What to Expect When Buying a For Sale By Owner Property

Whether buying a FSBO property from a friend or a stranger, you need to take some steps to ensure you are protected in the transaction, especially if you are buying without a real estate agent’s help.

  • Consider hiring a real estate attorney to review all contracts and paperwork.

  • Have all agreements put in writing.

  • Ask the seller how he or she arrived at an asking price. You want to make sure you’re not overpaying and that the amount you offer will be approved by the lender’s appraiser.

  • Request a Comprehensive Loss Underwriting Exchange (C.L.U.E.) report. This insurance claims report covers the past five years. Although it is inexpensive, ask the seller to order and pay for the report. Review the report for any red flags, like water damage, and inquire about any issues that the report lists.

  • Once you make an offer, insist that your earnest money be put into an escrow account so that the seller does not have direct access to your money.

  • Include any contingencies in the purchase agreement, such as loan approval, inspections and the sale of your home.
If you’re ready to search for properties, both FSBOs and ones in the Multiple Listing Service, visit our Property Search page . You can learn more about how to search for properties on our site and how to be the first to know of new listings by reading the article “How to Search for Homes.