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How To Buy A House That Is For Sale By Owner

Miranda Crace September 8, 2023

Buying a house that is for sale by owner, sometimes referred to as a FSBO home, can be just as easy as purchasing a home listed through a real estate agent. However, there are some differences, most of which revolve around you handling some of the logistics on your own, in addition to working with several professionals. This includes making an offer and negotiating a contract, going through a home inspection process, securing financing and carrying out the closing process.

Read on to find out what to consider when you close on a FSBO house.

The Purchase Contract

couple signing closing papers

Once you’ve decided you want to move forward with a property, you’ll want to figure out how to make an offer on a house that is for sale by owner. A purchase agreement is one of the first documents you’ll need once the seller agrees to your offer price. This is a written agreement between the seller and the buyer that outlines the terms of your sale – closing date, sales price and any contingencies such as the buyer securing financing and passing the home inspection.

Typically, a real estate agent drafts a purchase agreement. Usually it’s the seller’s agent that does this, but in this case, your real estate agent can take care of the paperwork. This person will work as a transactional agent or a dual agent whose job is to solely facilitate paperwork necessary for a home sale. Some states don’t allow dual agents, so you’ll need to check beforehand.

However, if you don’t have an agent, then you have a few options:

  • Hire a real estate attorney to create the documents and provide any legal advice you may need.
  • Hire a title company to draft the documents, and you may be able to get some legal advice depending on who you use.
  • Hire a real estate contract preparation service to create the documents, but no legal advice is provided.
  • Write your own purchase contract and hire a professional for advice.

Regardless of the option you choose, you’ll want to make sure that you’re clear on what you need to include in all the documents. Typically, the seller pays for drawing up a purchase agreement, considering it’s included in the seller agent’s commission fee. In this case, you as the buyer may have to take on that responsibility – you can ask the seller to pay for a part of it if you hire a professional for assistance.

Tips For Writing A Purchase Contract On Your Own

There are many complex terms and legalities you need to navigate when writing a purchase contract on your own. For example, each state (or even counties within a state) have different real estate laws, and the types of paperwork may differ depending on how you’ll finance the home.

Here are some general tips on drafting a purchase contract. Keep in mind that if you’re unsure about the process, it may be a good idea to seek the help of a legal professional.

Offer Below The List Price

Consider making an offer below the list price, especially if you believe the selling price is above market value. You can get what’s called a valuation or property report to see how the seller’s asking price compares to other homes that have recently sold in the neighborhood.

When indicating your offer price, include the market research you’ve done and any observations based on the property, such as any recent renovations or the overall structure of the home.

Include Contingencies

Contingencies are important and contain detailed information on what can make the contract invalid. These contingencies allow the buyer to back out of the contract with any penalties.

Common contingencies include:

  • Home inspection. This contingency outlines when a home inspection needs to happen and whether the buyer can negotiate for repairs.
  • Financing. This can include the time frame when the buyer can get financing, the type needed and even the amount.

Handle Your Earnest Money Deposit

Earnest money is money you pay in advance to show that you’re serious about buying the property. Your purchase contract should include how much earnest money you’re paying, when it’ll be paid and what entity (such as an escrow or trust by a title company) should hold the money.

Define Move In

Make sure to define when you can move in or take possession of the property. Sometimes this can happen after closing.

Home Inspection

An important step after your offer is accepted is going through the home inspection process. Hiring a reputable, licensed home inspector will help you determine the overall condition the home is in – you’ll get an inspection report outlining the home’s structure and mechanical features and any potential issues there may be.

Depending on what turns up in the report, you can renegotiate things like repairs, a credit so you can oversee repairs yourself or even the purchase price. If issues you’re not comfortable with turn up in the home inspection, you also have the opportunity to back out of the purchase.

Title Policy

Also known as title insurance, a title policy provides the buyer coverage against any problems against the home’s title. This can include fraud, forgery or issues that weren’t found in the title search process. If your title is challenged, then the policy could cover the costs of defending against the challenge, correct issues or cover any costs for a valid case. The buyer is responsible for the costs.

Pros And Cons Of Buying A Home That Is For Sale By Owner


Depending on how savvy the seller is, you may be able to get a good purchase price on the home. That’s because the seller may be motivated to sell or didn’t do their market analysis properly among other factors. Also, since you’re able to deal with the seller directly, you can learn aspects of the home you may not have learned otherwise, especially if both of you are going through the real estate agent.

It could also be easier to negotiate terms in the purchase contract, since you and the seller will be working more closely together. For example, you may find it easier to negotiate for repairs or have a better chance for the seller to understand what you may need.


There’s a reason why real estate agents earn their commissions – you’re getting years of expertise on how to negotiate an offer and the understanding of the legalese required for a home purchase. In some cases, you could find that you’re spending more time wading through paperwork and doing most of the work yourself through the closing process. You’re also on your own when it comes to hiring professionals. For example, you could be stuck with fees for hiring a real estate agent or a real estate attorney.

What To Ask When Buying A Home That Is For Sale By Owner

Do You Need An Agent To Buy A Home That Is For Sale By Owner?

The short answer is no. However, hiring an agent could help you figure out the home closing process, which could save you time. Keep in mind, you may pay their commission fee instead of the seller.

Do I Need A Mortgage Preapproval (Verified ApprovalSM)

Getting a mortgage preapproval, or what Quicken Loans calls a Verified ApprovalSM, is an important step in the home buying process. This can help you determine your housing budget and it’s used when putting an offer in on a house to show the seller you have a means to pay for the home.

Do I Need A CLUE Report? 

A comprehensive loss underwriting exchange report, or a CLUE report, can give you insight into the history of the home’s previous insurance policies and any claims. It should list any losses, whether a claim was denied or any amounts paid for claims. The report can give you insight into the history of the property but won’t mention which parts of the home were affected. If you need that information, you’ll need to ask the seller directly.

Buying a house that is for sale by owner can be a smooth process as long as you understand what you need to do and hire the right professionals to help you complete the transaction. It may be a good idea to seek the help of a licensed professional like a real estate attorney to make sure you have what you need in your purchase contract and throughout other steps in the closing process.

Now that you have a better picture of what to consider, check out a few for sale by owner listings and you could be on your way to finding your dream home.