Real estate agents are involved in the majority of home sales, but sometimes it can be done with no agents involved. Even if the owner of a home has a seller’s agent, that doesn't mean you need to have a buyer’s agent representing you.
There are advantages to using a buyer’s agent, including knowledge of the local market and expertise in navigating the complex home purchase process. When you are house hunting, it’s nice to have your own agent working alongside you.In some instances, like when you are considering buying a foreclosed home, buyer’s agents are necessary. In other cases, doing it on your own can work out fine. Understanding the unique nature of your home search, level of expertise, and confidence will help you understand if buying a house without a real estate agent is right for you.
The Steps To Successfully Buying A House Without A Realtor®
Real estate is a complicated industry, with several different professionals who play their part in the life of a real estate transaction. Lenders, real estate agents, title company representatives, lawyers, and inspectors are just a few people usually involved. If you are thinking about doing a real estate purchase, finding a good real estate agent might be the first thing on your checklist. However, if you decide to buy a house without a real estate agent, knowing what to expect at each step of the home buying process is essential.
Find A Good Lender
The first step is talking to a mortgage lender about getting preapproved for a mortgage loan. They will provide you with a pre-approval letter that indicates how much you can afford to pay for a home, which you will need to submit to the seller or their agent when you make an offer.
Mortgage pre-approval is not only a prerequisite for putting an offer in on a house; it’s a great way to assess your overall financial health. Understanding the mortgage basics means an in-depth look at your credit score, income, savings, and all the other aspects of your finances.A qualified lender will show you all the lending services provided to people looking to buy a home. This includes a variety of loan types and government incentives that can help you afford the home you want. They can even show you how to buy a house with bad credit. Buying a home without a realtor is possible, but buying a home without a lender isn't - unless you are paying cash.
The House Hunt
Searching for a home on your own is easier than ever, with a plethora of online resources. Not so long ago, real estate agents were the only people with access to the multiple listing service (the database that shows current homes for sale). Now anyone can access this information with the click of a button.
Once you find a home you like online, call the listing agent (or the owner if there is no agent) and get as much information as you can. You will have seen pictures and general statistics online, so this is a chance to dig deeper. Ask the listing agent or owner if they have had any offers or showings and why they are selling. You should also ask what information they used to decide the asking price for the home. This will give you insights that you may use later in the process if you choose to move forward.
Open houses are another excellent way to see homes and get questions answered. Pictures can be deceiving, and nothing beats seeing a house, walking through it, and getting a sense of whether or not you can envision yourself living in it. It also allows you to ask the seller or their real estate agent some questions about the home.
In addition, you don't have to limit your options to homes that are listed for sale. Sometimes homeowners will be willing to sell even if their house isn't on the market. You can approach the owners of a specific house - writing a personal letter is the best way - or reach out to an entire neighborhood you are interested in living in. Be creative in your home searching, and you will increase your chances of finding and buying your dream home.
Making An Offer
Look up the property in the tax records online to find the sales price of the last time the home was sold. Compare that to the current listing price. This helps you know how much the seller would get if the house sold. This is valuable information because completing a successful real estate transaction has a lot to do with understanding the benefits to the seller. Combining your motivations with theirs will allow you to settle on a fair price for the home.
Ask the seller or their agent if they used comparable sales in the area to determine their listing price. If they share these sales with you, you can begin to understand if the price is reasonable. This type of conversation is usually between a buyer’s real estate agent and the seller's agent. If you are doing this without a real estate agent, it becomes your responsibility.
Competition is the most critical factor when it comes to determining your offer price. If there are many competing offers, you should probably make yours above the asking price. In addition, you can include an escalation clause. This means you will raise your price a certain amount ($3,000, for example) over any other verified offer.
Next, you will need to decide what type of loan you will use or if you are going to pay cash. You’ve already talked to your lender about the options available to you, so now you need to consider what the seller prefers. Buying a house with cash is always the best way to make the seller happy. It means there is no appraisal (more on that later), and they can close faster without waiting for the approval of a loan.
If you can swing it, “cash is king,” as they say. You will also need to decide on what amount of earnest money you will be paying. These funds (usually about 1 or 2 percent of the purchase price) are put in an escrow account with a real estate broker or title company and will usually be given back to you at the closing. The only way you will lose this money is if you back out of the contract in a way that violates the terms of the purchase agreement.
You may also want to consider writing a letter to the seller. This is an opportunity to let them know why you love the home and your vision of living in it.
Next, it's time to tackle all the paperwork that needs to be submitted with your offer, including the purchase contract, seller disclosures, lead paint disclosures, and pre-approval letter. Consider having a real estate attorney review these documents before you submit the offer.
The seller and their agent (if they have one) will respond in one of three ways:
The negotiations can go back and forth a few times and, hopefully, end with a fair price that you both agree on.
