A Guide to Buying a Home For Sale By Owner in Indiana 2023

The steps to purchasing a home for sale by owner are no different than buying a home with a real estate agent.  The difference is you do not have an expert to guide the process.  To help you I have put together this guide to about how to buy a house from owner-seller.  Here, you will find information about the process of buying a home for sale by owner and tips for buying a home for sale by owner.

What Does For Sale By Owner Mean for the Buyer?

The first of the for sale by owner things to know is what is a for sale by owner.  When it comes to real estate and houses for sale by owner (FSBO) means the seller is selling his or her property without the assistance of a real estate agent. When buying a house for sale by owner you will be communicating and negotiating directly with the seller.

The process of buying a home for sale by owner does not change by the fact you are buying a FSBO property. However, the transaction can be more difficult. The reason is the seller is likely inexperienced at selling homes. Home sellers can be reluctant to follow the process out of fear they are being duped or losing control of the sale. FSBO home sellers are commonly overly skeptical and take a defensive posture.

How Does For Sale By Owner Work for the Buyer?

You should know buying a house from the owner is a different home purchase experience.  When buying a FSBO you will communicate directly with the seller.

Complications can arise when inexperienced home sellers and buyers try to sell and buy a home without a real estate agent’s assistance. Common complications include the transaction taking longer than what is typical.  Also, misunderstandings, incorrect assessments of information, and knee-jerk reactions to information are common occurrences, too. This is the friction in the transaction.  Sometimes the friction gets so hot it terminates the deal.

How to Find Homes for Sale By Owner

One of the hardest parts of buying a home from the owner is finding the homes. This is due to the fact there is no single silo aggregating all of the homes for sale by owner. Regardless, there are ways to find homes for sale by owner in Indiana.

First, many for sale by owners will place a sign in their yard. So, you can find some homes for sale by owner by just staying alert while you are out and about. Secondly, social media sites including those with groups focused on local real estate are another common area to find homes for sale by owner. Free advertisement message boards are often used, too. Lastly, there are some real estate websites which cater to the for sale by owner market. These will be a great source to find homes for sale by owner.

How to Buy a House from Owner: 5 Steps

The steps to purchasing a home for sale by owner are not different than when real estate agents are involved.

1. Look for Homes

The first step when buying a home from the owner is to find the right.  Homebuyers can find homes for sale by owner in many ways.  There are real estate websites which includes FSBOs and other websites dedicated only to for sale by owner homes.  Also, many FSBOs will place a sign in the home’s yard to advertise the home for sale.

2. Contact Seller for Showing

Wherever you saw the home for sale is where you will find the seller’s contact information.  Contact the home seller and request to tour the property.  I suggest requesting a 30 to 45 minute showing appointment.  Pick a time that works for you and the seller.  I also encourage you to tour the during the daylight hours.

3.  Write an offer

If you like the home the next step is to write an offer for the property.  Writing an offer has several steps in-itself.  Let’s take a look at those.

A. Forms

You need to write your offer on a proper purchase agreement. You can draft a purchase agreement yourself, but you will very likely make some mistakes. Alternatives include online websites where you can enter some information which creates a purchase agreement. Another option is to contact an attorney or an online attorney-based website which can provide you with a purchase agreement. Remember to include any disclosures the seller is required to provide by state law. The seller should have completed these and provided you with a copy. You can learn more about Indiana’s seller disclosure law.

B. Pricing

The hardest part of the process of buying a home for sale owner is knowing how much to pay for a home.  You can complete your own research to find a fair price for the home.  One of the tips for buying a home for sale by owner at the right price is to ask a real estate agent for a broker price opinion.

First, reach out to a real estate agent and see if one will provide you with a broker price opinion (BPO). Some real estate agents will refuse to do this, but if you call around you will likely find one who will. Be willing to pay for this. You do not work for free, correct? So, don’t expect a real estate agent to either. Offer an agent $100 to $400 for the BPO. This should be offered upfront and not on the contingency of you having your offer accepted.

Another option is to complete your own research. You can do this by looking at records of other similar homes sold nearby. The problem with this is you are unaware of what actually affects the value of a home. Though you can do this on your own, you also run the risk of making a mistake.

C. Negotiate

The seller will likely want to negotiate with you regarding the purchase price and terms in your offer. You should be okay with this. I strongly encourage you to try to keep your negotiations in writing. One of the forms you should have is a counteroffer form. This allows both the seller and you as the buyer to adjust contract terms without needing to rewrite the offer.

