The short answer to your question about whether you need a realtor to purchase a home is “No.” Although you might hesitate to hire one, the reality is that buyers do not pay a commission to a Realtor. Many homebuyers use a Realtor as a guide throughout the process.
Some real estate agents are Realtors or members of the National Association of Realtors (NAR). They are licensed professionals. Most sellers have a listing agent or seller’s representative working for them. You will need a buyer’s agency to help you make an offer and negotiate.
Homebuyers can also benefit from the assistance of a buyer’s agent in many other areas. These are the tasks that you would have to complete if you bought a house without a realtor.
Find homes that meet your needs and budget. Although real estate search websites give you an overview of the available properties, you will need to verify that asking prices are reasonable based on comparable sales in your area. This can be done by your Realtor, which will save you time and help you save money.
You can find out information about a neighborhood that the seller may not have disclosed that might be of interest to you. You might be surprised at the information your Realtor has to offer.
Negotiate a price, as well as other clauses or contingencies, in the purchase agreement.
Navigate the home inspection and negotiate repairs or credit with the seller.
You may need to decipher complicated terms and jargon in order to understand paperwork.
Ask for and review disclosures from sellers. It is possible that you don’t know what questions to ask or what disclosures sellers in your state must make.
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Bottom line: If you have never bought a home before it is better to work with a Realtor.
Why do some buyers choose not to work with a Realtor?
While the majority of homebuyers use a Realtor, only 12 percent did in 2020, according to the NAR, buying a home with one is possible, especially if the property is familiar.
Buyers who are considering quitting working with an agent may be doing so to save money. This is a common goal due to the way that Realtor commissions are structured. The commission usually amounts to 5 percent to 6 per cent of the property’s price. It is split between the buyer’s agent and the listing agent. Sellers often include this fee in the home’s price.
For example, on a $450,000 house, a 3 % buyer’s agent commission would equal $13,500.
Linskey notes that the seller may pay the commission so the buyer might not save any money. “The listing agent pays the brokerage fee, and any buyer agent pays it, so the buyer really has no advantage going it alone.”
There are other reasons why you might not choose to work with a realtor.
An experienced real estate lawyer has been hired to help you with the paperwork and provide advice.
You have experience with multiple properties, and you are familiar with the process.
You don’t want the seller to pay the commission to be a buyer’s representative, so you won’t either.
No matter what your motivations, you can end up paying more to buy a home without a realtor. This is because a Realtor’s main task is to assess the current market prices and those that have sold recently to determine if a seller’s asking is fair market value. You could accidentally overpay if you are not experienced in this type of analysis.
It is possible to end up with a house that is in serious condition. You will need to pay for repairs yourself or have them done by the seller.
How to purchase a home without a realtor
Here are the steps to take if you have considered all the negatives and decided to go ahead with the homebuying process, even if you don’t need a realtor.
1. Talk to the agent listing your property
You might be able negotiate the price with the listing agent to save the seller having to pay the commission. The seller may pay the commission but the buyer’s agency’s commission is usually included in the purchase price. However, if the buyer’s agents are not available, the seller might be allowed to reduce the fee.
Negotiating a home purchase requires skill. However, if the seller lowers its purchase price to cover the cost of agent fees, it will result in lower monthly mortgage payments and a lower purchase price.
2. Read the closing disclosure. Ask questions
The closing disclosure contains important information regarding your mortgage terms and closing costs. This document should be carefully read and compared to the original loan estimate provided by your lender. If there are any discrepancies in the document, it is a good time to ask questions. Pay attention to the interest rate, number and payment amounts, prepayment penalties, and any changes to closing costs. This includes title fees and lender fees.
You might also submit a request to have final bills delivered on the closing day. This will prove that all outstanding bills such as utilities have been paid. You may also need to prorate, or give credit, for real estate taxes, homeowners insurance, and service contracts.
3. Get a professional to review your paperwork
Hire a real estate lawyer early to review the purchase agreement. The purchase of a home can be a major investment. It is not easy to understand the paperwork and make it clear. A lawyer can advise you and include language in the purchase and sales agreement to protect your rights.
Real estate lawyers can help you navigate the entire process.
4. Get a cashier’s check, proof that you are insured and your ID.
You will need to bring a few items to the closing. These items should be prepared well in advance to avoid any problems on the big day.
Cashier’s or certified check: It is important that you are notified at the least one day before the closing of any checks you will need, along with the details of who they should be payable to and their exact amount. Personal checks are not usually accepted so please visit your bank to get an official check. If you receive an email asking for funds to be wired, this could indicate a scam. Always confirm payment instructions directly with the title company or settlement company.
Evidence of homeowner’s insurance: At closing, you will need to prove that you have homeowners insurance that is valid for at least one-year.
Photo ID issued by the government: You will need a valid driver’s licence or passport. You will need to have your ID if you are buying a house with a spouse or partner.
5. Sign all documents and receive the keys
You should expect to spend at least one hour reviewing and signing two sets. The agreement between you, your mortgage lender, and you, the seller, is in the first set. Take your time to read it all. If possible, bring your attorney. It is not a good idea to sign a document that you aren’t familiar with.
Bottom line
There are many moving parts involved in buying a house. Working with a Realtor will save you time, money, and avoid potential headaches. You don’t have to worry about whether you can afford the commission. The fees paid by the buyer’s agent are usually paid for by the seller. However, it is often included in the list price of the house so technically the buyer is “paying”.
However, many homebuyers work with a Realtor. People who aren’t familiar with the area or have previous experience buying a home tend to not be as knowledgeable. It’s best to get a real estate lawyer to guide you through the complicated parts of buying a house without the help of a realtor.