The guide below was submitted to us for inclusion in the website in the hope that it would help de-mystify the process of buying directly from an owner. We think that it does this and we hope that you find it useful.
This is intended as a general guide, not as legal advice.

Answering Your Questions about Buying and Selling Real Estate is a document from the Wisconsin State Bar Association that you might also find useful.

Perhaps you're wondering how to work directly with an owner in purchasing a home. Here's how the process works.

• To make an offer, ask the owner for the "Residential Offer to Purchase" form. This is a legal form you use to offer a purchase price and also describe the contingencies of the sale. Contingencies include such items as obtaining financing, having the home inspected, selling another house and so forth. This is a standard legal form used in almost every home sale, but you need to read it carefully and fill it out completely. You'll also receive a "Real Estate Condition Report" which provides details on various defects. (This report must be provided to you in any real estate transaction.)
• Return the offer and an earnest money check. Earnest money represents your good faith in going through with the deal. The amount of the check varies, but is typically no less than $1,000, and often is about 1% or more of the purchase price. If you buy the house, you'll usually have the amount credited to the purchase. If the contingencies identified in your offer to purchase are not met, you will get your money back. But you will not get the money back simply because you've had a change of heart. Ask whom to make the check payable to; often it's a trust fund.
• If necessary, a counter-offer will be made. Sometimes, counter offers are countered as well. Both the offer and counter-offers spell out the various conditions of the sale, and must be adhered to. The contingencies have deadline dates. Neither party can ignore the deadlines. If there's a problem in meeting one, however, both parties can agree to an extension. The contingencies are removed by filling out a legal form describing the action that's been taken. For example, once you obtain financing, that contingency is satisfied.
• Shop around for a mortgage. If you need assistance in comparison shopping, check out the following websites: Quicken Mortgage, E-Loan, homepath.com You also will need to provide proof of homeowner's insurance; your insurance agent will have the proper forms. (Comparison shop for insurance, too!)
• If your offer is subject to an inspection, you usually are responsible for making the arrangements and paying for the service, although sometimes it's negotiable. A list of home inspectors can be found in the yellow pages; ask for references.
• The owner will make the arrangements for closing the deal, including title insurance, meter readings, etc.
• Often, the owner works with an attorney. You also may want to consult with an attorney or legal services agency. This need not be expensive, especially if you get organized before you seek advice. Write down your list of questions ahead of time and have copies of any pertinent documents with you. Your attorney and/or the owner's attorney also may attend the closing.
• Remember, no one knows more about the house than the owner. Buying from the owner gives you the chance to ask questions directly.

Copyright © 1998 Providing Solutions. Lucy Harr is the proprietor of Providing Solutions, a communications consulting firm specializing in personal finance topics. She sold her Madison home through fsbo Madison in 1998.