How to sell a house privately: the direct-sale workflow

What it means to sell a house privately

When you sell a house privately, there's no listing agent marketing the property on the MLS. That can take a few forms: a for-sale-by-owner sale to a buyer who answers your ad, an off-market sale to a neighbor, tenant, relative or friend, or a direct sale to a cash buyer who purchases houses as they are. In each case you deal with the buyer, or the buyer's representative, directly.

What doesn't change is the legal side of the sale. The deed still has to be signed by everyone on title, liens and the mortgage still have to be paid off, state disclosure rules still apply, and the closing still needs to be handled by a title company, escrow company or attorney, depending on where the house is.

• FSBO to a buyer you find through your own marketing
• Off-market to someone you already know
• Directly to a cash buyer who buys as-is

Step 1: Set a price you can defend

Without an agent, the price is your job. Look at recent sales of similar houses nearby (sold prices, not asking prices), adjust for condition, and consider paying for an independent appraisal if the value is unclear or you're selling to family. Online estimates are a starting point, not a price. If you're comparing a direct buyer's offer, compare it with your estimated net from listing, after commission, repairs and carrying costs, rather than with a list price.

If you plan to sell a house privately to a relative or friend at a discount, be aware that selling below market value to family can be treated partly as a gift for federal tax purposes, and it affects the buyer's tax basis. An appraisal documents the value, and a tax professional can tell you whether a gift tax return is needed. Lenders also have rules for family sales, so a buyer who is borrowing should tell the lender about the relationship up front.

Step 2: Gather the paperwork before you sell a house privately

Buyers and the closing company will ask for the same documents, so collect them first. You'll want the deed or names on title, your latest mortgage statement and the servicer's payoff contact, the property tax bill, HOA details if any, and records of repairs, permits, warranties and insurance claims. If the house was inherited or is in a trust, gather the documents that show who has authority to sign.

Prepare your disclosures too. Most states require a seller disclosure form, and federal law requires a lead-based paint disclosure for most houses built before 1978. When you sell a house privately, nobody else will remind you of these, so check your state's requirements early.

• Deed and the names of everyone on title
• Mortgage statement and payoff contact
• Property tax bill and HOA contact
• Repair, permit and insurance records
• State seller disclosure and, if applicable, the lead-based paint disclosure

Step 3: Find and verify the buyer when you sell a house privately

If you're selling FSBO, you'll market the house yourself: photos, a description, a yard sign, online listings, and possibly a flat-fee MLS service. Screen buyers before showings: ask for a mortgage pre-approval letter or proof of funds. If you're selling to someone you know or to a direct buyer, verification still matters.

For any buyer, confirm the legal name that will appear on the contract, the source of funds, and the title or escrow company they'll use. With a company, look up its business registration and reviews, and ask whether the contract can be assigned to another buyer. A legitimate buyer won't ask you for money up front.

Watch for warning signs as you sell a house privately: a buyer who won't say who is actually purchasing, pressure to sign the same day, a request to sign over the deed before closing, an offer far above comparable sales that comes with a long inspection period, or a buyer who wants to use a closing company you can't verify. Any of these is a reason to slow down and have an attorney review the deal.

Step 4: Put the deal in a written contract

A real estate sale needs a written purchase agreement. It should state the price, the earnest money and who holds it, any inspection or due-diligence period, financing terms if the buyer is borrowing, who pays which closing costs, what stays with the house, the closing date and when you'll hand over possession. Many states have standard forms, and a real estate attorney can prepare or review the contract for a fee that's small next to the value of the house.

When you sell a house privately to family or a friend, the contract matters just as much. Clear terms protect the relationship as well as the sale.

Step 5: Title, payoffs and closing

Once the contract is signed, the title or escrow company (or closing attorney) searches the title, orders payoff statements from your lender and any lienholders, prepares the deed and the settlement statement, and collects the buyer's funds. At closing, your mortgage, liens and closing costs are paid from the proceeds, the deed is recorded, and you receive the balance.

Read the settlement statement before you sign, and confirm any wiring instructions by phone with the title company at a number you looked up yourself; criminals target real estate closings with fake instructions. You may receive a Form 1099-S reporting the sale for tax purposes.

Who handles the closing depends on your state. In some states an attorney must be involved; in others a title or escrow company runs the whole process. Either way, use a neutral, licensed closing provider rather than handing documents or money directly to the buyer, and keep copies of the signed deed, the settlement statement and the payoff letters for your records.

Should you sell a house privately or list it?

When you sell a house privately, you save the listing commission and keep control of the timing and the showings. You also take on the pricing, the marketing (for FSBO), the buyer screening and the paperwork, and you may reach fewer buyers than a listing would. If the buyer has an agent, you may be asked to pay that agent's fee.

A listing gives you market exposure and professional help, and for a house in top condition in an active market, it can net more even after commission. A private sale tends to win when you already have a buyer, when the house needs work that would complicate a listing, or when privacy and a firm date matter more than testing the open market.

Selling privately to a direct buyer

A direct sale is the simplest way to sell a house privately. A direct buyer evaluates the house as it is and sends a written offer; there are no showings, no repairs and no buyer's loan. The trade-off is that the offer reflects the condition and the buyer's costs, so it may be lower than a fully prepared listing. Compare it on net proceeds, verify the buyer, and read every term before you sign.

A direct buyer is often the right choice when you want to sell a house privately but don't want to market it, screen strangers or manage repairs: an inherited house, a vacant property, a house with tenants, or one that needs significant work. If the house is move-in ready and you have time, get an agent's opinion as well, because a listing may bring more.

Sell a house privately with Prominent

Prominent Cash Offer buys houses directly, as-is, in any condition, without a listing or showings. You share the address; if the property is a fit, you receive a written cash offer with the amount and terms spelled out. There are no fees or commissions, we pay the closing costs, and you choose the closing date. The closing is handled by a title company, and there's no obligation to accept.