Buying a Home Buying Process

How To Buy A Home For Sale By Owner

Looking at homes is exciting – browsing listings online, visiting open houses, searching for that perfect fit. Assuming you have a buyer’s agent (and you should since it means you have someone watching out for your best interest!) that person is probably working with the seller’s agents to help set up showings and get you the information you need about the property.

But what happens if the house is listed as “For Sale By Owner”? Let’s look into FSBO meaning and how it can affect a buyer.

What Does For Sale By Owner Mean?

The “For Sale By Owner” designation, typically abbreviated to FSBO and pronounced “fizz-bow,” indicates that the seller doesn’t have their own agent. The key FSBO meaning is that they are handling all the details themselves – from setting the price, to staging the home if needed, to overseeing the showings, and then finally, accepting the offers.

There’s no doubt that FSBO can be a daunting process, but it’s one that many sellers undertake, primarily to avoid having to pay a commission to a real estate agent. In most cases, the seller pays the real estate commission, with 6% as the standard that is typically divided between the selling agent and buyer’s agent. Now, with no selling agent, they are saving at least that 3%. And while that may lead you to believe that you’re going to be in for a bargain as a buyer, that isn’t necessarily the case. FSBO meaning might not translate into the seller pricing the house at 3% – 6% lower; instead they might just be hoping to pocket that excess amount in exchange for the work they are doing.

Many sellers decide to go the FSBO route when they feel as though they are in a “hot” market with a desirable property that will almost literally sell itself. In other words, they don’t see the reasoning behind paying someone to do a job that they perceive to be relatively easy. In other cases, the seller is well-versed in real estate transactions and is confident they can handle the details themselves.

How Does FSBO Work For A Buyer With An Agent?

Assuming you have a real estate agent representing you as the buyer, the process won’t be noticeably different. Your agent will ensure you have a prequalification so that you are prepared to submit an offer that shows you have done all your due diligence and are a solid buyer.

Then it’s up to your agent to negotiate their own commission with the seller. Oftentimes a FSBO seller is happy to have at least one agent coming to the table, since your agent will then be responsible for drawing up the contracts and keeping all aspects of the process on schedule. Typically the seller will come to an agreement about how to cover your agent’s commission, but keep in mind that your agent is rightfully likely to only submit an offer that includes compensation for themselves.

You should be aware that many real estate agents might steer clear of FSBO houses for the very reason that they might be leery of having to negotiate their own commission. Another reason is that FSBO homes can be harder to discover. A FSBO house may not be listed on the Multiple Listing Service, which your real estate agent is likely using to find appropriate houses for you.

Therefore, if you are using an agent and don’t want to miss out on any potential properties, you might want to do your own searching for FSBO homes. One might catch your attention as you’re driving through a neighborhood, via an ad on social media or in the listing guide on

How Does FSBO Work For A Buyer Without An Agent?

If you don’t have an agent, then the transaction might be a little more complex as the buyer. That’s because it will be up to you to negotiate and oversee every aspect of the purchase. This includes:

  • Making an offer, also known as a “purchase agreement.” The document should include the price you are offering (tricky in itself since you don’t know how savvy the seller was in setting the price in the first place); and any contingencies, such as whether you need to sell your house first or if your purchase is contingent on the inspection; the proposed dates for closing and possession; and details on your earnest money.
  • Paying your earnest money, which is the money you offer as a “good faith” deposit that you intend to buy the house. It’s intended to buy you time to get your financing and other details secured without worrying that someone else will buy the house from under you. But, remember that if you walk away, this money is theirs, except in certain circumstances, such as a failed house inspection. You should never hand the earnest money over to a seller as there’s nothing to keep them from holding on to it even if the deal falls through legitimately. For your safety, you’ll need to find another third party, such as the title company, when there is not a seller’s agent involved.
  • Scheduling inspections and then negotiating as needed with the seller if there are any issues, whether that’s having them fixed or securing a credit or reduction in the sale price to cover the cost of the repair.
  • Overseeing subsequent work to ensure it’s done satisfactorily.
  • Bringing the appropriate paperwork to the closing.

If there are no agents involved on either side, often buyers and/or sellers use a real estate attorney who can look over the paperwork to make sure it is sound. Or, there are forms available you can use if you feel confident in handling the paperwork yourself.

As you can see, buying a FSBO house isn’t that much different than any other house, particularly if you are using an agent yourself.

Have you ever bought a house that was listed as FSBO? Share any additional tips or advice below.