As the price of homes continues to climb across the country, so does the cost of selling. In fact, one of the fastest rising costs amidst the current low interest rate-fueled market has been commissions paid to sellers’ listing agents. Some sellers may not want to pay thousands of dollars to a real estate agent, and as a result, processing the home transaction privately seems like a good alternative. While many Canadians buy and sell homes privately each year, it’s not always the best option for everyone. Learn more about the process so you can determine if buying or selling your home privately is the ideal choice for you.

How Do Private Real Estate Sales Work?

Private real estate transactions are sometimes referred to as FSBO (for sale by owner) and are essentially a transaction where the seller doesn’t use the full-service component of a real estate agent. In the case of private sales, the term “full service” is important because while private sellers may not want to engage a REALTOR® for their usual duties, they’ll still need a licensed real estate professional to get their property listed on websites like

Whether you use a real estate agent or go with a third-party FSBO platform, there are a few options available to ensure you can still get your property listed on the proper websites. Once the listing is made public, you essentially take the agent’s place by being in charge of organizing showings, vetting potential buyers and answering any questions. When an offer comes in that you’re happy to accept, you bring a real estate lawyer into the mix to ensure the sale is legally binding and all paperwork is completed properly and efficiently.

What Parties Are Involved In Private Home Sales?

When it comes to selling a home privately, there are a few parties that will be involved in the process. Sellers will need an agent or third-party FSBO platform to help get the property listed and then a real estate lawyer once they’re ready to accept an offer and complete the legal paperwork. From a buyer’s perspective, they’ll need a lawyer to deal with closing paperwork and any legal issues. As a general rule of thumb, whether you’re selling/buying a home with an agent or privately, both parties will always need a lawyer to determine closing costs, ensure all sale terms and agreements are legally binding, prepare deeds and other legal documents, collect and distribute the money at closing, ensure the seller meets all their legal obligations and to lease with any third parties.

For Sale By Owner (Seller Process)

If you’re thinking about selling your home privately, you’ll want to follow the traditional home-selling process as closely as you can to maximize your likelihood of success. The goal of a private sale is to save money, not to wind up paying more, so streamlining the process is important. Selling privately will require a serious time commitment, but getting the price you want for your home is possible without any help if you keep these important tips in mind as you move through the process:

Price Your Home Accurately

Pricing your home too high will most definitely leave you with a lack of interested buyers and a stale listing. It’s important to do your research and avoid being stubborn about your pricing. Just because you think your home is worth $350,000, doesn’t mean it is. Not sure where to start? Check out sales data from Canada’s local multiple listing services (MLS). This data is publicly available so you have the option of seeking out properties similar to yours and pricing your home comparably.

Beware Of Half-Commission Pitches

It’s not uncommon for FSBO sellers to be approached by agents representing buyers who are willing to make an offer on the property if the seller will sign an agreement stating the buyer agent gets paid a certain percentage of commission. Without an advance warning, many sellers will agree to this thinking that 2% – 3% commission is a bargain, but the real question is what services will that agent be providing you in exchange for that commission?

Invest In Your Listing

If you’ve ever looked at home listings, then you’ll definitely know the difference between a good one and a bad one. While you don’t need a professional real estate agent to ensure you create a high-quality listing for your home, you will need to hire the professionals that real estate agents normally do, like photographers and perhaps even a home-staging company. There are so many options in each local market when it comes to these service providers, so you can choose the best one for you and your budget.

Once your listing is live, you’ll also want to invest time in managing it. A few hours each week to swap out photos, promote it with some targeted Facebook ads, share the post in Facebook groups or make a point to change up the description every so often, can make all the difference in the long run.

Be Patient With Finding A Buyer

It’s important to remember that when selling privately, it’s likely the sale will take longer than it would if you were using an agent who’s also using their own marketing channels and connections to spread the word. Frustration can set in as you watch other listings disappear quickly while yours remains. If you find your listing is getting stagnant, it’s usually the result of a miscue with pricing so you may want to revisit that strategy if you find your listing is lacking in activity.

On this note, it’s also important that you make it as easy as possible for buyers by showing them you’re transparent, honest and easy to work with. Buyers may shy away from private listings for fear of the home’s condition so you may even consider offering to pay for a home inspection yourself. In today’s market where buyers are paying for houses in cash sight-unseen, this simple gesture could be a huge stress reliever for interested, but hesitant, buyers. The more information you’re able to provide buyers with and the more comfortable you make the process for them, the more likely you are to get them to look past their private purchase hesitation.

For Sale By Owner (Buyer Process)

Whether you’re thinking about buying a home privately or you just want to be prepared should you set your sights on one you love, there’s a process you can expect to encounter and one you’ll want to understand fully before making the decision:

Get Mortgage Preapproval

When it comes to buying a home, privately or not, getting preapproved for a mortgage is an essential first step. Knowing how much you can comfortably afford will help you focus on the areas that have homes within your budget and remain realistic about your selections.

Finding A Home

Narrowing your focus is key when it comes to buying a home privately. If you’re not sure where to start, you should consider price, location and aesthetics. If you’ve been preapproved for a mortgage then the price is fixed, which leaves you with choosing your local and desired aesthetics.

It’s not as simple as choosing foundational items like the fact that you need three bedrooms, two bathrooms and a garage. There are many factors that come into play when searching for a home that go beyond that. Are schools important? Is transit important? Is living within your desired neighbourhood a must, even if that means purchasing a home that needs renovations? It’s always wise to narrow down a list of needs and a list of wants in advance, so you can decipher which properties make the cut based on what’s most important to you.

