To buy a house from a private seller, you follow the same legal path as any other home purchase — a signed purchase agreement, inspections, title work, and closing — but you take on the coordination that agents normally handle. With a mortgage, expect the process to run 30 to 60 days. The single most useful step you can take is hiring a real estate attorney before you sign anything, because the oversight a listing agent would provide isn’t there.
Hire a Real Estate Attorney First
In a traditional sale, agents shepherd the contract through negotiation, review, and closing. Remove the agents and that oversight disappears unless you replace it. Several states require attorney involvement in residential closings, but even where it’s optional, a private sale is exactly the situation where legal review pays for itself.
An attorney will draft or review the purchase agreement, flag issues with the title search, negotiate repairs or price adjustments, and confirm the closing documents are executed correctly. For a standard residential closing, expect to pay between $500 and $2,000, higher in major metro areas. Some states build a formal attorney review period into purchase contracts, typically about five business days after both sides sign, during which either party’s attorney can request changes or cancel the contract without penalty.
The cost is small next to the price of the house, and the mistakes an attorney prevents in an agent-free transaction are not hypothetical. Contract language that reads as standard can carry consequences neither party intended.
Signing the Purchase Agreement
The purchase agreement is the binding contract that governs the whole transaction. It needs the legal description of the property (pulled from the existing deed), the purchase price, a closing date, and both parties’ names exactly as they appear on legal documents. State bar association websites and legal document providers sell standardized residential purchase agreement forms for a modest fee, but a template alone is not a substitute for having an attorney tailor the contract to your situation.
The agreement should specify an earnest money deposit, usually 1 to 3 percent of the sale price, held in a neutral escrow account by a title company or attorney. If you back out for a reason not covered by the contract’s contingencies, the seller keeps that deposit.
Contingencies are what protect you. The three you want in almost every deal let you walk away, deposit intact, if financing falls through, the home inspection reveals serious problems, or the appraisal comes in below the purchase price. Spell each one out clearly, with deadlines.
Seller Disclosures
Most states require sellers to give you a written disclosure statement listing known defects: roof, foundation, plumbing, electrical, flooding history, pest damage. The specifics vary by state, but the principle is uniform: sellers cannot conceal known material defects. Failing to disclose can support a lawsuit after closing or let you unwind the sale.
One disclosure is federal. For any home built before 1978, the seller must provide information about known lead-based paint hazards and give you a 10-day window to conduct a lead inspection before you’re bound by the contract.1eCFR. 24 CFR Part 35 Subpart A – Disclosure of Known Lead-Based Paint and/or Lead-Based Paint Hazards Upon Sale or Lease of Residential Property Skipping this carries federal penalties for the seller.
Inspections and Appraisal
Once the purchase agreement is signed, schedule a professional home inspection during the contingency window in your contract. A general inspector examines structural integrity, roofing, electrical, plumbing, and HVAC systems and produces a written report of any deficiencies. A standard inspection runs $300 to $500 depending on the home’s size and location.
The report gives you leverage. If serious problems surface, you can ask the seller to make repairs, reduce the price, or credit you at closing. If the issues are severe enough and your inspection contingency is in place, you can walk away and recover your earnest money. In a private sale there is no listing agent smoothing over bad news, so the inspection report often becomes the most contested document in the deal. Get one anyway.
Specialized Inspections
A general inspection doesn’t cover everything. Depending on the property and your loan type, you may need separate inspections for termites and other wood-destroying insects, radon, mold, or septic systems. VA-backed loans, for example, require a pest inspection in the majority of states and specific counties within several others.2U.S. Department of Veterans Affairs. Local Requirements – VA Home Loans Your lender or attorney can tell you which apply.
Appraisal
If you’re financing the purchase, your lender will require a formal appraisal by a licensed appraiser. The appraiser estimates market value by comparing the property to similar recent sales in the area. Cost typically runs $300 to $500 for a standard single-family home.
The appraisal protects the lender, which won’t lend more than the home is worth. If the appraised value comes in below your agreed purchase price, you can renegotiate the price down, pay the difference in cash, or cancel under your financing contingency. Low appraisals are more common in private sales because the price wasn’t set by an agent running comparable market analyses. Cash buyers don’t need an appraisal, though ordering one voluntarily confirms you’re not overpaying.
Title Search and Title Insurance
A title company or real estate attorney searches the public records to verify that the seller actually owns the property and can legally transfer it. The search uncovers liens (unpaid taxes, contractor claims, judgments), easements, and any other encumbrances that could affect your ownership. You’ll receive a preliminary title report summarizing the findings.
Title problems surface more often in private sales than you’d expect. A seller might not realize there’s an old second mortgage that was never formally released, or a contractor’s lien from a dispute they thought was resolved. The search catches these before closing so they can be cleared instead of becoming yours.
Title insurance covers what the search didn’t catch: forged signatures in the chain of title, undisclosed heirs, recording errors, and similar hidden problems. An owner’s policy is a one-time premium paid at closing, generally 0.5 to 1 percent of the purchase price. If you’re taking out a mortgage, the lender will require a separate lender’s policy.
