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Should You Buy A House Without A Realtor?

Andrew Dehan4-Minute Read
July 31, 2020

We all love to save money. Whether it’s finding coupons online, buying in bulk or using an app to price compare, there are so many ways to save. When making a big purchase like a house, you may be tempted to save money trying to buy a house without a real estate agent.

This is a corner that shouldn’t be cut without careful consideration. A good real estate agent will steer you clear of trouble. They’ll know the area you’re looking to buy in and what properties are for sale, making them a good judge of a fair price.

An experienced agent knows how to negotiate with the seller after your offer is accepted. Discover an ancient furnace during the inspection? A good real estate agent will negotiate to have it replaced or have the price dropped to reflect the cost of replacement.

In general, a real estate agent will work hard for their commission. Where it seems like you could save upfront by forgoing an agent, if a problem comes up, you might be wishing you had one.

What Value Does A REALTOR® Add To The Home Buying Process?

If you’re house hunting, a knowledgeable REALTOR® is an incredible source of information. They’ve been through the house sale process many times, so they’ll be able to relay what you should expect. An established REALTOR® has relationships in the community and they know the quality service providers you’ll need.

Here are more ways a REALTOR® will add value:

  • Choosing the right neighborhood: taking taxes, safety, school districts and your interests into account
  • Showing you the right homes: saving you time and helping focus your house hunting
  • Connecting you with a home inspector: making sure you know all you can about the property and minimizing your risks
  • Securing financing: helping you get the right financing for the home you want, especially if your first application is denied
  • Crafting the offer: including contingencies that protect you and your deposit
  • Negotiating: working with you and the seller on counteroffers and demands

A realtor will streamline the home buying process for you. Their services are valuable if you’re house hunting and unsure of the buying process.

What If I Decide Not To Work With A REALTOR®?

While most buyers choose to work with an agent, maybe you’re in a situation where you feel comfortable going without one. If you decide to forgo getting a real estate agent, you need to be aware of all the steps you’ll need to complete on your own.

Know that the process can be long and complex, especially if you’re not an experienced REALTOR®. Here’s a list of what you should be ready to take on:

Getting Preapproved

You must prepare and submit all documentation for mortgage preapproval. Unless you’re buying with cash, getting preapproved is the very first step you should take when you start thinking about buying a home.

To get preapproval, the mortgage lender will want to examine your finances. You’ll need to include proof of income, tax returns, employment history, information on debts and bank accounts, as well as identification like your Social Security card and driver’s license.

Making An Acceptable Offer

After you’ve been preapproved and have found a home you’re interested in buying, you’ll need to make an offer. How much you offer is situational.

If the market in your area is highly competitive, your offer may be up against other buyers offering above asking price. On the other hand, if the house has been on the market for a while, you could consider making an offer well below asking price.

Your offer must include all contingencies to protect your deposit money. You want the option to back out of the sale if something goes wrong during closing.

Negotiating Sale Price And Terms

After you make an offer, the seller may counter it. Unless the home is for sale by owner, you’ll need to negotiate the sale price and terms with the seller’s agent.

There are many facets to these negotiations. If you bid low and the seller counters with their original asking price, it means they’re not willing to budge on the home price. Otherwise, they may be more flexible.

Closing costs and the earnest money deposit amount are potential terms to negotiate. In the right market, a seller may be willing to cover part of or all closing costs. Regarding your earnest money deposit, the more buy-in they see from you, the more seriously they may take the offer.

Another factor in this negotiating is timing. Your original offer may specify a closing date 60 days after the offer is accepted. If the seller needs more time to move out, they may counter by asking for a longer period.

Securing Financing From A Mortgage Lender

Once your offer is accepted, you’ll need to secure financing from a reputable mortgage lender. This happens in conjunction with the rest of the closing process.

Work with your mortgage lender to move from preapproval to full approval. They will order an appraisal and make sure there are no claims or liens against the property’s title. Depending on the loan, they may require repairs to be made to the home before closing.

Requesting And Evaluating Seller’s Disclosures

If you choose to forgo getting a real estate agent, you’ll need to request and evaluate the seller’s disclosures. A seller’s disclosure is a document where the seller lists issues with the home, as well as remodel projects done while they were in the home.

Each state is different on what’s legally required for sellers to disclose, or whether they must disclose at all. Without an agent, you’ll need to research and evaluate the disclosures on your own.

Hiring A Home Inspector And Appraiser

Without an agent, you’ll need to find and vet a reliable home inspector and home appraiser. You need to hire an inspector that’ll spot issues with the home and be upfront with you about them. You’ll also need to find an appraiser that’ll give you and your mortgage lender an accurate appraisal.

Once the inspection and appraisal come in, you’ll need to evaluate them. Without an agent, you’ll need to negotiate any home repairs with the seller on your own. You may also need to work with your mortgage lender if there’s an issue with the appraisal.

Hiring A Real Estate Attorney

Real estate attorneys prepare the home purchase documents, make sure the title is clear and help you close on your home. Many states require a real estate attorney to be present at closing.

Do you need to hire a real estate attorney if your state doesn’t require it? It’s possible you won’t, as the home buying process has become more standardized over the years. However, if legal issues arise, you may need to consult an attorney.