Assessing Home Value

If you’re not cautious, buying a home privately can create some serious issues and one of them is relating to the value. Falling in love with a home that checks off all of your boxes is an amazing feeling, but finding out you’ve overpaid by $50,000 unknowingly based on comparable homes in the area, is not. Look beyond the aesthetics and more closely at the big things like the roof, foundation and HVAC as these can cost you tens of thousands of dollars to replace. Not to mention the nightmare they can cause if the work on these projects was not to code or done without a permit. Without an agent by your side to assess the home’s value against comparable properties in the area, you’ll need to have a keen eye, know which questions to ask and ensure you do your due diligence every step of the way so you don’t end up regretting your purchase down the road.

Signing Representation Agreements

When buying a home directly from a seller in a private sale, you won’t have to sign a representation agreement like you normally would with the listing agent.

In Ontario, there are two types of representation agreements; a customer service agreement and a buyer representation agreement. While you are most definitely owed fairness, honesty, and integrity with either of those options, only the buyer representation binds the listing agent to the fiduciary duty to protect your interests. Signing one of these documents at the start and thinking you’ll be protected if you don’t wind up going through with the purchase, can be a mistake. This is why it’s extremely important that you have a listing agent review the contracts with you in detail, taking the time to explain each and every one of the clauses contained in it. The last thing you want as a buyer is to wind up having to pay a previous agent who you unknowingly signed a contract to work with during a certain duration.

Reviewing Counteroffers

Hopefully your offer gets accepted on the first try and you’re one step closer to securing your dream home in a private sale. If that’s not the case and you wind up receiving a counteroffer, you’ll have a specific amount of time to respond.

When buying a home privately, it’s likely you’ll be focusing heavily on the price, but it’s important to note that a counteroffer could be related to the terms of your agreement, like whether or not a home inspection is required or if items like your furnace or hot water tank are included. These changes may seem small, but they can have a huge impact on your bottom line and the end agreement so make sure to read the counteroffer carefully, and look beyond the price.

When it comes to buying a home privately, this step is monumental as it’s the point in which you are legally bound by the agreement of purchase and sale. As a result, it’s very important that prior to signing this (or submitting the offer in general) you are absolutely sure that everything is how you want it to be.

Confirmation Of Acceptance

Once all the terms are agreed to and both parties are happy, it’s time to sign the confirmation of acceptance documents. This can be done by either the buyer or the seller, depending on whether there were counteroffers. If the seller accepted the initial offer, they would be the ones to sign the document. If the seller countered/signed back your offer and you were happy with the changes, then you would be the one to sign the confirmation of acceptance. 

The Conditional Period

Once the confirmation of acceptance is signed, the “conditional period” begins, which means any clauses you inserted into your offer as conditions have begun. Two of the most common clauses include financing and home inspection. For example, if you had an offer conditional on financing for 5 banking days, those days begin the morning after your offer is accepted.

Depending on the arrangements you made with your listing agent, they may be able to do a lot of the work required during the conditional period, but if your agreement with the agent didn’t extend beyond getting your listing up on, you’ll be the person in charge of ensuring this portion goes smoothly.

If you’ve already been preapproved then financing isn’t going to be a conditional issue. Once your offer is accepted, your lender will need a copy of the agreement of purchase and sale, as well as a copy of the MLS listing. A bank can take anywhere from 1 – 5 business days to give you the green light that your financing is approved and you can waive the condition. It’s important that you don’t waive it without getting express approval from the lender first as you never know what can come up.

When it comes to home inspection conditions, they usually require the same timeframe to be completed as the financing condition. Most often, this is the make-or-break condition, especially with a private sale, as it’ll give you a more detailed idea of what condition the home is in. As a result, selecting the right home inspector is crucial to ensure your investment is sound. Don’t try to cut corners to save money by hiring a home inspector that isn’t adequately experienced or nearly as thorough. You can expect to pay $400 – $500 for a good home inspector and that cost will be worth every penny in the long run.

The outcome of any conditions will determine how you move forward. Will you be waiving the conditions and confirming the offer? Or will you be walking away from the home? Do keep in mind that there is an in-between as you can create an “amendment” to your original offer, which would make some minor changes in order for you to confirm the purchase of the home. This often involves asking the sellers to address specific issues that were brought to light as part of the home inspection.

Closing On The Home

Once your conditions are fulfilled, you can work toward the official closing.

As a part of your Agreement of Purchase and Sale, you may have included a condition that allows for 1 – 2 extra visits of the home prior to closing. Try to book these as far in advance as you can so as to avoid any scheduling conflicts between you and the seller. It’s always wise to keep one of those visits for a few days before closing so you can see the exact state of the home before it passes into your possession and address anything that needs to be dealt with before you close the deal.

At this point you’ll also need to hire a real estate lawyer and you’ll want to meet with them a few days before closing as well. The lawyer’s job is to review the purchase documents and payment details so you know how much money is needed for this last leg of the deal (deposit, legal fees, mortgage insurance, etc.). Their job is to help you tie up any legal loose ends, ensure you understand all the documentation and get you the keys to your brand-new home.

Whether you’re considering buying or selling privately, understanding the process and what you can expect to encounter will help you navigate each step with confidence. Not sure where to start? Reach out to our team of experts at Rocket Mortgage to learn more about your financing options and how to take the first step.