Picture this: you find your perfect house in the perfect city for the perfect price. Everything’s just like you always wanted it to be — but there’s a catch. This house is for sale by owner, or FSBO.

What do you do? Where do you turn? Are your dreams of a simple, stress-free purchase about to be dashed for good?

Actually, you’re not out of luck. Although the communication process is different when a home seller isn’t represented by a real estate agent, it is possible to buy a house from owner without complications, stress or legal trouble. It takes a little more work, but with the right information up your sleeve, you’ll be settling into your new place in no time.

Here’s everything you need to know.

Buying a home from the owner: breaking down the process

Different states have different laws when it comes to selling by owner. Knowing these laws is the FSBO seller’s responsibility, but it’s just as helpful for a home buyer to know what’s legal and what isn’t. Doing your research can also help you get a better deal in the long run.

Here’s how to buy a house from owner:

Finding a home

The first step in the moving process is to find a house you’re absolutely in love with. That can involve learning more about ideal cities, talking to local residents, meeting with real estate agents or just searching on your own. However, if you’re interested in “for sale by owner” properties specifically, you may need to take a few extra steps.

Because a home seller doesn’t necessarily have the same tools and connections as a professional real estate agent, they may list their property with criteria that your search engine doesn’t bring up right away. Keep this in mind when house-hunting and be prepared to look — and think — outside the box.

Creating a purchase agreement

Once you’ve found an interesting home and are ready to take the next step, it’s time to make an offer by creating a purchase agreement or purchase contract. This helps protect both you and the seller from legal loopholes or other unexpected disputes.

According to The Balance, this is where a real estate agent can be especially helpful. Navigating all that legalese yourself can be tricky — not to mention stressful. Real estate agents help you write and review offers that won’t back you into a corner legally or financially.

It’s also important to put a “backup plan” in writing. Adding contingencies to your purchase agreement allows you to back out of an offer if something goes wrong — for example, you find a serious issue with the foundation that would cost thousands to repair. The FSBO seller will likely have contingencies of their own, so expect to agree to financial stipulations (like getting mortgage approval before the deal goes through). 

Getting a home inspection

Home inspections are your chance to find out exactly what you’re getting into. Working with a licensed home inspector will keep you from stumbling into any trouble — plus, more experienced inspectors will know just where to look to make sure your future home isn’t hiding any nasty secrets.

Here are a few issues that might be revealed by a home inspection:

• Water damage
• Mold
• Structural issues
• Faulty wiring
• Plumbing problems
• Insects or other pests

If one or more of these problems is present in your future home, the specific wording in your purchase agreement determines what your options are. For example, if the issue is severe, you may be able to back out of the deal — or, if you’re still interested in the property, you may be able to get the home seller to pay for some or all of the necessary repairs.

Managing your money

In the traditional home buying process where everyone is represented by a real estate agent, sellers pay the agent commission for both parties. Since a home seller has chosen not to work with an agent of their own in a “for sale by owner” scenario, the rules are a little different — but the chances are, you’ll still benefit. Often, even for a FSBO property, the seller pays your agent’s commission, which means you save on closing costs.

However, that’s not the only way a FSBO listing could make it easier to manage your money. Depending on the local real estate market and the condition of the home, you could offer less than the listing price. Because home sellers aren’t experts and can be less comfortable negotiating costs, you’re more likely to get your dream home for a dream price.

Setting a realistic timeline

Buying a home is a delicate balancing act, especially if you’re selling your own home at the same time. To make sure everything goes according to plan, it helps to know how long each step will take. Here’s how a FSBO timeline compares to other buying processes:

Buying with cash

According to Forbes, buying with cash is your fastest option. You won’t have to wait for a mortgage company to review and approve your application, and there will be no back-and-forth as you negotiate terms or payments. In fact, this whole process might only take a few days.

Financing

Forbes also explained that closing on a house when financing is involved takes considerably longer — sometimes up to two months. Different loans have different timelines, too, so there’s a lot to consider.

For sale by owner

FSBO deals complicate the timeline estimation process. Because so many steps leave the ball in the home seller’s court, it’s up to them to decide how long it takes to close on the property. Knowing how to navigate each step — especially by writing due dates and time requirements into your purchase agreement — helps you make sure everything is done in a timely manner.

