When it comes to home sales, sellers and buyers typically correspond through agents. But the situation is different when a house is put up for sale by the owner. In such cases, there is direct communication with the seller. The lack of a middleman implies that there is no extra fee involved—the seller is more interested in bargaining on the sale prices. But buying owner-sold houses is majorly about leveraging the right strategy.

Get a mortgage approval
Before scouring through the houses you want to buy, set a budget and get approved for the home loan. Taking these steps gives you an idea of the funds needed for such an investment. Often, sellers do not entertain buyers without a pre-approval from the lenders. Even pre-approved buyers will have to apply for the loan and seek an official approval after the seller accepts your offer.

Find an agent
When you see a sign that says “for sale home by owners,” the sellers do not hire an agent. However, some homeowners are okay with paying the buyer’s representative. So, if you already have an agent, the seller can contact them. But, if you do not have an agent yet, look for someone willing to do the task. Usually, the buyer agents do not want to assist you with a house up for sale by owners, sans any listing agent. It only adds to their liability, implying more work without any addition in compensation. Naturally, as there is a single agent, they will work for both parties. But as you’re on the lookout for houses to buy, it always helps to have an agent. They can streamline the whole process, and when the seller pays for the agent’s commission, why would you not want an agent?

Look for a home
When you collaborate with a buyer’s agent, they will take you through the home buying process. Firstly, you can discuss your preferences, and accordingly, they can give you options on houses to buy. Alternatively, you can also search for houses up for sale by the owner online or drive around looking for available homes.

Attend the showing of the home
After you have found the property that interests you, attend its showing to get an in-depth understanding of the home you intend to buy. While working with an agent, request them to organize a home showing time. But if you’re working without an agent, directly contact the seller and ask for a showing. When you visit the property, take the time and effort to analyze it thoroughly. Inquire the seller, and ask several questions about the location and the house. You can also ask about any underlying issues or problems with the property.

Make an offer
After screening, you can discuss with your agent and decide on an offer. The offer contract must state the amount you can pay, including the earnest money deposit. In addition, you must also cite the terms of the offer. Typically, such contracts must explicitly mention that your title company or the real estate broker will hold on to the deposit. If that does not happen, you have to rely on the owner to handle the funds.

Elect contingencies
You need to consider if you wish for any contingencies included in the offer. A contingency can let you back out from the sale if the owner or property does not meet specific criteria. For instance, some buyer offers have a home inspection contingency. Another one of the most prevalent contingencies buyers like to add when shopping for the sale by owner home is the Comprehensive Loss Underwriting Exchange (CLUE) report. The CLUE report lists up to seven years of insurance claims on the house. Hence, the CLUE helps you find out about the issues that may be concerning in the future, such as damage to the property’s foundation or flooding.

Hire a professional to inspect the house

Before you buy the home, it is vital to get an inspection done. A trained professional performs the assessment by evaluating the home’s structure, appliances, and systems.  Any issues found during these checks need the immediate attention of the real estate professional. At this stage, you can request a credit to resolve the situation, ask the seller to fix the issues, and cancel the sale if an inspection contingency is part of the purchase agreement. Otherwise, you can demand a lowering of the sale price. After the final mortgage approval and home inspections, it is time to close the deal and receive the home ownership. Now, you will pay for the closing expenses and the down payment.

Shopping for a for-sale home by owner does not necessarily translate to savings for you. Also, since the seller does not have an agent, it may introduce some issues for you during the sale process. Thus, as a buyer, you have to carefully monitor the property, perform thorough research, and make an offer. You can consider working with an agent to shield you from overpaying or landing on any issues concerning the purchase agreements or other documents.