If you’re wondering whether you can buy a home without a Realtor, it’s entirely possible to do so. But without the right Realtor guiding you through the process, it’s easy to pay more for a home than you planned.
Before you go into your homebuying journey alone, there are a few things to consider.
- There are nine steps to buying a home without a Realtor. It starts with getting familiar with the market and ends with closing on the home.
- It’s important to weigh the pros and cons of buying a house without a Realtor to determine if it’s the best option for you.
- Buying a house without a Realtor can make sense in different situations. These include if you are a Realtor yourself or if the seller is a trusted friend or relative.
What Does a Realtor Do for Homebuyers?
A Realtor can help you navigate the homebuying process in several ways:
- Handling the paperwork. Buying a house involves a lot of paperwork. Realtors are trained to identify any issues that could be overlooked by the buyer.
- Negotiating the best deal. Realtors are familiar with negotiation tactics that can maximize the value of your deal. They have experience presenting counteroffers that represent the needs of their clients.
- Providing expert advice. Realtors are licensed real estate professionals, and many have specialized in specific neighborhoods for years. Realtors have a median of eight years of real estate experience.
- Offering an objective opinion. Buying a home is an emotional decision, and emotions can cloud judgment. Having a third party by your side can help you more accurately weigh the pros and cons of a deal.
What’s the difference between a Realtor and real estate agent?
The term Realtor and real estate agent are often used interchangeably, but there are a few key differences.
A real estate agent has a professional real estate license and is a salesperson on behalf of a real estate broker. Getting licensed requires training and passing a two-part exam that covers both federal and state-specific real estate laws.
A Realtor is a real estate agent who took the extra step to become a member of the National Association of Realtors. Realtors must abide by NAR’s code of ethics, which are standards meant to further a client’s best interest.
How To Buy a Home Without a Realtor in 9 steps
It’s possible to tackle the homebuying process alone, but it will take time and dedication. Here’s what you’ll need to do when buying a house without a Realtor.
If you’re buying a home, it’s important to get familiar with the market. Start by building a general understanding of the area and its price points.
Additionally, consider the temperature of the market. Is it a hot market where sellers have all the power? Or is it a slow market and a good opportunity for buyers to negotiate? Understanding the answers to these questions will inform your negotiation tactics. If you’re not familiar with the real estate market, you’ll likely need to build this knowledge from scratch.
“Buyers who choose not to use a Realtor may not have the most up-to-date market knowledge,” says Tyler Forte, CEO of Felix Homes, a real estate brokerage in Nashville, Tennessee. “This can hurt a buyer’s chance of securing a home for the right price. It may mean overpaying for the home or on the other hand, not making a competitive offer.”
It’s important to research different types of mortgages so you can be prepared whenever you’re ready to purchase a home.
Some might opt for a conventional mortgage, while other qualified borrowers might determine that Federal Housing Administration, Veterans Affairs, or Department of Agriculture loans are a better fit. You’ll also need to determine if you want to pay off the loan in 15 or 30 years, and whether it will be at a fixed or adjustable interest rate.
Researching desirable neighborhoods in your price range is a good idea as well. Make a list of wants and needs that considers factors like the school district, property taxes, community resources, and length of commute.
With enough research, you’ll better understand how much house you can afford, and the mortgage loan needed to secure it.
Mortgage preapproval shows the seller that you’re serious about buying the home. Lenders require paperwork to verify your financial information, which gives sellers confidence that you’ll be able to receive financing.
A preapproval letter doesn’t commit you to the mortgage type or lender, but it does expire within 30 to 60 days. With that in mind, don’t apply for preapproval until you’re ready to make a home purchase soon.
Once you’re zeroed in on a neighborhood that suits your needs, touring open houses can help you find the right home. Some sellers hold in-person open houses, and others offer virtual tours. Some houses are staged, and others are white boxed. In-person open houses give you the opportunity to identify any issues that might not have been apparent in photos.
A Realtor will pull real estate listings for their clients. Without a Realtor, you’ll have to complete this step yourself.
Negotiating is important not only while making an offer but also throughout the homebuying process. Negotiating while making an offer can help you secure the best possible deal; negotiating afterward can potentially get the seller to compensate for any unmet contingencies. Understanding real estate jargon will help you navigate discussions with the seller.
You’ll need to make an offer complete with contingencies, a closing timeline, and any extra terms you have in mind. Also do your research to determine a fair price. It’s a good idea to have a lawyer read through your offer before sending it to a seller.
The seller may counter your offer. If they won’t budge, you may need to walk away from the deal. How much negotiation power you have depends on whether it’s a buyer’s market or seller’s market.
6. Apply for a mortgage
Once you come to an agreement with the seller, it’s time to officially apply for a mortgage. There are many documents needed for a home loan, such as W-2s, tax returns, and pay stubs. Getting all the required documents together in a timely manner will help expedite the process.
7. Buy homeowners insurance and title insurance
Lenders typically require you to buy homeowners insurance and title insurance before you can close on the loan.
