Most Americans do not begin the home buying process with the idea of buying a for sale by owner (FSBO) property. But you may find that a for sale by owner property could be your dream home.

If you see such a home and love it, should you consider buying it or moving on? There is no one answer; buying a FSBO is just like buying another home in some ways, but there are some things to keep in mind.

Purchasing a home without a real estate agent can pose additional challenges compared to working with a professional. If you choose to navigate the process solo, you’ll assume extra responsibilities.

Without a REALTOR® or real estate agent, you might lack comprehensive knowledge of the market. Professionals have access to property listings, enabling them to identify available homes and understand their features. Seasoned agents are well-versed in local real estate markets; they listen to your home preferences, locate properties within your budget, and streamline the research process. Without an agent, the burden of research falls entirely on your shoulders.

Negotiating terms can be more complex without the expertise of a REALTOR®. These professionals are skilled negotiators, ensuring favorable outcomes for buyers. If you proceed without an agent, you’ll need to handle negotiations independently, potentially risking overpayment or missing out on desired properties. A buyer’s agent can advocate on your behalf during negotiations with the seller and their agent.

The home-buying process involves extensive paperwork. From drafting a solid purchase offer to deciphering inspection reports, a significant amount of documentation is part of the process. A REALTOR® is equipped to assist you in managing this paperwork and highlighting crucial issues.

REALTORS® also offer valuable connections that you might lack on your own. Engaging in a home purchase often requires collaborating with third-party experts such as contractors and home inspectors. A real estate professional can direct you to reputable professionals, facilitating a smoother buying experience. Without an agent, the onus is on you to independently research and locate the right assistance, potentially making the process more challenging.

For Sale By Owner

Decide If You Need an Agent

If you see a FSBO, the seller probably does not have a listing agent. But some owners may be willing to pay a buyer’s agent. If you have one, you can have her contact the seller for you. If you do not have one, you do not necessarily need one, but it will make the sales process smoother.

Some buyer’s agents do not want to work on a FSBO with no listing agent because they think they might have too much liability if something goes wrong. Or, it can mean more work for the agent for no more money. When there is only one agent, the realtor usually ends up doing more work.

As for you, having a realtor in your corner may be very useful, and the seller usually pays the commission anyway.

Writing Up the Purchase Contract

If you do decide to not have an agent, you may want to have a real estate attorney to write it the contract for you. Most real estate attorneys can write you a purchase contract for a fair fee. You also can buy a purchase contract online and fill out the legal contract yourself.

If you do plan to write the purchase contract yourself on the FSBO with no buyer’s agent, remember:

  • You should offer less than the list price, because you can only go up, not down.
  • Write down any contingencies. Be sure that you have a way out of the purchase if there are physical problems in the home that the seller declines to fix. Other continencies you may want to write in are having a good appraisal of the home, approval of the loan, clear title and ability to insure the property.
  • Do not provide the seller with any earnest deposit funds. It should go to a third party, such as a title company. Usually, the listing agent puts it in her escrow account.
  • Decide who is paying for what. Who pays for every fee on the transaction? These include transfer taxes, title fees and escrow. If you are good at negotiating, this will come in handy now.
  • When do you take possession of the home? You should detail when you will take over possession of the property. Many parts of the country expect possession of the home to be the day the sale closes.

Home Inspection

You should always have a home inspection done. There are many real estate deals on FSBOs that go south if a poor home inspection is done or one is not conducted. If there are problems of a serious nature with the home inspection, here are your options:

  • Fix the issue. But the home owner is not required to hire the best person for the job. Many contracts also may specify that the home is being sold as is.
  • Credit the money to you. You can hire your own contractor after the deal is closed. The amount will apply to the closing costs. In this situation, the seller does not fix anything.
  • Drop sales price. If there is a real problem on the home, the price of the home can be reduced by how much it will reasonably cost to fix it.

If you are still thinking about a FSBO with or without an agent, there are some myths to dispel:

  • FSBO sellers are not serious. Not true. They generally want to get the home sold but want to avoid paying a commission if possible.
  • FSBOs will not move on price. FSBOs usually get less than people who list their home with an agent. FSBOs are usually willing to offer negotiation, and they may not be very good at it, which can help you.
  • FSBOs are hiding something. It can happen but FSBOs must follow the same laws as any agent-represented transaction.
  • Pre-approval is unnecessary. Generally, you have a better chance of getting a home that you want if you have a mortgage pre-approval, just as with a home where there is a seller’s agent.

The bottom line is that buying a home with a FSBO seller can be more complicated if you do not have an agent on your end of the transaction. We generally advise having an agent on the buyer’s side, but the seller could balk at paying the commission.

References: Tips for Buying a Home for Sale by Owner

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