Standard policies cover defects that existed before you bought the property. Enhanced policies cost more but add protection for post-purchase risks like fraud, forgery, zoning violations, and building permit issues, and they typically include inflation protection with coverage rising over time up to 150 percent of the original amount. In a private sale, the enhanced policy is worth considering.
Closing the Sale
Review the Closing Disclosure
If you’re financing, federal law requires your lender to provide a Closing Disclosure at least three business days before closing.3Consumer Financial Protection Bureau. What is a Closing Disclosure? The five-page form details your final loan terms, monthly payment, interest rate, and a full breakdown of closing costs.4Consumer Financial Protection Bureau. Closing Disclosure The requirement comes from the integrated disclosure rules under the Real Estate Settlement Procedures Act and the Truth in Lending Act.5Office of the Law Revision Counsel. 12 U.S. Code 2603 – Uniform Settlement Statement Compare every line to your original Loan Estimate and question anything that changed.
For cash purchases there is no Closing Disclosure, because there’s no lender. Instead, the title company or attorney prepares a settlement statement itemizing the purchase price, prorated taxes, title fees, and other costs. Simpler document, same level of review.
Watch for Wire Fraud
At closing, you’ll submit your remaining balance by wire transfer or cashier’s check, and the funds sit in escrow until documents are signed and verified. Wire fraud is the biggest financial risk at this stage. Scammers routinely intercept emails between buyers and closing agents and send fake wiring instructions directing your money to a fraudulent account.
Before wiring anything, call the title company at a phone number you looked up independently, not one from an email, and confirm the account details verbally. Ask your bank to verify the name on the receiving account before releasing the funds. Legitimate wiring instructions almost never change at the last minute; treat any sudden change as a red flag.
Sign and Record the Deed
Both parties sign the deed, which is the legal instrument that transfers ownership. After closing, the title company records the deed with the county recorder’s office and the public record updates to show you as the new owner. Recording fees vary by county but commonly run around $125.
If the Seller Needs to Stay After Closing
Sometimes the seller needs to remain in the home for a few days or weeks after closing. If that’s the case, put a post-closing occupancy agreement in writing before closing day, not after. The agreement should specify the exact move-out date, a daily occupancy fee to cover your carrying costs (mortgage, taxes, insurance), an escrow holdback for potential damage, and clear penalties if the seller overstays. Structure it as a license to occupy rather than a lease. A lease can trigger landlord-tenant protections that make removing an overstaying seller far slower and more expensive.
Taxes and Reporting the Buyer Should Know
Form 1099-S
The person responsible for closing (usually the title company or attorney) must file Form 1099-S with the IRS reporting the sale proceeds. If the sale price is $250,000 or less ($500,000 for married joint filers) and the seller certifies in writing that the property was their principal residence with the full gain excludable, the 1099-S can be skipped.6Internal Revenue Service. Instructions for Form 1099-S Sales under $600 are also exempt. In a private sale without agents, make sure someone is designated to handle this filing; the obligation doesn’t disappear because no brokerage is involved.
Buying From a Foreign Seller (FIRPTA)
If the seller is a non-resident alien or foreign entity, federal law requires you as the buyer to withhold 15 percent of the sale price and remit it to the IRS.7Internal Revenue Service. FIRPTA Withholding This catches many buyers off guard in private transactions where there’s no agent flagging it. Failing to withhold makes you personally liable for the tax. If there’s any question about the seller’s residency, ask for a certification of non-foreign status before closing.
Transfer Taxes
Most states impose a transfer tax or documentary stamp fee when real property changes hands, calculated as a percentage of the sale price. Rates run from zero in some states to several percent in others, and who pays — buyer, seller, or a split — varies by local custom and negotiation. Your title company or attorney will calculate the exact amount. Budget for it early; on higher-priced homes it can reach thousands of dollars, all due at closing.
If the Seller Is Financing the Purchase
In some private sales, the seller acts as the lender and the buyer makes payments over time instead of taking out a traditional mortgage. The arrangement can take the form of a promissory note secured by a mortgage or deed of trust, or a land contract in which the seller keeps the title until the buyer pays the full price.
Federal law limits how often an individual can offer seller financing before triggering licensing and consumer protection requirements. A seller who finances no more than three properties in any 12-month period and meets certain conditions — including that the loan is fully amortizing and the seller makes a good-faith effort to determine the buyer can repay — is generally exempt from mortgage originator licensing. Sellers who finance more than five properties in a calendar year are treated as creditors and must comply with the federal ability-to-repay rules.
Any seller-financed loan must charge at least the IRS’s Applicable Federal Rate for the loan term. The IRS publishes these rates monthly. If the note rate falls below the AFR, the IRS treats the difference as imputed interest income to the seller, creating a tax bill on money that was never actually collected. Have your attorney or tax advisor verify the current AFR before signing.