For many first-time home buyers, the home buying process can feel like a mysterious journey into murky, uncharted waters. REALTORS® and real estate agents can help home buyers keep their dreams of owning a home afloat.
According to the 2020 Home Buyers and Sellers Generational Trends Report from the National Association of REALTORS® (NAR), 89% of home buyers purchased a home with a real estate agent.
Still, there are many brave souls interested in buying a house without the help of a real estate agent (gotta love that indie spirit!). It can be done, but you’ll want to make sure that you’re up to the task.
If you’re thinking about buying a house without a REALTOR® or a real estate agent, we break down everything you need to know to proceed with confidence.
Can Buying a House Without a Real Estate Agent Save You Money?
When you go solo like Han and swoop into the world of home buying without an agent, you’re taking a risk. Many buyers who decide to strike out on their own do it to save money on a key cost.
The purchase price
The seller typically pays the buyer’s real estate agent their commission at closing. If the seller doesn’t have to pay that commission because you decided to buy the home without a real estate agent, they might be willing to drop the home’s sale price by the amount they would have spent on commission.
Real estate commissions differ by area, but they’re typically somewhere around 3%. If the seller agrees to reduce their sale price by 3%, it could make a noticeable difference. A house selling for $150,000 would get its purchase price reduced by $4,500 if the buyer didn’t use an agent and the seller agreed to lower the price.
This doesn’t happen automatically. You have to ask in a purchase agreement. And while there’s nothing wrong with asking the seller to do this, be careful when you’re playing that hand in a seller’s market. It could make another offer more appealing.
Cash buyers may have an easier time getting the seller to say yes to this arrangement. A cash offer is a signal to the seller that the buyer has money on hand to buy the house and that there’s less chance of any hiccups or holdups since the buyer isn’t taking out a mortgage loan.
Because cash buyers are seen as more likely to close (and close quicker), sellers are more open to reducing their purchase price to seal the deal.
If this is all making your head swim, don’t worry. When it comes to getting house-hunting advice, including what’s the best mortgage option for you and getting preapproved for it (we’ll get to that in a second), finding a lender, like our MoneyTips vetted recommendation below, will be a big help.
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Steps to Buying a House Without a Real Estate Agent
You get how a real estate agent can help when it comes to home buying. Now, let’s look at how buying a house without one works, focusing on key steps of the home buying process.
Here’s what you need to know when you want to buy a house without a real estate agent:
Step 1: Apply for a mortgage preapproval
A preapproval letter from a mortgage lender tells you how much the lender is willing to let you borrow to buy a house. (You can also use the lender’s estimate to narrow your house search and focus on houses you can afford.)
Getting preapproved can help get eyes on your purchase offer, especially in a hot, competitive housing market.
And when you’re not working with an agent, a preapproval carries extra weight. It shows the seller that – agent or not – you’re a serious buyer.
And let’s keep it 💯.
Some sellers might question a buyer’s commitment if they aren’t working with a real estate agent to buy a house.
Step 2: Get to know the neighborhood
Falling in like (or love) with a neighborhood or street that you want to live on is the easy part.
But you’ll have to do a little digging to make sure that the area fits your needs, lifestyle and your budget. And while you’re at it, you should try and determine if the house’s value is likely to increase or decrease.
You should look into these factors when you’re considering a neighborhood:
- The area’s job market
- School options, ratings and commute
- Upcoming commercial developments in the area
- Hospital and urgent care options
- Public transportation options (and their accessibility)
- Any slated road improvements or major highway construction projects that are nearby
Step 3: Find the house you want
Thanks to your preapproval, you know what you can afford to pay for a house. Now, it’s time to start scanning those online listings.
All the pretty houses … 👀
To avoid sinking in a sea of results, you need to filter for more than price and locations. Think like an agent. When your search is targeted, you can work faster and jump on good opportunities before other equally motivated buyers do.
Create a list of must-haves, but be flexible. In a competitive housing market, a buyer’s real estate agent will keep their clients’ expectations and demands in check. Without a real estate agent, you’ll need to do the same for yourself.
Here are some other ways to take control of your search like a real estate agent:
- You should take advantage of online video tours.
- You should get the contact info for the seller’s agent off of the house’s listing page and request a tour or more info.
- Go to upcoming open houses to see the house, so you can make sure you like it before you reach out to the agent.
- When you tour a house, look CLOSELY at everything. Note the condition of the house, appliances, yard and outbuildings (like a shed or garage). That’ll help you decide if you want it and how much you’re willing to offer.
Step 4: Research recent sale prices of comparable homes
Once you’ve found your dream home (or your starter home), do yourself a big favor and find out how much similar homes in the area have recently sold for.
These recently sold homes (often referred to as “comps”) can help you decide what price you want to offer on the house you want. Make sure you’re only researching the sale prices of houses that were recently sold – not homes that are currently for sale.
Here’s are some things that need to be the same (or nearly the same) for a comp to be comparable:
- Square footage
- Number of bedrooms and bathrooms
- Lot size
- Age of the house
- Garage (size, age, if it’s connected to the house or not)
- Approximate era and quality of any cosmetic updates
Researching comps is one of the most helpful services a real estate agent provides. They have free access to the most accurate and up-to-date info and are experienced at using the comps.
But an agentless buyer can handle this part. There’s no rule for how accurate you need to be. Just do your best and make an offer you’re comfortable with. 🙌
Step 5: Make an offer
Before deciding how much you want to offer on a house, you’ll need to review those key findings you made about the home and its market:
- The prices of comparable homes recently sold in the area
- Estimated costs of repairs (for items on seller’s disclosure)
- How much of a hot (aka “seller’s”) market it is
- The amount you’ve been preapproved for (try and give yourself some wiggle room on your offer in case you have to offer more during a bidding war 😧 )
There’s a good chance that it might take losing a few bidding wars to other buyers before you get a real handle on what you should be offering on houses.
