When Buying a Home "For Sale by Owner," Here’s What You Need to Know

You’ve found the perfect house, and it’s “For Sale by Owner.” What does that mean for you as the buyer? The experience of buying directly with a seller is a bit different than dealing with their real estate agent. That’s not necessarily a bad thing, but it is something to prepare for. Here’s everything you need to know when buying a home For Sale by Owner (FSBO).

Why Homeowners Choose to Sell a Home Themselves

The most common reason that a seller might decide to try selling their house themselves is to save on real estate agent fees. At closing, sellers are responsible not only for their own listing agent’s commission, but also for the buyer’s agent’s commission too. This typically amounts to about 3% of the house’s selling price to each agent. Depending on the value of the home, this can be a substantial amount.

Homeowners who aren’t completely decided on whether or not to sell may take a For Sale by Owner route. It can allow them to “test the waters” before committing to work with a realtor. They are typically not in a hurry to sell, but if they get lucky and find a buyer, they get the bonus of keeping the commission.

Some homeowners may feel that they can do a better job—or at least as good a job—as a real estate agent in selling the house. They are, after all, intimately familiar with all aspects of the home and property. And their attention can be focused 100% on the sale, where they may perceive an agent as being too busy to give their home enough attention.

There is a chance that the seller has tried to work with agents, but has been “dropped” for some reason, or have them broken off the relationship themselves. Realtors don’t like to do it, but occasionally they will decide not to work with a client. Likewise, a homeowner may be unhappy with the level of service they are receiving and cut ties. 

While some homeowners have been through the selling process many times, others have not. Some may underestimate the amount of work and attention to detail it takes to handle the sale of a house. An agent has experience with all of the necessary paperwork and contracts. Sellers may embark on the FSBO journey without really knowing how much work it will be.

Because purchasing a home is such an important event, it may be helpful for buyers to know the reason for someone selling by themselves. They can assess whether the seller is overconfident, difficult to work with, or really knows what they’re doing.

Consider Hiring a Buyer’s Agent

Even though the seller has decided to go it alone, that in no way means that the buyer must too. Not only is it perfectly acceptable to hire a buyer’s agent, it’s a very good idea. Buying a house that is For Sale by Owner does not save a buyer any money, and since agent commissions are paid by the seller, there is no financial incentive to buy without help. 

Real estate agents are well-versed in all of the contracts and requirements to complete a sale in the proper way. They also know the local real estate market so they are able to give advice about offering a fair price. Most importantly, they will negotiate on their clients’ behalf to get the best possible deal.

For most buyers, the process of negotiating and purchasing a house is too daunting to handle by themselves. A professional realtor handles more real estate transactions in a few months than many people do in their lifetime. 

Protecting Your Interests as a Buyer

glasses money spreadsheet  calculating asking price and investment

Whether a buyer hires a real estate agent or decides to negotiate the purchase on their own, they should exercise a healthy amount of caution. Dealing directly with a homeowner instead of a listing agent can add some uncertainty to the transaction, especially if the seller has never sold a home themselves before.

Here are some things to watch out for with a For Sale by Owner home:

Asking Price

Some homeowners have an unrealistic view of their home’s value. Maybe they simply think their house is great, or they may expect to get their money back for every improvement they’ve paid for over the years. Regardless of the reason, without a listing agent’s advice, they may price it too high. 

It’s important for a buyer to research comparable properties in the area. An agent is the most reliable expert on prices in the local real estate market. 


Sellers may not always be 100% upfront when it comes to disclosing things about their houses. This doesn’t mean they are being purposely deceptive. They might just not know the laws about what type of information must be disclosed to potential buyers. 

Buyers must come armed with questions about problems in case the seller doesn’t volunteer the information. For example, is there a leaky basement, plumbing problems, or a mold issue? Again, since a real estate agent has been through the process many times, they might find out something the buyer wouldn’t think to ask about.


An inspection is essential in any home purchase, but especially important for a house that’s For Sale by Owner. Because the seller isn’t working with a listing agent, they may not have worked through a list of suggested repairs and improvements. 

A real estate agent will have contacts in the community, including a trusted inspector. If not working with a realtor, the buyer will need to find someone they trust. Armed with information about any problems with the house found during the inspection, the buyer will not only know what they are getting into, but may also find some room to negotiate.


When problems with the house are either disclosed by the owner or found during an inspection, buyers have a few options. They can ask the seller to fix the problem. They can ask for a credit to fix the problem themselves or request a reduction in the asking price. Or, they can back out of the sale. Sellers can decide to back out of the sale too if the two parties can’t come to an agreement.

Purchasing Agreement

The seller’s listing agent is usually responsible for writing up the contract between the buyer and seller. If the buyer is the only one working with an agent, the task may fall to them. If neither the buyer nor seller is using a real estate professional, it is up to the two of them to draft the purchasing agreement. An individual can find a template online to write their own agreement, or they can hire a real estate attorney.

The purchase agreement is an extremely important legal document, so the utmost care must be taken to get it right. The buyer should include any contingencies that are important to the purchase. For example, they can insist that the sale is contingent upon fixing the roof, a pest inspection, or a radon assessment. 

Earnest money should not be given to the seller, but instead held by a title or escrow company. A listing agent will have an established escrow account and can handle this for the buyer and seller.

Pros and Cons of Buying a Home For Sale By Owner

for sale by owner

(Image courtesy of TaxRebate.org.uk.)

Most of the aspects of buying a FSBO house can be either a positive or a negative, depending on how the buyer looks at it.

Direct communication with the seller “cuts out the middleman.” Buyers can build a rapport with the seller. If they have a lot in common, the buyer might have more confidence that the house is right for them. They can ask questions directly and judge for themselves if the answers are satisfactory. Sellers can share information about the neighbors and amenities in the area.

On the flip side, this also eliminates the buffer of an agent. Buyers can vent openly to an agent about faults they see in the house or have them ask uncomfortable questions of the seller. They can also leave the tough negotiations to the realtor, which is often enough incentive for a buyer to hire an agent to represent them.

Buyers should be cautious of the inexperience of a DIY seller. The homeowner may not be aware of all of the details involved in disclosures and a purchase agreement. They may also lack knowledge of the real estate market or have an inflated sense of their home’s value. This may result in an asking price that is higher than reasonable. It may also make them reluctant to perform necessary repairs. 

Buyers shouldn’t let a “For Sale by Owner” sign stand in the way of buying their dream home. It can be a positive experience, as long as they know what they’re getting into. And if they’re not prepared for a do-it-yourself purchase, hire a real estate agent to help you navigate the process. The agents of Berkshire Hathaway HomeServices Select Properties would be happy to represent you.

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