Pros and cons of buying a home from the owner

Pros

Many home buyers seek out FSBO properties because they hope the process will be simpler without the added complication of so many third parties — like real estate agents or a real estate attorney.

However, as a home buyer, you have the option to work with an agent or attorney even if the home seller doesn’t. That’s good news, because it means you can get paperwork and other legal steps taken care of and still have the seller pay your agent’s commission — which lowers your closing costs overall.

Cons

Home sales involve a lot of steps — and when sellers take each of those steps without recommendations or guidance, mileage may vary. For example, experienced sellers could create a smooth, stress-free home sale because they know the ins and outs of the market, legal language, process and more. However, first-time home sellers may not have all the information necessary to navigate each step, resulting in wasted time and potential legal issues.

When considering a FSBO deal, make sure to know what you’re getting into — and, most importantly, know how to protect yourself legally and financially.

Financing your home purchase when buying from owner

Watching home values

To make sure you’re getting the best deal when buying from owner, it’s important to keep an eye on the local real estate market. Know the prices houses are selling for in your area so you don’t end up paying too much.

When looking for comparables, consider things like:

• Condition of home
• Location
• Square footage
• Property size
• Number of bedrooms
• Number of bathrooms

Protecting your savings

According to USA Today, it usually takes 14 years to save for a down payment on a home. This equates to different amounts of money depending on your yearly salary and spending habits, but it’s a good benchmark to help you make sure you have enough money saved before you begin the home buying process.

When you do have that down payment or earnest money, don’t give it directly to a home seller, especially in a FSBO deal. Instead, as recommended by The Balance, leave the down payment with a third party.

First steps in financing

Whether you’re buying from an owner or working with real estate agents, one step is absolutely necessary: getting preapproved for a mortgage.

When you get a preapproval letter from a bank or mortgage lender, you have proof that someone is willing to finance your home purchase. It isn’t a guarantee of any details like interest rate or payments, and either party can back out later — but it is your first step toward securing reliable financing for your new place.

Mortgage preapproval makes the home buying and financing process easier, faster and less prone to error. That’s especially important when buying a “for sale by owner” property, because home sellers like to know that you’ve come prepared. This step may also be required by your purchase agreement, as it protects sellers from wasting time on a deal that isn’t going to go through anyway.

Alternative approaches to finding and buying a house

If buying a “for sale by owner” property sounds like a lot of work, stress or potential trouble, don’t worry — there are plenty of other ways to get your dream home.

Here are a few things to consider when looking for alternative approaches:

Unique listings

In particularly hot markets, competition for a single property can be fierce. Searching Bungalo listings, however, means you’ll be able to find unique properties that other buyers may not have seen yet.

Timeline

Remember that home sales are quickest when buyers bring cash to the table. However, that’s not the only way to speed up the timeline. Look for home sellers who are particularly motivated — for example, they’re trying to secure financing on a new home and need to sell their current property first — or experienced agents who know how to get the job done quickly and efficiently.

Closing costs

If you’re looking to save on closing costs, not all home buying processes are created equal. Keep in mind that traditional deals, where both parties have an agent, can have a lot of associated fees, while FSBO deals are cheaper for home buyers but can be complex. The solution? Buy direct from Bungalo without an agent and save thousands of dollars in closing costs.

Home certifications

Remember how you need to write contingencies into your purchase agreement to protect yourself during a “for sale by owner” deal? That type of backup plan isn’t necessary when working with Bungalo — and that’s because all Bungalo houses are certified and guaranteed, meaning they’ve been thoroughly inspected for issues big and small. They even come with one-year warranties so you know your dream home will still be your dream home even after moving in.

Skip the stress with help from Bungalo

Although buying a “for sale by owner” home is one way to save money, it may not be the easiest — or the least stressful. If it’s a quick, simple, stress-free and even guaranteed buying process you’re looking for, skip all those extra steps and buy from Bungalo instead.

With exclusive listings, home certifications and all the answers you’ll ever need, Bungalo is your best bet for getting into that dream house without tearing your hair out along the way. Start searching today and get home a whole lot faster.

This article is meant for informational purposes only and is not intended to be construed as financial, tax, legal, real estate, insurance, or investment advice. Bungalo always encourages you to reach out to an advisor regarding your own situation.