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How to Buy a House Without an Agent
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Most homebuyers work with a real estate agent (87%, according to the National Association of Realtors). Another 6% of homebuyers purchase their homes through a builder or builder’s agent. The other 7% of homebuyers are working without an agent.
So why is anyone buying a home without a REALTOR®?
One reason homebuyers may go it on their own is that they don’t want to pay commissions. The seller typically pays the commissions for both the buying and selling agent, though, and these commissions are usually already included in the listed sales price of the home. On occasion, some sellers aren’t willing to pay the buyer’s agent commissions, but that’s relatively rare. The commission on a home sale is, on average, around 5% to 6% of the home sales price, and is split between the buying and selling agent. If a homebuyer wants to avoid paying commissions as part of the sales price of the home, they would need to work directly with a seller in a for-sale-by-owner transaction, which cuts out real estate agents on both sides of the equation.
Another reason homebuyers may go it on their own is that they don’t want to be pushed into a more expensive property than they can afford. They may be concerned that, because real estate commissions are based on sales price, a real estate agent may push for a higher-priced home to increase their paycheck.
Homebuyers who’ve already been through the process may also feel more comfortable navigating it without a real estate agent. You may be wondering, “Do I need a REALTOR® to buy a house?” The answer is typically no. Depending on the state, you may be required to have an attorney present at closing, but you are not required to work with a real estate agent.
What does a REALTOR® do?
Some of the tasks buying agents assist with include:
- Finding a home. “We have access to certain databases for putting together market knowledge,” said Samantha Trenk, a real estate agent with REAL New York. “Databases that the regular consumer wouldn’t typically have access to.” Real estate agents typically have extensive knowledge about the local market and can help guide you to the best home and price for your needs and budget.
- Completing a home inspection, including recommending a home inspector and attending inspections. “We can recommend different inspectors [who can] explain to them about potential safety hazards of the house,” said Jennifer Okhovat, a real estate agent with Compass in Los Angeles. “If there are issues that come up, we assist in renegotiating the sales price so that the client can get an even better deal.”
- Negotiating on price. Some negotiations require a lot of back and forth, whether it’s when you make your initial offer or if you need to renegotiate due to issues found during your inspection. They may ask for repairs to be completed before closing, or try to get a lower price due to the needed repairs. Real estate agents keep things running and communicate with the seller’s agent.
- Helping with closing. Real estate agents typically shepherd buyers through the closing process, including the final walkthrough and completing the paperwork.
A real estate agent will typically work with you until you have your new home keys in hand. If you prefer a more DIY approach, though, you can manage a real estate agent’s tasks on your own.
How can you manage a REALTOR®’s tasks on your own?
If you decide to go it on your own, you will need to know the ins and outs of how to buy a house without a REALTOR®. Familiarize yourself with each step of the homebuying process. Some of the tasks you’ll need to complete include:
- Finding a home. Visit real estate websites to get a sense of the homes available in your area. To help keep your search from becoming too overwhelming, figure out which qualities are important to you in a home and search the sites for houses that best meet your desires. You can also let your family and friends know you’re looking for a home so they can give you a nudge if they see a property that might work for you.
- Finding and scheduling a home inspection. Finding a good home inspector is critical. After all, their entire job is to find problems and hazards that need to be addressed, both for your safety and so you know exactly what you’re getting into in terms of potential repairs. You can find a home inspector through referrals from friends and family, websites such as Yelp and Angie’s List, or through professional organizations.
- Negotiating. You have three opportunities to negotiate on price during the homebuying process: when you make your initial offer, after the home is appraised and after the inspection is completed. You can use the information you gathered while you were finding your home to make an informed offer. Look at prices for other homes in the area, and pay attention to how long the home has been on the market. When you’re ready to submit an offer, you may want to consult a real estate attorney to ensure the contract has the appropriate contingencies or clauses so you can get out of the contract with minimal loss. For example, you may want to include a contingency in case the appraisal is significantly lower than the proposed purchase price.
- Closing. You will receive your closing disclosures three days before you need to sign. Review the form carefully for any changes, or have a real estate attorney review them. You may also want to have an attorney present at closing (this is required in some states). The Consumer Financial Protection Bureau (CFPB) has a closing checklist you can use to ensure you’re prepared. The CFPB also has a closing disclosure explainer that walks you through the form.
The CFPB recommends asking lots of questions throughout the homebuying process, and particularly at closing. If you’re not comfortable at any point along the way, you can stop and seek professional advice. Keep in mind that if you walk away from closing, you may lose your deposit as well as any application and appraisal fees you’ve paid.
Pros of going without a REALTOR® as a buyer
The main advantage of going without a real estate agent is the potential to save on commissions. Even though they are technically paid by the seller, commissions are often added to the sales price. Saving 2% to 3% on the price of your home may not sound like much, but it can add up. For example, 3% of a $250,000 home is $7,500.
You also have the assurance you’re not being pushed into a home simply because of the commission. You’re buying the house because you’ve decided on your own that it’s the best home for you.
Cons of going without a REALTOR® as a buyer
The main disadvantage of going without a real estate agent is that you lose the in-depth market knowledge they bring to the table, Trenk said. This could potentially cost you money if you make an offer that’s higher than it needs to be. Additionally, “You wouldn’t have someone negotiating and building a good relationship with the selling agent on your behalf,” she said.
The bottom Line
To buy a house without a real estate agent, you need to act as your own agent. You will have to do extensive research and stay highly organized to ensure nothing falls through the cracks. You may also want to consult with a real estate attorney to ensure all the paperwork is done properly. It’s a daunting task, but it certainly can be done.