Buying a house directly from the owner, often called a for-sale-by-owner or FSBO purchase, means you take on every job a buyer’s agent would normally handle: verifying the property, drafting the contract, ordering inspections, and getting to closing. The savings can be real, since agent commissions have historically run 5% to 6% of the sale price, but so is the risk if you skip a step. The process below moves in the order you’ll actually face it.
Line Up Financing Before You Approach the Seller
Get your money side settled before you tour the house or start talking price. If you’re using a mortgage, ask your lender for a pre-approval letter stating how much they’re willing to lend based on your income, credit, and debts. FSBO sellers tend to be wary of buyers who might not close, and a pre-approval letter is what convinces them you can.
Paying cash instead? You’ll need a proof of funds letter from your bank showing the money is sitting in your accounts right now, not locked in investments that take weeks to liquidate. It should carry the bank’s name, your balances, and an officer’s signature. Sellers routinely ask for one before they’ll consider a written offer.
Verify the Property and the Seller Yourself
With no agent pulling records for you, the homework falls on you. Start at the county tax assessor’s office, which shows the assessed value, annual tax bill, and legal description of the property. The legal description identifies the property by its exact boundaries, often through a surveying method called metes and bounds rather than a street address, and it’s what ends up on the deed.
Pull the deed itself to confirm the person selling the home is the one legally listed as owner. If it’s held in a trust, by multiple owners, or through an estate, the seller may need extra paperwork or court authority to transfer it. Search for any liens too: unpaid mortgages, tax liens, mechanic’s liens, or judgments can follow the property to you if they aren’t cleared before closing. The county recorder’s office or a title company can run that search.
Look closely at the most recent property tax bill. Rates vary widely but often fall between 1% and 2% of assessed value, and many jurisdictions reassess after a change in ownership. If you’re paying more than the current assessed value, your future bill will likely exceed what the seller pays today.
Know What the Seller Must Disclose
Private sale or not, the seller has legal obligations to tell you about problems. Most states require a written disclosure form covering the condition of major systems: roof, foundation, plumbing, electrical, and HVAC. The form asks the seller to report known defects that affect value or safety. You can usually download a current copy from your state’s real estate commission website to check that the seller is using the right version.
Lead-Based Paint
Federal law adds a separate layer for any home built before 1978. Under the Residential Lead-Based Paint Hazard Reduction Act, before you become obligated under the contract the seller must give you a written disclosure of any known lead-based paint or hazards, copies of any available lead inspection reports, and the EPA pamphlet Protect Your Family From Lead in Your Home.1Office of the Law Revision Counsel. 42 USC 4852d – Disclosure of Information Concerning Lead Upon Transfer of Residential Property You also get a 10-day window to hire an inspector and test for lead, unless you and the seller agree in writing to a different timeframe.2eCFR. 24 CFR Part 35 – Lead-Based Paint Poisoning Prevention in Certain Residential Structures You can waive that inspection right, but in a FSBO deal, where no one is looking out for you, waiving it is risky. A seller who knowingly skips lead disclosure can face civil penalties and may be liable for up to three times the damages you suffer.
Flood Zone
If you’re financing and the house sits in a FEMA-designated Special Flood Hazard Area, federal regulations require your lender to notify you in writing before closing, warning about flood risk and explaining insurance requirements.3eCFR. 12 CFR Part 22 – Loans in Areas Having Special Flood Hazards That obligation falls on the lender, though, not the seller. If you’re paying cash, you may get no flood warning at all. Check FEMA’s flood map tool yourself before making an offer no matter how you’re paying.
Insurance Claim History
Ask the seller for a copy of the property’s CLUE report, an insurance claim history maintained by LexisNexis covering the last five years. It shows water damage, fire, theft, and liability claims that might not appear on the standard disclosure form. Only the current owner can order one, so you need the seller’s cooperation. The report can flag hidden problems and gives you a sense of what your own homeowner’s insurance premiums might look like.
Consider Hiring a Real Estate Attorney
A handful of states require a licensed attorney at real estate closings; if you’re in one, the choice is made for you. Even where an attorney isn’t required, hiring one is among the smartest moves in a FSBO purchase. With no agent to review the contract, flag title problems, or interpret disclosures, an attorney fills that gap.
They can draft or review your purchase agreement, negotiate terms, examine the title search, and represent you at closing. Flat fees for a straightforward residential purchase typically run $500 to $2,000, with complex deals involving liens, boundary disputes, or estates costing more. Some states also recognize an attorney review period, commonly around five business days after signing, during which either party’s attorney can request changes or cancel the deal without penalty.
Write a Strong Purchase Agreement
The purchase agreement is the legal backbone of the transaction. In a FSBO deal there’s no listing agent handing you a pre-filled form, so you need to source the right one and fill it out carefully. Many state real estate commissions and bar associations offer standard residential templates. If you’ve hired an attorney, they’ll draft one to fit your situation.
Core Contract Terms
At a minimum the contract should include:
- The purchase price, which drives your loan and tax calculations.
- An earnest money deposit, typically 1% to 3% of the price, held in a neutral escrow account and applied toward your down payment at closing.
- The legal description and parcel number, copied exactly from the deed or tax records.
- The target closing date.
- The full legal names and signatures of buyer and seller.
Contingency Clauses
Contingencies are your escape hatches, conditions that must be met before the sale goes through. Without them, you can lose your earnest money if something falls apart. Three matter most for FSBO buyers:
- An inspection contingency, usually 7 to 10 days after signing, letting you hire a professional inspector and renegotiate or walk away if serious problems surface.
- A financing contingency, which returns your earnest money if your mortgage is denied by a specified deadline despite the pre-approval letter.
