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What you need to know about buying a home that’s for sale by owner in 2021 | Mortgage Chicks

What is for sale by owner?

For sale by owner (FSBO) homes are sold directly by the owner without a real estate agent. Before you decide to purchase a for sale by owner, let’s go over everything you need to know and how it differs from buying a home with an agent.

Buying a for sale by owner vs. buying with a listing agent

Benefits to buying a for sale by owner:

  • Save 6 percent of the cost of the house if neither side uses a real estate agent.

  • Direct communication with the seller, you’re eliminating the middleman which is the listing agent. This can give you more access to the owner and home.

Drawbacks to buying a for sale by owner:

  • No agent means doing everything yourself which can be complicated.

An agent takes care of inspections, appraisal, seller’s title to the home, searching for a reliable mortgage company, and so much more.

  • The home value can be priced higher than other homes.

Homeowners may not know what their home is truly worth.

  • Disclosures can get tricky.

Sellers are required by law to disclose any known problems in their home during the sales process. Defects like mold, roof damage, etc. Unfortunately, sometimes sellers aren’t honest and hide these defects.

  • Can be difficult to get repairs made or covered.

Some FSBO are looking to save as much as possible and don’t want to spend on repairs, even if they should fix some things.

How to buy a for sale by owner home in 5 steps

1. Get approved for a mortgage

The first thing you always want to do when purchasing a home is get approved for your mortgage. This will tell you exactly how much you can spend and let sellers know you’re a serious buyer. You can do this with us the mortgage chicks. It’s a great way to get an approval letter quickly and start searching for your next home.

2. Strongly think about working with a buyer’s agent

Real estate agents are there to help you and make your life easier. You’ve obtained a mortgage approval, you can work with a local expert in your area to guide you through the buying process. The buyer’s agent can be beneficial to you on a FSBO by taking care of the negotiation and complicated paperwork. Your agent makes sure everything is good so you can avoid any issues. When you’re a buyer, the seller of the home usually pays the commission. This makes working with an agent even more appealing. Be sure the homeowner agrees to pay your agent commission as part of the purchase agreement.

3. Take time to look at the home in detail

If you decide to work with an agent, they can arrange a time to show you the home. If you’re not using a realtor, contact the seller directly and schedule a time that works for both of you. If the seller is at the showing, ask them questions about the home and area.

4. It’s time to make an offer

When you find a FSBO that you like, you can make an offer. A realtor will be able to offer opinions on how the home is priced so you can know how much you should be paying.

5. Closing time

After receiving a final approval on your mortgage and inspections, you can close on your home. This will be the time where homeownership is transferred from the seller to you. At closing, you will pay your closings costs and down payment. Once everything is complete as closing, you’ll get the keys to your new home.

Questions to consider when buying a FSBO home

Do I need a lawyer for a FSBO purchase?

This depends on which state you live in. Some places require both parties are represented by an attorney, which means you need one even if you use a buyer’s agent. If you’re buying a home in a short sale, you should hire an attorney to help guide you through the process.

Who holds escrow money when you buy a FSBO home?

Normally it’s the listing agent who holds earnest money in their escrow account until closing but there isn’t a listing agent, you can arrange an attorney or title company to act as the escrow agent.

Do I need a home inspection?

This is a must! It doesn’t matter what the seller says, get a home inspection. The homeowner may not even know if there’s anything wrong with the home. Avoid any future repairs and hire an inspector to check the roof, pipes, wire, and foundation of the home. An inspection can range from two hundred to seven hundred dollars but can save you thousands in the long run.


Buying a home that’s for sale by owner (FSBO) doesn’t necessarily mean you’re saving money. If the seller decides not to use a real estate agent, there can be problems in the future and the home sale process. If you’re the buyer of a FSBO home, inspect the home carefully and do your research to make a fair offer. Working with a real estate agent is highly advised and can benefit you. Agents take care of negotiations, protect you from overpaying, go over purchase agreements, closings, and so much more to avoid running into problems later.

Want to get rid of the first step to buying a for sale by owner home? Contact us today and let’s get you a mortgage approval as soon as possible! We have helped over 300 families this year and want you to be the next.

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