Purchasing A Title Insurance Policy

If you take out a mortgage, you must purchase title insurance. Title insurance protects you and your lender from unknown faults with the title. These include liens, ownership claims and boundary disputes.

Some states allow you to shop around for title insurance. Others don’t. Rates can vary depending a variety of factors, such as location and home value.

Preparing For Closing

As you can tell by now, there are a lot of moving parts that must fall in line by the closing date. A buyer’s agent will orchestrate these factors, making sure all paperwork is ready for your signature. Without one, you’ll need to triple-check that the paperwork is ready for closing.

If you’re prepared to handle it, buying without an agent is an option. You may be able to save money without an agent, but the right agent will be well worth the money spent.

How To Find The Right Agent

If you decide to work with a real estate agent, it’s important to find an agent you work well with. You want an agent with expertise in the areas and home styles you’re looking for. You also want someone with integrity who respects you.

There are several ways to go about finding an agent. If you have any family or friends who recently have bought or sold, ask them about the agent they used. What was their experience like, and would they recommend that agent to you?

If you don’t have a direct connect, turn to the internet. Search local listings and look up the agents tied with them. Read reviews of the agents online to see how their clients have rated them. If they have open houses in the area, attend one. Tour the house, but also get the agent’s info if you feel you could work with them.

Once you have an agent or two in mind, schedule interviews. Ask questions about their experience. Get a feel for their personality and how they work. Ask them about their commission and fees, making sure you understand everything before making it official.

Buying A House Without A Real Estate Agent: FAQs

If you’re curious about buying without an agent, you likely have some questions. Even if you’re planning on working with one, the following questions are good to know the answers to. Regardless of whether you have a real estate agent, the more you know going into buying a home, the better off you’ll be.

I’m The Buyer; Doesn’t The Seller Pay The Commission?

In general, yes, the sellers pay the real estate commission to their agent, who then splits it with the buyer’s agent. Typically this commission is 6%, with 3% going to both agents.

However, if you don’t have an agent, the seller’s agent may take the full 6%. Without an agent, you may be able to negotiate for the 3% that would’ve been paid out to the buyer’s agent. This could come in the form of a lower house price. As with many things in the sale of home, it all depends on how you negotiate.

If the seller must make home repairs after an inspection, these repairs would normally come out of both agent’s commission to find the wiggle room to make the sale. If you don’t have an agent, the seller’s agent may try to pass on the cost of the repair to you.

What If I’m Working With An Agent But The Seller Is Not?

If the house you’re interested is For-Sale-By-Owner (FSBO), there are some extra things to consider. Since the main reason for listing a property FSBO is to save on costs, you need to ask who’s paying the buyer’s agent’s commission. The seller may be willing to pay your agent’s commission, depending on the market. Your agent should negotiate this with the seller.

The seller may not be willing to pay your agent’s commission. If that’s the case, you may be paying your agent’s commission if you decide to buy the property. Some buyer’s agents include this information upfront, but ask if they don’t. Either way, your agent is getting paid, so pay attention to your contract.

What If I’m Buying The Property From A Trusted Family Member Or Friend?

While buying from a trusted family member or friend sounds like a great idea at first, it has its pitfalls. The situation can get complicated easily. When entering any sort of business or major transaction with someone you’re close with, you need to consider how it’ll affect your relationship if things go awry.

For instance, if you agree on a price, proceed to the appraisal and the appraisal comes back $30K less than the price you agreed on, is that going to make things awkward? You need to be able to talk business without things getting personal.

Along with many sellers not knowing how to price their homes, many are unaware of property defects until they begin providing disclosures or home inspections. This is another area that can be tricky to navigate with a friend or relative.

If an inspection comes back with a long list of necessary repairs, are feelings going to get hurt if you try to negotiate? How will your friend or family member handle you asking for a discount?

You can start to see why all parties might appreciate the buffer an agent provides. While you may trust your friend or family member, they don’t necessarily know what may arise from an appraisal or inspection.

Summary: A Good Agent Can Guide You Through A Difficult Journey

The journey of going from home hunting to home buying to homeowning is stressful. You need to find the right home and craft an acceptable offer. Once your offer is accepted, the home must be inspected and appraised.

While you may save money by buying without a real estate agent, you’ll have your work cut out for you. Even with an agent, the whole process can feel precarious. Can you handle all the planning, scheduling and orchestrating an agent does while also prepping for the move?

A buyer’s agent will help you each step of the way. They’ll narrow down the list of available homes to ones that meet your needs. They’ll negotiate with the seller in your stead. They’ll recommend reputable inspectors and appraisers and make sure your financing is secure.

When closing day comes, they’ll be there to make sure all paperwork is in order. And yes, once the sale closes, they’ll collect their commission. By the end of the process, you’ll know it’s well-deserved.

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Andrew Dehan

The Rocket Homes blog is here to bring you all you need to know about buying, selling and making the most of your home. Whether you’re thinking about becoming a homeowner, selling your current home or looking to keep your place in tip-top shape, our writers and freelancers bring their experience and expertise to meet you right where you are.