Your purchase offer also needs to specify who’s paying closing costs – you, the seller, or both parties – as well as any conditions (aka “contingencies”) that need to happen for the sale to go through. A contingency can be anything from selling a current house to pay for the new one or giving yourself a way out if the appraisal comes back low.
Purchase offer templates are available online. Once you fill the purchase offer out, send it to the seller’s listing agent for their review. If you’re making an offer on a home that’s for sale by the owner (FSBO), send it to the owner.
There will be some negotiating at this point with the seller’s agent or the owner of the FSBO house on things like the sale price and any contingencies.
After your offer is accepted is when you receive a seller’s disclosure.
The sellers what? Let’s get into it.
Step 7: A major 🔑 : Read the Seller’s Disclosure
In most states, the home seller has to disclose what they know about the condition of the house in the Seller’s Disclosure. The disclosure document is usually given to the buyer after their offer is accepted.
Usually, a buyer’s agent will get a copy of the disclosure. But when you’re not using a real estate agent, you’ll have to get it from the listing agent. Remember, disclosures are usually only given after your offer is accepted. What must be included in a disclosure varies by state law.
Here’s the kind of info you might find in a Seller’s Disclosure:
- The age of the roof
- Age or dysfunction of “mechanicals” (like a furnace or an a/c unit)
- Problems with any of the plumbing
- Current issues with mold or water damage
- Structural problems (like cracks in the foundation, crumbling chimney, etc.)
- The presence of older construction materials, like asbestos, that can cause health issues
- Lead paint on the property (an important consideration for some loans)
Knowing this info upfront can keep you from investing too much time on a house that would require costly repairs. But, if you love the house, you could use what’s in the seller’s disclosure to strengthen your negotiation power.
Step 8: Find the pros you need for a successful home purchase
In this next phase of the home buying process, you should start thinking about hiring skilled professionals to read over your purchase offer and make sure its terms and contingencies are properly documented. This could help prevent complications or legal repercussions stemming from any mistakes or ambiguities in the offer. That means it may be time to hire a real estate attorney.
In 21 states and Washington, D.C., attorneys are required to complete the sale of a home and transfer the home title from the seller to the buyer.
The purchase offer should also specify who will pay for title insurance: you or the seller. Title insurance protects you in case there’s a problem with the house title that wasn’t discovered in the initial title search. You certainly don’t want someone to knock on your front door one day and tell you that they were the rightful owner of the house – not the person who actually sold it to you.
Step 8: Make your purchase agreement official
Once all of the terms of the sale are finalized and agreed to, you’ll need to have that purchase offer signed by you and the seller to make it a legally bound purchase agreement.
Step 9: Order, attend and review the home inspection
Wow, look at you. If you made it this far without an agent, including getting a seller to sign your purchase offer – CONGRATS!
Next, you may need to schedule a home inspection to find out if there are any existing, unknown problems with the house. The sooner you can schedule it – the better.
That’s especially true in a flaming-hot housing market where your area’s limited pool of inspectors is probably getting stretched thin. And if the home inspector spots additional problems they aren’t qualified to assess, you may want to hire additional experts to come and investigate.
Typically, a real estate agent would provide recommendations for these kinds of professionals. So, if you don’t already have those connections, you’ll need to ask around, spending a lot of time looking up pros, comparing reviews and researching prices.
Whether or not you have an agent, it’s a good idea to attend the inspection. You can have the inspector explain any issues while you’re there and answer any questions you might have.
You can always skip the inspection if you’re comfortable with the age and condition of the house. Just know that what you don’t learn about the house now could potentially cost you hundreds – if not thousands of dollars – once you become the owner.
Step 10: Negotiate the final price and terms of the sale
Even though you’ve signed the purchase agreement with the seller, you can negotiate and amend the agreement after the home has been inspected and a big or expensive repair is discovered.
Don’t be afraid to request another contingency that makes the sale dependent on the seller addressing an issue with the house in one of the following ways:
- Getting the damaged part of the house fixed before closing day
- Giving you a cash seller’s credit at closing to pay for the repair (you’d just have to get the repair done after you take ownership)
- Lowering the house’s sale price to cover the estimated cost of repair
This can be seen as a risk in a competitive market. Anything you request is going to make your offer incrementally less attractive to the seller. And the seller has the right to refuse additional requests during this phase of the sale. If you or the seller don’t budge, the deal could be off. This is why it’s good to have an inspection contingency in case you need to back out. Choose your battles wisely.
Once you and the seller reach an agreement on the final price and seller concessions, you and the seller will re-sign the purchase agreement.
And congratulations! The bulk of the work that a real estate agent would’ve done for you is now completed.
Next up, submit the agreement to your lender and apply for a mortgage loan.
Should You Buy a House Without a Real Estate Agent?
A real estate purchase can be a wild ‘n’ crazy ride. The buying process can be complex and full of surprises. Sometimes you need to make quick decisions that might have long-lasting implications for you as a buyer, and eventually, as a homeowner.
Given these challenges, most buyers use an agent. But many don’t and still end up in a house they’re happy with.
Only you can decide if having an experienced real estate agent at your side while you navigate the home buying process is necessary. If you believe in your ability to go agentless during the home buying process, we believe you can, too!
National Association of REALTORS®. “2020 Home Buyers and Sellers Generational Trends Report.” Retrieved October 2021 from https://www.nar.realtor/sites/default/files/documents/2020-generational-trends-report-03-05-2020.pdf