSBOs tend to be sold with very limited marketing, sometimes only posted on a single website, fewer buyers may be aware of these properties on the market,” says Rizzi.

Cons

• Without a seller’s agent to compile all relevant information on the home, you'll likely have to do more research and due diligence.
• A seller who isn’t working with an agent experienced in the local market may have unrealistic expectations.
• There’s a higher likelihood of legal issues and delays, especially if the seller is unfamiliar with the intricacies of the homebuying process.

FAQs

• Do I need a lawyer when buying a for sale by owner house?

  That depends on what state you’re in: Some states require buyers and/or sellers to hire a real estate attorney to complete any transaction, FSBO or not. But even if you’re not required to, it’s smart to anyway, especially for a FSBO transaction. A lawyer can review the contract and paperwork to make sure it’s all in order and generally look out for your best interests.

• What questions should I ask when buying a house for sale by owner?

  When buying a FSBO home, you want to get all the information about the home that you can. Make sure you get a home inspection to find out about any red flags. Check into the home’s title status and whether or not it is in a flood zone. You may also want to request a CLUE report, to find out about any past insurance claims on the property. Your agent can help make sure you ask all the right questions.

• Who draws up the purchase contract when buying a house for sale by owner?

  The seller typically creates the contract. This can create legal issues if not done correctly, so check carefully to make sure the seller has followed all the rules and regulations for a purchase contract in your area. If you have a buyer’s agent, they may be able to help the seller draw up the purchase contract for a FSBO home.