Homeowners insurance helps you pay for property damage from some natural disasters, theft, or accidents. If someone files a lawsuit against you after getting injured on your property, homeowners insurance covers liability, too.
Title insurance compensates you or the lender if there are claims against your home. Lenders usually require borrowers to purchase lenders title insurance, which protects their money if there’s an issue with the property’s title. You can also purchase owners title insurance, which protects you if someone sues over a title issue.
8. Get a home inspection and appraisal
After you make an offer, getting the home appraised and inspected will help you understand the condition and value of your potential home. Before you get the home appraised and inspected, request a property disclosure statement from the seller. A property disclosure statement is a document that outlines any problems with the home that could hurt your home appraisal.
To conduct a home inspection, a third-party professional inspector checks the condition of the property. If issues come up and you have a home inspection contingency, you can back out of the deal, have the issues corrected by the seller, or request compensation.
Typically, the buyer hires the inspector. Ask friends or family — especially anyone who has recently purchased a home — if they have any recommendations.
To conduct a home appraisal, a professional appraiser examines the property and estimates its value. If the home appraisal comes back lower than expected and you have an appraisal contingency, you can renegotiate the purchase price. Typically, the lender hires the appraiser.
Finally, it’s time to close on the home. Be sure to read the closing disclosure and all the other documents before you sign. Once you close, you’re the homeowner.
Every financial decision comes with advantages and disadvantages. Here’s what to consider about buying a home without a Realtor.
Pros of buying a home without a Realtor
- Sellers may accept a lower offer. If you don’t have a Realtor, the seller won’t have to pay a commission to a buyer’s agent. This commission usually is 3% of the sales price. Without a buyer’s agent in the deal, sellers might accept a lower offer price — but you’ll have to negotiate with the seller first.
- More control over the homebuying process. Some homebuyers prefer to handle such a big financial decision on their own. Instead of handing off responsibilities to a Realtor, you’ll be involved every step of the way.
- Availability of online resources. The internet makes it easier than ever to purchase a home without a real estate agent. You can access listings, find reputable inspectors, and research online lenders. Plus, there are many free forms available to help you draft important documents like your offer letter.
Cons of buying a home without a Realtor
- You could overpay. Negotiations are a common part of the process, and a Realtor has experience securing the best deal for their clients. Without a Realtor, you’ll be responsible for handling negotiations about things like sales price, possession date, and how much earnest money you should pay. For those unfamiliar with negotiating, you could end up leaving money on the table.
- Buying a home is time-consuming. The closing process alone typically takes 30 to 60 days. It also involves reading through a lot of complicated paperwork, including a purchase and sale agreement and inspection report. If you have a full-time job and family to take care of, buying a home alone may be difficult.
- You won’t have expert guidance. Without a Realtor on your team, you might miss important details. Whether you make a mistake in your offer or miss out on working with a great inspector, there are risks to buying a home on your own. Realtors typically have useful networks that can help you save money and make the homebuying process easier.
- You might not be familiar with the market. If you decide to buy a home without a Realtor, you won’t benefit from a real estate expert’s local market knowledge, and you’ll have to monitor the market yourself. Experienced Realtors know trend in the market after years of studying comparable properties — or comps — which are the reasonable prices for a home in any given neighborhood.
In some situations, it makes sense to purchase a home without a Realtor. These situations include:
- The seller is a trusted friend or relative. If you feel comfortable negotiating with the seller directly, a Realtor might not be necessary.
- A Realtor is willing to advise you for free. You’ll get all the benefits of a Realtor’s help — without the cost — if you have a friend or family member in the industry who is willing to offer a helping hand for free.
- You’re a Realtor or real estate agent. If you’re a Realtor yourself, you may not need outside help.
- You’re an experienced homebuyer. People with previous homebuying experience might not need the help of a Realtor. However, real estate laws and regulations frequently change, so it’s helpful if your experiences were recent.
- You make an agreement with the seller to not use a Realtor. You can come to an agreement with the seller to keep agents out of the deal. However, in many cases, this is a risky way to get a good deal, so proceed with caution.
- The property is a new-construction home. A brand-new home shouldn’t have too many issues. However, it’s usually still a good idea to get a home inspection.
Not using a Realtor: Does it save money?
As a buyer, you likely won’t pay out of pocket to work with a Realtor. Instead, the sales price includes the buyer’s agent commission.
If you don’t use a Realtor, you’ll need to negotiate with the seller for a lower sales price to save money.
Here are the answers to some frequently asked questions about buying a home without a Realtor.
In general, the decision to work with a Realtor is up to you. However, specific home purchases may require one. For example, if you are buying an FHA foreclosure property, you might be required to use a real estate agent.
Dual agency is when the buyer and the seller use the same real estate agent. Both parties must agree to this arrangement in writing before moving forward.
There are no states with legal requirements to work with a Realtor when buying a home.
Prospective buyers should consider if they have the knowledge, time, and connections to embark on the homebuying journey alone. Realtors are there to help, but it’s possible to buy a home without them. Someone who is looking to buy a home without a Realtor should be detail oriented, dedicated, and a determined negotiator.