What does it mean when a house is for sale by owner?
A for-sale-by-owner listing is when a home seller lists their own home for sale instead of a listing agent. It also means that they won’t be working with a real estate agent to represent them. However, they may work with a lawyer throughout the sale.
With an FSBO seller, you’ll either work with them directly or you’ll hire a real estate agent to represent you while working with them. FSBO sellers typically list their property via online listing sites, social media sites or a sign in their yard.
6 steps to buying a house that’s for sale by owner
The steps involved in buying an FSBO property aren’t too different from the typical homebuying process.
1. Get preapproved
The homebuying process often begins with mortgage preapproval, which typically lasts up to 90 days. You’ll want this approval before you start visiting FSBO homes to show sellers you’re a vetted buyer since some sellers will only show their homes to potential buyers who’ve been preapproved. The seller may also request that you include the preapproval letter along with your offer.
» MORE: Mortgage prequalification vs. preapproval
2. Decide if you want to work with an agent
In a typical home sale, real estate agents represent both sellers and buyers. In an FSBO sale, the FSBO seller doesn’t have an agent. If you choose to work with an agent, it’s a good idea to find one with experience in FSBO transactions. You want a reliable and professional agent who can help you find an FSBO home that best fits your needs.
Make sure to discuss commission before hiring an agent so you understand the fees attached. Then confirm that the buyer’s agreement specifies these commission fees and the circumstances in which you will or will not pay them.
» MORE: How to find a real estate agent
3. Find a home
You may need to dig through some off-market homes to find the best FSBO options for you. But you can generally find FSBO listings through various real estate platforms and websites, including Zillow. You can also look for for-sale-by-owner yard signs in neighborhoods you’re interested in.
If you’ve chosen to work with an agent, they can help schedule showings. Otherwise, you’re on your own.
4. Make an offer
Once you’ve found the right home for you, it’s time to prepare an offer. The offer is a type of contract that details the amount you’ll pay for the home, the down payment and the terms of the sale. If you don’t have an agent, you can appoint a lawyer or a title company to manage the escrow.
5. Pick a mortgage lender and apply
You can apply for a mortgage with the lender you got preapproved with, or you can choose another mortgage lender. Once you’ve decided on a lender, you’ll need to apply for a mortgage and get approved for your home offer to be accepted.
6. Close on the home
The last stage of the homebuying process is closing. At this point, you’ll complete the requested documentation from your insurance company and mortgage lender. You can sign all the paperwork and pay for the closing costs after you finish the title work and get final approval.
Pros and cons of buying an FSBO home
While some people may prefer the seemingly straightforward nature of for-sale-by-owner transactions, there can be some downsides.
Pros
- Buyers typically have more negotiating power
- FSBO homes often sell at lower prices
- Removing agents can speed up the process
- Fewer homebuyers may be interested in the property
Cons
- FSBO sellers may be amateur homesellers
- FSBO sellers are more likely to overprice their homes
- May be frustrating to navigate the homebuying process without an agent
- FSBO sellers may leave out crucial details a listing agent would include
Should you work with an agent for an FSBO home?
Whether you choose to hire a real estate agent is up to you. There’s generally no legal requirement to go through an agent, so you and the seller can negotiate the sales price and other relevant matters directly. But if the seller you’re working with is inexperienced in real estate procedures — especially if you're also new to the process — going without an agent can be risky.
Working with a real estate agent can make the process significantly simpler, especially for first-time homebuyers. An agent can help you find the best homes for you, negotiate your price and demystify the closing process.
If you use an agent for an FSBO transaction, you’ll just have less wiggle room in negotiations because the purchase price will have to include your agent’s fees. However, some FSBO sellers choose to pay a 2% or 3% commission to the buyer’s agent to increase their chances of finding a buyer.
If you don’t use an agent in an FSBO sale, you can avoid paying real estate commissions. In a traditional home sale where both parties have real estate agents, the combined commissions are about 6% of the sales price. So, if you were to buy a home for $300,000, the real estate agents would split about $18,000 of that before the seller is paid.
Note that, if you’ve already begun working with an agent and signed an agreement with them, you’ll need to see that contract through.
FAQ
What should you ask when buying a house from the owner?
You’ll want to ask why the owner is selling the house, the previous sale price and how long the property has been on the market. It’s also a good idea to ask about potential hazards and any past issues with the home.
What are the risks of FSBO?
Some of the main risks of buying an FSBO home include pricing, negotiation or legal issues. FSBO sellers may be more likely to be emotionally attached to their home, so they may be more likely to overvalue their property or refuse to negotiate. Legal issues are also more likely if an FSBO seller doesn’t hire a lawyer to draft the contract or assist in the closing process.
Is it hard to get approved for financing for an FSBO house?
It’s not necessarily harder to get approved for financing for an FSBO house, and you should generally have the same financing options as you would with any other home. However, some FSBO sellers may only want to work with buyers who are preapproved for a conventional loan since government-backed loans typically involve a stricter and longer closing process.
Bottom line
Buying an FSBO home comes with specific challenges. Dealing directly with an inexperienced seller can leave both parties struggling, especially first-time homebuyers. However, if you’re an experienced buyer and know the ins and outs of real estate transactions, buying an FSBO home might make more sense for you.
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- Consumer Financial Protection Bureau, “Find the Right Home.” Accessed Dec. 2, 2025.