- An appraisal contingency, which lets you renegotiate or exit if the lender’s appraisal comes in below the purchase price.
Each contingency should carry a specific deadline so the deal keeps moving toward closing.
Personal Property and Fixtures
Anything permanently attached to the home, like built-in shelving, ceiling fans, or a mounted dishwasher, is generally a fixture and transfers with the property automatically. Items that aren’t attached, like a freestanding refrigerator or a washer and dryer, are personal property and don’t automatically stay. List every item the seller has agreed to leave right in the contract. Vague assumptions become disputes at the final walk-through.
Seller Concessions
You can negotiate for the seller to cover some of your closing costs, but conventional mortgages cap how much the seller can contribute. For a primary residence with less than 10% down, the cap is 3% of the purchase price. With 10% to 25% down, it rises to 6%. With 25% or more down, sellers can contribute up to 9%.4Fannie Mae. Interested Party Contributions (IPCs) Anything over the cap gets deducted from the sale price for underwriting, which can affect loan approval.
Get an Independent Home Inspection
A professional inspection is the single most important protective step in a FSBO purchase. In a traditional sale a buyer’s agent often recommends inspectors, flags issues during showings, and helps interpret findings. Without that support, be proactive.
Hire a licensed inspector as soon as the contract is signed and the inspection contingency period begins. A standard inspection covers roof, foundation, electrical, plumbing, HVAC, and visible structural components. Expect $300 to $425 for a typical single-family home, with larger or older properties running higher. Specialty inspections for termites, radon, mold, or sewer lines cost extra and are worth considering based on the home’s age and location.
When the report arrives, your options depend on what it shows. You can ask the seller to make repairs before closing, negotiate a lower price, request a closing cost credit to cover future repairs, or, if the problems are serious, exercise the contingency and cancel with your earnest money returned. The report also gives you negotiating leverage you’d otherwise lack.
Handle an Appraisal Gap
If you’re financing, the lender will order an independent appraisal and base your loan on either the appraised value or the purchase price, whichever is lower. When the appraisal comes in below the agreed price, there’s a gap to close.
Your options are to renegotiate the price down to the appraised value, pay the difference in cash at closing, or walk away under your appraisal contingency. Gaps happen more often in FSBO deals because no agent is helping the seller price the home against comparable sales. Running your own comparative analysis, using recent sales from the county assessor or a real estate data service, helps you avoid overpaying in the first place.
Close the Deal
Once inspections, the appraisal, and any renegotiations are behind you, the transaction moves into closing. You’ll typically work with a title company, escrow company, or real estate attorney acting as a neutral third party for the final steps.
Title Search and Title Insurance
The title company or attorney conducts a title search through public records to confirm the seller owns the property free of undisclosed liens, judgments, or competing claims. If problems turn up, they have to be resolved before closing. Buy an owner’s title insurance policy too. This one-time premium, paid at closing, protects you against defects the search may have missed, including forged signatures in the chain of title, undisclosed heirs, or recording errors. Your lender will require a separate lender’s policy.
Review the Closing Disclosure
If you’re using a mortgage, your lender must deliver a Closing Disclosure at least three business days before closing.5Consumer Financial Protection Bureau. 12 CFR 1026.19 – Certain Mortgage and Variable-Rate Transactions The five-page document lays out final loan terms, monthly payments, interest rate, and every closing cost you owe.6Consumer Financial Protection Bureau. What Is a Closing Disclosure? Compare it line by line against the earlier Loan Estimate. Buyer closing costs typically run 2% to 5% of the purchase price and include loan origination fees, title insurance, prepaid property taxes, and homeowner’s insurance.
Protect Yourself Against Wire Fraud
Wire fraud targeting real estate closings has grown common. Scammers intercept email between buyers and closing agents, then send fake wiring instructions that redirect funds. To protect yourself:
- Get wiring instructions directly from the title company or attorney in person when possible.
- If instructions arrive by email, call the title company at a number you already have on file, not one from the email, and confirm every detail.
- Treat any last-minute change to wiring instructions as suspicious.
- Call to confirm receipt of your wire immediately after sending.
Final Walk-Through and Signing
Schedule a walk-through a day or two before closing to confirm the property is in the condition you agreed to: repairs done, agreed appliances and fixtures still in place, no new damage. On closing day you sign the mortgage documents and Closing Disclosure, the seller signs the deed, and the closing agent disburses funds. The deed is recorded with the county, ownership transfers, and you get the keys.
Budget for Taxes and Fees
Many states and some localities charge a transfer tax when real estate changes hands. Rates run from a flat nominal fee to several percent of the sale price, and roughly a third of states impose no state-level transfer tax at all. Who pays it, buyer, seller, or split, varies by local custom and is negotiable in the contract. Recording fees the county charges to file the new deed are separate and typically modest, often $25 to $50.
Reassessment is the other item to plan for. In many jurisdictions a change in ownership triggers a new assessment for tax purposes. If you’re buying above the current assessed value, your tax bill after the sale is likely to rise. Ask the county assessor’s office how reassessments work locally so you can budget for your first full year.
If the Seller Is Foreign
If the seller isn’t a U.S. citizen or resident, the Foreign Investment in Real Property Tax Act (FIRPTA) requires you, as the buyer, to withhold 15% of the total sale price and send it to the IRS. Fail to withhold and you can be held personally liable for the tax. An exception applies when the sale price is $300,000 or less and you plan to use the home as your personal residence.7Internal Revenue Service. FIRPTA Withholding Ask the seller to sign an affidavit confirming their U.S. tax status before closing; your attorney or title company can prepare it.