Most of the time, homebuyers opt to use a Realtor to help guide them through one of life’s largest financial transactions. A real estate agent’s job is to match you with a home that fits your budget and lifestyle needs, and help you navigate making an offer, negotiations, the home inspection and closing on your new place.
If you’re wondering whether you need a Realtor to buy a house, the answer is no. Some buyers may hesitate to use a Realtor because they don’t want to be saddled with Realtor fees. Typically, though, buyers don’t pay the commission; sellers do. The commission is about 5 percent to 6 percent of the home’s purchase price and is split between the listing agent and buyer’s agent. Oftentimes, sellers build this fee into the price of their home, which means you might pay more for the house.
Still, going it alone can be a risky bet. Before making your decision, learn the pros and cons of buying a house without a Realtor to see if it’s a good idea.
Reasons for buying a house with a Realtor’s help
Real estate agents are professionals who work on your behalf and advocate for your interests. In most cases, sellers have a real estate agent working for them so you want someone on your side who has your back in negotiations and can help you understand the complex lingo in contracts, for example.
Laurie Blank, a licensed Realtor with Edina Realty in Minneapolis, says that unless you’ve been through the process of buying property before, it’s a better idea to go with a Realtor than not.
“There are too many legal loopholes and fancy terms that can get overwhelming and confusing for someone who’s not well-versed in the real estate business,” Blank says. “It seems too risky, considering real estate agents are there on a daily basis to help people make decisions, using their experience and continuing education requirements.”
Here’s what you’ll have to do yourself if you buy a house without a Realtor:
- Find homes that match your budget and needs. Property search sites give you a sampling of what’s available, but you’ll have to research whether asking prices are justified based on comparable home sales in the area.
- Dig up facts on a neighborhood, including ones that a seller might not disclose that could be important to you.
- Negotiate an offer, including the price and other clauses and contingencies in the purchase agreement.
- Navigate the home inspection, and negotiate repairs or credits with the seller.
- Decipher paperwork that could be filled with complex jargon and terms you don’t understand.
- Request and review seller disclosures. You might not know what to ask for or what sellers in your state are required to disclose.
Buyer horror stories
If you’re not careful, you could end up paying thousands of dollars more for a home going it alone. One of a Realtor’s key tasks is to run a comparable sales analysis (called “comps” in real estate speak) of homes that are similar in size, condition and age to the home you want to buy.
A Realtor will evaluate the prices of homes that are currently on the market and those that have sold in recent months to determine whether a seller’s asking price is in line with market data. Otherwise, you could end up overpaying for a home.
You could also wind up with a home that has serious issues, having to sink money into repairs without help from the seller because you didn’t have an inspection contingency in place or, worse yet, skipped the inspection altogether.
“I’ve heard stories where buyers worked out terms for a contract and found multiple, serious problems after they moved into the home,” Blank says. She adds that legal jargon in the contract left those buyers with no recourse to get their money back or require the seller to pay for repairs.
Mark B. Huntley, a former real estate attorney who now runs a personal finance blog in San Diego, says nobody should buy a home without a Realtor unless they know what they’re doing.
Huntley says he worked with a buyer who purchased a home without an agent and relied on his own inspection to justify why he wanted to forgo contingencies. That didn’t end well for the buyer, Huntley says.
“Turns out, the house was riddled with termites, and the buyer had no legal way to get out of the contract, so he lost his $5,000 deposit,” Huntley says.
Reasons for buying a house without a Realtor
Buying a home without the guidance of a real estate agent might make sense if you have a strong handle on how the process works and confidence in your ability to navigate the deal on your own. Here are some common reasons for buying a house without a Realtor:
- You’re purchasing a home from a trusted friend or family member.
- You have a specific home you want to buy and have a good idea of its value.
- You’ve hired an experienced real estate attorney to walk you through the paperwork and offer advice.
- You’ve purchased multiple properties and understand the process.
- The seller isn’t willing to pay the commission for a buyer’s agent, and you don’t want to pay it either.
There are a lot of moving parts that go into buying a house, so you’ll want to ensure you have all the details down. Using a Realtor can save you time and possible headaches down the road. After all, the buyer’s remorse and money lost if you make mistakes will be more painful. If you decide to buy a house without a Realtor, though, consider hiring a real estate attorney to review the offer and purchase agreement.