Once your offer has been accepted, you are considered “under contract.” The next step is to hire a home inspector who will do a comprehensive home inspection of the house you are purchasing. Home inspectors can be found through an online search or by asking friends (a former realtor® is an excellent choice if you know one) for recommendations.
The home inspector will review every part of the house and provide a complete report of the condition. This will include significant defects (like a hole in the roof) and minor deficiencies (like a broken gutter). The next step would be reviewing the report with your buyer’s agent, but if you are doing this yourself, read the report a few times to make sure you understand everything.
Next, you will decide if the report has anything you want to request from the seller. Your options are:
Once inspection negotiations have concluded, the appraisal is the next big hurdle between you and the closing table. Your mortgage lender wants to ensure that the loan they are giving you has sufficient collateral (the house’s value). If you are paying cash, this step isn't necessary. If you are using a loan, your lender will insist that an appraiser reviews the home to see if the value is at or above the purchase price.
This process involves looking at comparable homes that have recently sold in the area and an inspection of the home you are buying. If the appraisal indicates the house’s value is at or above the purchase contract price, things move forward. If it appraises below that value, negotiations commence again.
This is an opportunity for the buyer to void the contract or ask for a reduced price given the low appraisal. The seller can accept or reject this request.
Finalizing The Loan
Once the appraisal is done, it is time to finalize your mortgage loan and schedule the closing. Your lender will confirm that all the income, credit score, debt, and other financial information you provided during the preapproval process is still valid. This means you should keep a keen eye on your finances during the home buying process. For example, this would be the wrong time to go out and buy a new sports car.
Once the loan is given final approval, the lender lets everyone know that they are “clear to close.” The title company, seller’s agent, buyer’s agent (or you if you are buying without a real estate agent), are all notified, and the closing date can be scheduled. After one more trip through the house to make sure everything is in order, you will be on your way to the closing.
The final walk-through presents you with one last opportunity to see the home before finalizing the sale and moving in. This isn't like a home inspection, where you look for things to ask the seller for. This is just a brief trip through the house to make sure everything is as you remember it. Often the sellers are moving out during this time, and it’s essential to see if they left things in good shape for you.
If everything looks good, the closing is right around the corner. If there are some things to discuss, you can reach out to the sellers or their agent. The final walkthrough is usually just a formality unless something has recently gone terribly wrong, like a fire or flooding.
Nothing beats closing day! After a long journey, you are finally at the finish line, where you will consummate the purchase of your new home and get the keys. The title representative will go over all the closing costs with your well ahead of time, so there should be no surprises. Title companies are experienced with coordinating everything between the seller, buyer, real estate agents, lender, and other applicable parties.
Your lender will wire the loan funds to the title company, and you will bring a check with the exact amount to cover the purchase price balance and other closing costs. Once you review all the closing documents carefully and sign, the house is yours!
Advantages To Buying A House Without A Realtor®
When you buy without a real estate agent, you can make use of some possible advantages to save money. The seller pays the real estate agent's commission for most home sales, so they have to pay less if you don't have an agent. Reminding them of this may allow you to reduce the sales price.
Some people like to have complete control of their decisions when undergoing a transaction of this magnitude. If you feel like you can't give up control and trust the advice of a realtor, then buying one on your own may be the best route. It all comes down to personality and work style, and some people like playing by their own rules.
You also won't have to worry about hiring the wrong real estate agent. Finding a realtor who is a great communicator, knowledgeable about the local market, and adept at negotiations is critical to success. If you find an agent without these skills, they might do more harm than good.
Disadvantages To Buying A House Without A Realtor®
An experienced real estate agent understands how to sell houses, buy houses, and exactly what to expect during your home purchase. A realtor® is an agent that has gone through rigorous training to become a member of the National Association of Realtors®. This means they adhere to a strict code of ethics and continually update their real estate industry education.
When reviewing contracts and other complex real estate documents, it helps to have a trained eye, which a buyer’s agent can provide. If you consider buying without a real estate agent, hiring a real estate lawyer to look over everything is a good alternative.
Real estate agents have connections that most people don’t. When you use a buyer’s agent, they might know about properties that are not on the market but have owners willing to sell. They also are well connected with other agents who might know about other off-market properties.
Buying a house without a real estate agent can be daunting, but it’s not impossible. Real estate is complicated, and having an agent with experience can help. If you are not scared of a lot of research and paperwork, it might work well for you to buy a house without a real estate agent.
If you decide to go alone, utilize the other real estate professionals involved. Lenders, title representatives, lawyers, inspectors, and other professionals familiar with the process can help guide you. From financing to closing, assemble a team you trust to help you, even if that doesn't include a realtor®.
There are disadvantages and advantages to buying a house without a real estate agent, so the decision must be considered carefully. In the end, it all comes down to preference. The ultimate goal is getting the house you want using a process that’s right for you. That takes knowledge and determination.
Now that you have the correct information and mindset, you are ready to buy a house without a realtor®.