Reasons to buy a home with a Realtor’s help.If you’re wondering whether you need a Realtor to buy a home, the short answer is no. You might be hesitating to work with one because you don’t want to be saddled with Realtor fees, but typically, buyers don’t pay a real estate agent’s commission — sellers do. The fact is, many homebuyers use a Realtor to help guide them throughout the process, so before deciding whether or not to work with one when you buy a home, consider these pros and cons.
Real estate agents (some of whom are Realtors, members of the National Association of Realtors, or NAR) are licensed professionals. In most cases, sellers have a real estate agent working for them — a listing or seller’s agent — so you’ll want someone on your side, a buyer’s agent, who also has your back in negotiations and can help you understand how to make an offer on a home.
A buyer’s agent can help homebuyers in a host of other areas, as well. Here are some of the tasks you’d have to do yourself if you were to buy a home without a Realtor:
- Find homes that match your budget and needs. Real estate search sites give you a sampling of what’s available, but you’ll have to research whether asking prices are justified based on comparable home sales in the area. Your Realtor can help you do this and save you time.
- Dig up facts on a neighborhood, including ones that a seller might not disclose that could be important to you. Your Realtor can share insight you might not have thought to ask about, too.
- Negotiate an offer, including the price and other clauses and contingencies in the purchase agreement.
- Navigate the home inspection, and negotiate repairs or credits with the seller.
- Decipher paperwork that could be filled with complex jargon and terms you don’t understand.
- Request and review seller disclosures. You might not know what to ask for or what sellers in your state are required to disclose.
The bottom line: Unless you’ve been through the process of buying a home before, it can be better to go with a Realtor than not.
“There are too many legal loopholes and fancy terms that can get overwhelming and confusing for someone who’s not well-versed in the real estate business,” explains Laurie Blank, a Realtor with Edina Realty in Minneapolis.
Why some buyers pass on working with a Realtor
Although the majority of homebuyers work with a Realtor — just 12 percent of homebuyers didn’t in 2020, the NAR reports — buying a home without one can be a viable option for some, especially if you’re familiar with the property.
In fact, not working with a buyer’s agent on “an intra-family transaction is fairly common,” according to Pamela Linskey, attorney and founder of Linskey Law LLC, specializing in real estate, estate planning and probate in Massachusetts.
Most buyers considering not working with an agent are looking to save money — a goal that can be misguided given how Realtor commissions are typically structured. The commission is usually about 5 percent to 6 percent of the home’s purchase price and is split between the listing agent and buyer’s agent. Often, sellers build this fee into the price of their home.
“Generally, the only advantage to buying a home without an agent is saving the money it would cost to pay the agent, typically about 3 percent of the purchase price,” explains William P. Walzer, attorney at Davidoff Hutcher & Citron LLP in New York. “For expensive homes, that amount isn’t trivial and could come to tens of thousands of dollars.”
On a $450,000 home, for example, a 3 percent buyer’s agent commission would equal $13,500.
However, because the seller pays the commission, there might not be any real money-saving advantage for the buyer, Linskey points out: “The seller pays the brokerage fee for the listing agent and any buyer agent, so there’s really no benefit to the buyer for going it alone.”
In addition to saving money or already knowing the home in question, there are a few other reasons you might choose not to work with a Realtor:
- You’ve hired an experienced real estate attorney to walk you through the paperwork and offer advice.
- You’ve purchased multiple properties and understand the process.
- The seller isn’t willing to pay the commission for a buyer’s agent, and you don’t want to pay it either.
Regardless of your motivation, though, know that without a Realtor, you could end up paying more for a home. That’s because one of a Realtor’s key tasks is to evaluate the prices of homes currently on the market, along with those that have sold in recent months, to determine whether a seller’s asking price is in line with fair market values. If you’re inexperienced in doing this type of analysis yourself, you could unknowingly overpay.
You could also wind up with a home that has serious issues, having to sink money into repairs without help from the seller because you didn’t have the right contingencies in place or, worse yet, skipped the inspection altogether.
“I’ve heard stories where buyers worked out terms for a contract and found multiple, serious problems after they moved into the home,” Blank says, adding that the contract left those buyers with no recourse to get their money back or require the seller to pay for repairs.
Mark B. Huntley, a former real estate attorney who now runs a personal finance blog in San Diego, relays a similar story of a buyer who purchased a home without an agent. The buyer relied on his own inspection to justify why he wanted to forgo contingencies, which didn’t end well.
“Turns out, the house was riddled with termites, and the buyer had no legal way to get out of the contract, so he lost his $5,000 deposit,” Huntley says.
There are a lot of moving parts that go into buying a home, and working with a Realtor can save you time and money and stave off potential headaches. If you’re concerned about being able to afford a Realtor’s commission, know that the buyer’s agent’s fees are typically paid for by the seller, not the buyer — although it’s often worked into list price of the home, so the buyer is technically “paying” it, anyway.
Still, most homebuyers partner with a Realtor. Those who don’t tend to be experienced buyers or are familiar with the home they’re looking to purchase. If you’ve decided to buy a home without a Realtor, it’s best to hire a real estate attorney to help guide you through the more complex parts of the transaction.
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Ana speaks 3 languages (Portuguese, English, Spanish), Wife, Stepmom, Journalist, Event Director for the National Association of Hispanic Real Estate Professionals (NAHREP) Central MA Chapter.