D. Pre-approval

It is common practice for buyers to submit a pre-approval letter with their offer. Being pre-approved for a home loan adds credibility to your offer. If you are purchasing the home with cash providing a proof of funds at the time of making your offer will provide the same credibility. Remember, you want to offer the seller a complete offer when buying a for sale by owner.

4. Complete Terms of Contract

Once your offer is accepted you need to begin completing the terms of the purchase agreement within the timelines set for each item. Common items include submitting earnest money, completing home inspections, applying for and getting loan approval, ordering and receiving title work, and closing the transaction.

5. Close

The last step to buying a for sale by owner is to close the transaction. Closings usually take place at a title company’s office. At the closing you will sign all of the documents including the mortgage if there is one. At the end of the closing ceremony you will own the property.

Buying House for Sale by Owner: Pros and Cons

As with everything in life there are benefits and consequences. The same is true when buying a house for sale by owner. Let’s take a look at the pros and cons of buying a house for sale by owner.

Pros of Buying a House FSBO

• You may be able to buy the home at a lower price. Since there are no real estate agents there are no commission fees. The seller might pass some of these savings on to you.
• Your purchase is more private. Since there were no real estate agents involved the home sale will not be recorded in a multiple listing service. This will make your purchase less public.
• Negotiating directly with the seller can get you a better deal. Occasionally, the buyers and sellers speaking to each other directly are better at making a transaction occur versus when real estate agents do the communicating.

Cons of Buying a House FSBO

• Inexperienced sellers and buyers are more likely to make mistakes. There are mistakes which can happen in real estate transactions. Some mistakes carry significant consequences.
• Emotions can interfere with objectivity. Buyers and sellers are quick to anger and frustration in these transactions. With no real estate agents involved both the seller and buyer are left to their own emotional intelligence to keep the transaction progressing.
• Low inventory of problem solving solutions. Rarely does a home purchase transaction go exactly as it says in the original purchase agreement. Real estate agents are skilled at amending transactions and getting everyone back on track. Buyers and sellers without a real estate agent are left on their own to resolve issues which will arise during the home purchase process. The problem is buyer and sellers’ inexperience means they have little previous information to draw from to pivot and correct a situation. Basically, their problem solving skills are weak because they have never had to solve these problems on a routine basis.

What to Ask When Buying a House from Owner?

You will likely have a lot of questions about the home you are thinking about purchasing.  Keep in mind some sellers will be reluctant to say much of anything, and that is okay.  On the other hand, some home sellers will know little about the home.  This is often true if the home sale is an estate.  This is the list of questions I would ask when buying a house from the owner:

• What is the age of major mechanicals systems and structures including the roof, HVAC equipment, septic and well equipment if applicable, and condition of the appliances?
• What is the character of the neighborhood or local area?
• What terms does the seller want regarding a closing date, when you can take possession of the home, financing types the seller is willing to accept, and if the seller is willing to repair any defects discovered at the time of inspection?

Should You Buy a FSBO Without an Agent?

Homebuyers should be cautious about buying a home without a real estate agent.  The trouble with going it alone is that homebuyers don’t know what they don’t know.

A real estate agent can help you write a good offer for the property and help you understand whether or not you are overpaying for the home.  Additionally, a real estate agent can help you navigate the process of buying a home.  A real estate agent can also alert you if the home seller is doing anything out of the ordinary during the transaction.

Home sellers who FSBO do so to avoid paying a real estate agent.  Therefore, if you want to hire a real estate agent to represent you while purchasing the home, the real estate agent may ask the seller if the he or she will pay a real estate commission fee.  However, you as the buyer can hire a real estate agent on a fee for services basis to represent you.  In that circumstance, you would pay the real estate agent yourself.

Conclusion

The process of buying a home for sale by owner is no different than purchasing a home with a real estate agent.  What is different is you are all on your own to get the task completed.  By following some tips for buying a home for sale owner and knowing what to expect you will be better off.  However, I do recommend homebuyers work with a real estate agent.

If you are buying an FSBO in Indiana we are here and ready to help you.  The Northwest Indiana real estate agents on the Quadwalls Real Estate Team have helped FSBO Indiana homebuyers.  Contact us and we can help you, too. Or, if you haven’t found a home yet tell us what you are looking for with the Quadwalls HomeFinder Assistant.