When you’re considering buying a home and searching inventory, you might have noticed that homes for sale by owner are more visible than they used to be, thanks to the proliferation of online real estate marketing. Even casual home searches intended to satisfy curiosity about neighborhood price points will turn up for sale by owner (FSBO) listings.
If you're specifically searching for an FSBO, you can use a more targeted approach to generate better leads. The National Realtors Association reported that in 2024, the top five outlets owners used to market their FSBO were friends, relatives, neighbors, yard signs, open houses, a third-party aggregator, and the Multiple Listing Service (MLS).
Here are some things to note when buying a home sold by the owner.
Similarities and Differences between a FSBO and Traditional Home Sale
A FSBO transaction has the majority of the same components as the traditional home selling process, with one major difference: the absence of a listing agent.
If you're buying a home sold by the owner, it’s important to remember that the home seller who prefers a FSBO is interested in saving money or has the expertise to sell a home (or both!). Some FSBO sellers are open to paying a buyer agent’s commission because they need professional help with paperwork, but others would rather not.
Much of the FSBO home buying process is the same as a traditional sale, but buyers often have a few other questions. To help you prepare, here's some key information.
1. You can work with a buyer's agent.
Just because the seller chose not to use an agent doesn’t mean you have to work the deal alone. There’s a good chance the seller will be happy to work with your agent because the sale will require official paperwork.
The owner still saves money by paying only the agent’s commission, about 3%, which is less than the 6% (all percentages are negotiable) for the buyer's and seller's agents. Note that buyers' agents might be reluctant to take on a FSBO because they’re essentially performing twice the work for the same or less commission.
2. Learn your state's laws.
FSBO transactions aren’t exempt from state and local laws, and it’s up to you to make sure your deal meets standards, especially when it comes time for the seller to disclose issues with the property or make required repairs. A first-time FSBO seller may not understand all the selling procedures your state requires.
State laws also vary when addressing the need for a real estate attorney. Some states require one, and others don’t. The laws may even change from city to city or county to county. And the specificity of their services ranges from requiring both parties to be represented by an attorney to not needing attorneys at closing.
3. Beware of FSBO overpricing.
There’s a big difference between what the homes in the neighborhood are listed for and actual comparable sales prices. Truthful “comps” help you determine the best offer price. As the buyer, you’ll want to know if the property was previously listed with an agent and for how long. Also, how long has the house been on the market?
4. Spell out who pays for closing costs in your contract.
Closing costs can be paid by the seller or the buyer or split between the two. Your agent should help you calculate the best scenario because there are multiple ways to go about the sale. For example, you could offer the owner less money overall and pay your closing costs.
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5. Don’t give the seller your earnest money.
Normally, the listing agent holds the money in an escrow account, but since the listing agent is the seller during a FSBO, you’ll need to find a trusted third party, such as a real estate attorney or title company, to hold the money. You don’t want to depend on the seller to return the money if the deal does not work out.
6. A FSBO needs a home inspection.
Remember, the only difference between buying a FSBO is the lack of a hired seller's agent. You typically wouldn’t waive a home inspection in a traditional transaction, right? Even honest home sellers won’t know everything wrong with the house compared to a professional inspector’s checklist.
7. Get a C.L.U.E.
A Comprehensive Loss Underwriting Exchange report is a critical tool for a buyer to get an inside look at any insurance claims the seller has made on the house within five years. The trick is the seller is the only person who can request the report, which they may be reluctant to do if significant damage has occurred. If the claims are negligible, they shouldn't be hesitant. The report contains the dates, amount paid, and cause of the damage. You can offer to pay for the report, which is about $20.
8. Plan for what you’ll do if repairs are needed.
Needed repairs won't necessarily prompt a FSBO seller to spend more money. You might see “as is” in the marketing package. Even if they agree to the fixes, they aren’t required to hire your area's #1 ranked professional. Consider if these needed repairs will affect your offer to the seller.
If a FSBO home listing looks attractive, don’t be turned off by the owner selling without representation, especially if you have a buyer's agent working on your behalf. Your agent will be able to handle any bumps encountered during a FSBO, such as not knowing about state-specific real estate laws.
Choosing to pursue homeownership alone means you'll need to consider the differences between a traditional sale and a FSBO to protect your purchase. You’ll need plenty of time to research accurate pricing and be willing to invest in real estate professionals, from home inspectors to title company services, who are familiar with working with buyers directly.
Learn more about the FSBO process in our free guide:
