Everyone strives to save money on major purchases. So when it comes to buying a house, paying a realtor's commission can seem daunting and expensive. The fee—often based on a percentage of the cost of the home—can add up to thousands of dollars. But for that money, a potential homeowner gets days, weeks or even months of service and guidance from a housing professional. Are you considering buying a house without a realtor or real estate agent?
Buying a House Without a Realtor
Of course, deciding to forgo using a realtor or real estate agent to buy a home comes with a few words of caution. There's a reason people get certified to take care of home buying negotiations and transactions for the public. Here's what to know when buying a house without a realtor:
1. There's a Mountain of Questions and Paperwork to Navigate
The Federal National Mortgage Association, better known as Fannie Mae, recommends hiring a real estate agent when you first start house hunting. After the excitement of attending open houses and browsing house ads online fades, you'll have a professional available to answer questions about cleaning up your credit report and securing financing. Best of all, you show up for the house closing to simply read and sign the legal documents prepared by the agent for you.
2. You Might Give Up Some Advantages
If you approach a selling agent as a solo buyer, they might ask if you'd like to participate in dual representation. At a first glance, it's enticing. The seller's agent helps you with paperwork and decision making. But remember: the seller's agent will always have the seller's best interest as a primary focus, according to Loan Safe, a consumer-based home buying resource. If the house-buying process becomes frustrating, you might choose dual representation and give up the advantage of keeping your financial information to yourself during the delicate negotiation process.
3. The Home's History Is a Mystery
"One huge factor that comes into play when buying a home without a realtor which we've seen time and time again is the fact the buyer does not know the history of the property," explained Sherry Bender of Affiniton, LLC. "We work with property owners who have purchased a property and later find out the place was used as a meth lab. In some states, Realtors are now required to disclose whether a property was a 'meth home', but that is of course assuming even the realtor knows. If it's a private sale, there's even more of a chance this fact would not be disclosed."
4. Hidden Expenses May Linger
"The benefits of using a seasoned agent span well beyond the negotiations process. These agents often know the pros and cons of various neighborhoods and areas that may become more costly for a buyer in the long run in regards to insurance costs and maintenance issues," noted Mark K. Card, P.A., CRS, SRES, ePRO with RE/MAX Property Centre.
5. Buying Can Take More Time Than Expected
Buying a house without arRealtor isn't a weekend project. From researching the projected cost of utilities to local zoning restrictions (Is it legal to run your home-based business from the new dwelling?), you're going to invest countless hours in research before making an offer.
"As a buyer, and especially as a seller, you will invest a much greater amount of time, and incur a much greater amount of opportunity cost, than you originally envisioned," commented Mark Mallardi, CEO of Listen for Life Global Productions.
6. Learning a New Community Can Be Daunting
If you're buying a home without a realtor in a new city or state, it's tough to know the ins and outs of your potential new area. An agent working in that community on a daily basis can be a wealth of information.
"A buyer who tries to 'go it alone' also loses an edge, as he doesn't have the advantage of knowing the subtleties of the specific market area. A real estate agent has this knowledge, and can help a buyer craft an offer that will be realistic and have the comparable statistics to substantiate it," explained Sandi Klein, a realtor of 38 years in Greenwich, CT.
Once you've made an offer on your new home, with or without an agent, start shopping for homeowners insurance. You can save money by working directly with an independent insurance agent. Trusted Choice® independent agents work with you individually and offer several price quotes on homeowners insurance for you to evaluate before signing a contract.
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Last Updated: 5/22/19 6:49 AM PDT