A Realtor is not required to help you buy a house. While you may be reluctant to use a Realtor to buy a home, it is common for buyers to not pay a Realtor’s commission. Sellers do. A lot of homebuyers hire a Realtor to guide them through the process.
Some agents, such as Realtors and members of NAR, are licensed professionals. Sellers usually have a real agent representing them, either a seller’s or listing agent. So you will want someone to represent you, a buyer’s agent. They can also help you negotiate and understand how to make an offer.
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The buyer’s representative can assist homebuyers in many other areas. Here are some tasks you might have to perform if you wanted to purchase a home yourself.
Find homes that fit your needs and budget. While real estate search sites can give you a glimpse of what is available, you need to investigate whether the asking price is justified based upon comparable home sales in the region. You can save time by asking your Realtor for help.
Find out facts about the neighborhood. A Realtor might have information you didn’t know.
Negotiate a deal, including the price and any other clauses or contingencies.
Navigate the home inspection. Negotiate repairs or credits with seller.
Comprehend complicated terms and jargon that can be found in paperwork.
Review and request seller disclosures. You may not know what you should ask or what sellers are required to disclose in your state.
It is better to hire a Realtor if you don’t have any experience in buying a house.
Why buyers don’t want to work with a realtor
A majority of homebuyers have a Realtor. However, just 12 percent of them did not in 2020. The NAR reports that buying a house without one can still be possible for those who are familiar with the property.
Many buyers are looking to save money and not work with an agent. However, this goal can be misleading due to how Realtor commissions are usually structured. The commission typically amounts to about 5 percent to 6% of the home’s value and is split equally between the buyer’s and listing agents. This fee is often included in the sale price.
A 3 percent buyer’s commission on a $450,000 home would be $13,500.
Linskey points to the fact that because the seller pays the commission there may not be any money-saving benefit for the buyer. Linskey says: “The seller pays both the brokerage fee for any buyer agent and the listing agent for the seller, so there is really no benefit for the buyer going it alone.”
You might avoid a Realtor because you are not only saving money, but also because you already know the property.
You have hired an experienced realty attorney to guide you through the process and give advice.
You are familiar with the process of purchasing multiple properties.
The seller won’t pay the commission for a buyer agent and you won’t pay it either.
You could pay more for a house regardless of your motivation. It’s because the main job of a Realtor is to compare the asking prices of homes on the market and the sales in the past months to determine if the seller’s asking price is reasonable. Unknowingly, you might overpay if this type of analysis is done by someone you don’t know.
A home could have serious problems and you will end up paying for the repairs yourself.
How to Buy a Home Without a Realtor
After weighing the pros and cons, you may decide to proceed with the homebuying journey without the help of a realtor. Here’s how to do it and what to expect at closing.
1. Negotiate with the listing agent
The seller might not have to pay your commission if you negotiate the price of the house with you as the buyer. Although the seller pays the commission for the home, the buyer’s agent commission is often included in the purchase price. But, if there is no buyer’s representative, the seller may be able to lower that fee.
Negotiating a home sale requires skill. But if the seller lowers his purchase price to avoid agent fees, you will get a smaller mortgage and monthly payments.
2. Go through the closing disclosure.
The closing disclosure is an important document. It contains information about your mortgage terms as well as closing costs. Compare this document to your original lender loan estimate. If you find any discrepancies, this is the right time to ask questions. You should pay attention to the interest rate and number of payments. Also, be aware of any changes in closing costs such as prepayment penalties and any lender fees.
It may also be a good idea to request that final bills be delivered on closing day. This will demonstrate that all outstanding bills (such as utilities) have been paid. Additionally, you might need to prorate credit or give credit for homeowners insurance, service contracts, real estate taxes and property taxes.
3. Ask a professional to review the paperwork
It is a good idea to hire a realty attorney as soon as possible to review the purchase contract and other closing documents. A home purchase is a big deal. The documents can be difficult to read and understand. To protect your interests, a lawyer experienced in this field will be able advise you.
It is important to remember that problems can arise at any stage of the sale. A real estate lawyer can help you be an ally and resource throughout the process, even at closing.
4. You will need a cashier’s cheque, proof of insurance, and identification to get your ID.
These are the most important things you need to bring to closing You can make sure you have these items on hand so that you don’t run into problems on the big event.
A certified or cashier’s check should be received at least one working day before closing. This should include details about who the checks should be made payable and how much. Personal checks are rarely accepted. You will need to visit your bank for an official cheque. You should be cautious if an email asks you to wire funds instead. This could be a sign that you are being scammed. It is a good practice to confirm payment instructions with the title and settlement company.
Documentation proving homeowners insurance: On the closing day, you’ll need proof that you have homeowner’s coverage that lasts at least one year.
Government-issued photo ID Your ID is required if you plan to buy a home together with your spouse or partner.
5. Sign all necessary documents and obtain the keys
Two sets of multiple documents will be required to close the deal. Each set should take between one and two hours to review and sign. You will need to review both the agreement between your lender and yourself and the one between you and the seller. Make sure you take your time, read through everything, and if you can, have your attorney with you. You don’t want your signature on a legal document that you don’t fully understand.
Bottom line
There are many things that go into purchasing a home. A Realtor can help you save time, money and prevent potential problems. If you are concerned about your ability to pay a Realtor’s fee, the seller usually pays it. Although it is often listed in the price of the home it means that technically, the buyer is paying it.
Most homebuyers will partner with a Realtor. The majority of homebuyers don’t have the necessary experience or aren’t familiar enough with the property they want to buy. A real estate attorney can help you navigate the complex aspects of the purchase if you have decided not to use a Realtor.