Tips from an Attorney for Selling or Buying a House for Sale by Owner (FSBO)

A close up of a For Sale By Owner sign, with a two-story house in the out of focus background.

If you are thinking about selling or buying a house “For Sale By Owner”, it is important to have a complete understanding of the FSBO process and all the legal requirements that are involved. It is also important to seek advice from an experienced real estate attorney. Ann Arbor real estate attorney Bill Ager at Ager Law Office has assisted clients with successful FSBO transactions for over 30 years and can help guide you through the process.

Selling a House for Sale by Owner

If you handle the sale of your home by using the FSBO process, you will typically save a 6% real estate agent commission on the sale price. Although the process can put big money in your pocket, you will have to take on a number of responsibilities.

First, you must determine a sale price based on the current market value of your home. This may require you to obtain an appraisal of your property or to review the recent sales of comparable properties in your neighborhood, homeowner’s association, condo association, or the surrounding geographical area where you live.

Unless you have a buyer in mind, you will also have to advertise and market your home for sale. Getting the word out that your home is for sale to your neighbors and members of your condo or homeowner’s associations (if you have one) can be a great way to garner interest for your property. Also, advertising your home for sale on web sites or through social media sites can be an effective way of marketing your home.

To finalize an agreement on a purchase price, you will need a written sales contract signed by both parties that clearly describes all the agreed to terms and conditions of the sale. In addition, prior to signing a sales contract you must provide a prospective buyer with Michigan’s Seller’s Disclosure Statement along with a Lead Based Paint Disclosure that is required by the federal government if the house was built before 1978.

Buying a House for Sale by Owner

If you are a buyer you have the choice of using a real estate buyer’s agent or finding a home yourself. If you use a buyer’s agent, the agent typically asks the seller to pay 2% to 3% of the sale price as a commission for being involved in the transaction. That can be a disadvantage in negotiating the purchase of a home listed as FSBO because the seller may not want to pay the agent a commission or may be less inclined to negotiate given the amount of the commission to pay.

As a buyer in a FSBO transaction without a real estate agent you will be responsible for doing your own research on the neighborhoods and schools in the area that you would like to live. In addition, you will be responsible for determining the price of the offer you would like to make for a property. This will involve researching the recent sales of comparable homes in the neighborhood or geographical area of the FSBO home. If you will be financing your purchase with a mortgage, you should talk to a lender in order to determine the price range for your purchase. The lender will also be able to provide you with a pre-qualification or pre-approval letter which should be included with any offer you make.

Legal Requirements of Selling or Buying a House for Sale by Owner


The State of Michigan, like other states, has specific legal requirements that apply to the sale of real estate. One important requirement is that all contracts for the sale of real estate must be in writing. An offer made and accepted in a phone call or face to face conversation is not enforceable. If you are buying a home for sale by owner, you should be prepared to make an offer in writing. The seller in a FSBO transaction should require all offers to be in writing.

Signed legal documents are necessary to create an enforceable real estate sales contract and to finalize the transfer of the property. That applies to a FSBO sale, just as it applies to other real estate transactions. The documents are all extremely important, because they should clearly define the legal rights and responsibilities of both the seller and buyer.

If you are a buyer or seller in a FSBO home sale, you should never sign a document that has a provision that you do not understand. Given the significant financial character of the transaction, the best approach, whether you are a seller or buyer, is to retain an experienced real estate attorney to draft or review the documents before signing them.

Disclosure Requirements

There are state and federal laws that require the seller to provide written disclosures about the property in a FSBO sale. One of the most important is the Seller’s Disclosure Statement. Under Michigan’s Seller Disclosure Act, the seller must provide a signed disclosure form describing the condition of the property to a prospective buyer. This must be accomplished prior to the buyer and seller signing the sales contract. After receiving the signed Seller’s Disclosure form from the seller, the buyer should sign the form to acknowledge its receipt and should also acknowledge its receipt in the sales contract.

The Seller Disclosure Statement form includes detailed information a seller of residential property must provide about the condition of the property and certain fixtures and appliances in it. A seller’s failure to fully and accurately complete the disclosure form as required by Michigan’s Seller Disclosure Act can have serious consequences, including cancellation of the sale or a court action against the seller for fraud or misrepresentation after completion of the sale.

It should also be noted that for homes built before 1978, the federal government requires that a seller must also provide a buyer with a Lead Based Paint Disclosure form regarding the presence of possible lead-based paint hazards in the property.

Title Insurance

An approved owner’s policy of title insurance should be included as a condition for the purchase of real estate. A sales contract should include a provision that a title agency will issue an owner’s title insurance policy commitment for approval by the buyer. The Title Insurance Commitment, describes the title insurance coverage for the buyer and provides important information about mortgages, liens, easements, building and use restrictions, condominium and homeowners associations, taxes, and other matters that apply to the property. As a buyer, you should have a clear understanding of the owner's title policy commitment along with any recorded documents relating to the property. This will ensure that the property you think you are purchasing is the property that is conveyed to you and also that you will be aware of any limitations on your ownership and use of the property.

Protecting Your Interests

To ensure compliance with all requirements of Michigan law, a seller utilizing the FSBO process should retain an experienced FSBO attorney to assist with preparation of the documents and required disclosures. The attorney’s role includes assisting with the sale from start to finish.

Likewise, when buying a house for sale by owner the buyer should have their own experienced FSBO attorney to represent them in the transaction and to review all legal documents before signing them. This includes the purchase agreement, owner’s policy of title insurance, and closing documents.

Talk With an Experienced Ann Arbor Real Estate Attorney About the FSBO Process

Bill Ager at Ager Law Office, assists both buyers and sellers in For Sale By Owner / FSBO transactions. For a reasonable flat fee, you can receive a full explanation about how a FSBO transaction works as well as assistance through the entire process from start to finish.

From the Ann Arbor office, Bill serves clients throughout Washtenaw County. For a free consultation about selling or buying a home in a for sale by owner transaction, call (734) 649-0784, send an email to, or contact us online!

Categories: Real Estate