If you’re wondering whether you need a Realtor to purchase a house, the brief answer is no. You might be hesitating to work with one since you don’t want to be saddled with Realtor charges, but typically, buyers don’t pay a real estate agent’s commission — sellers do. The truth is, many anglers use a Realtor to help direct them throughout the procedure, so before deciding whether or not to work with one when you purchase a house, consider the pros and cons.
Reasons to buy a home with a Realtor’s help
Property agents (some of whom are Realtors, members of the National Association of Realtors, or NAR) are licensed professionals working on your behalf and advocate for the interests. In most cases, sellers possess a real estate agent working for them a list of seller’s agents — so you will need someone in your side, a buyer’s agent, that also has your spine in discussions and can help you realize how to create an offer on a home.
Why some buyers don’t like to work with Realtors
Even though nearly all homebuyers work with a Realtor — only 12 percent of homebuyers didn’t in 2020, the NAR accounts — buying a house without one could be a feasible solution for some, especially if you’re knowledgeable about the property.
In fact, not working with a buyer’s representative on “an intra-family transaction is rather common,” according to Pamela Linskey, lawyer and founder of Linskey Law LLC, specializing in real estate, estate planning, and probate in Massachusetts.
Most buyers contemplating not working with a broker are looking to save cash — a goal that can be marginal given how Realtor commissions are generally structured. The commission is usually about 5 percent to 6 percent of the home’s purchase price and can be divided between the listing agent and buyer’s agent. Frequently, sellers construct this fee to the purchase price of their home.
“Ordinarily, the only advantage to buying a house without a broker is saving the money it would cost to cover the agent, typically about 3% of their purchase price,” explains William P. Walzer, attorney at Davidoff Hutcher & Citron LLP in New York.
How to buy a home without a Realtor
If you’ve carefully considered the downsides and decide to move forward in the home buying process without a Realtor, here is how to make it happen and what to expect at the final.
1. Negotiate with the listing agent
As the buyer, you could have the ability to negotiate the price of the home with the listing agent since you’re rescuing the seller from having to cover your agent’s commission. Though the seller pays the commission, the buyer’s broker’s commission is often baked to the buy price — however, if there is no buyer’s broker, then the seller may be able to knock that fee off the purchase price.
Negotiating on a house purchase, of course, takes skill, but in the event, the seller lowers the purchase price to reflect the dearth of agent charges, that means a smaller mortgage and lower monthly payments for you.
2. Check the disclosure and ask questions
The final disclosure is a significant record that includes information about the terms of your mortgage and closing prices. Make certain to read this document carefully and compare everything to your initial loan quote from the lender. If you notice any discrepancies, now’s the time to ask questions. Take special note of the interest rate, amount of obligations, whether there’s a prepayment penalty, and some substantial modifications to closing prices.
It could also be wise to submit a request for closing bills to be sent on closing day. This will show that all the vendor’s outstanding debts, such as utilities, have been paid.
3. Have a professional review the paperwork
At the very least, hire a real estate lawyer early on to review the purchase agreement and closing documents. Purchasing a home is a large purchase, and the files can be complex to read through and understand. An experienced lawyer will have the ability to counsel you and have language incorporated into the purchase and sale agreement to secure your interests.
Remember that issues can come up at any time in the sale, also, therefore a real estate attorney can be a resource and ally during the process.
“Forget waiting until the closing to get a lawyer,” Linskey states.
4. Sign all of the files and receive the keys
At the closing, plan to pay one or two hours reviewing and signing two sets of multiple files. 1 set contains the agreement between you and your mortgage creditor, and another set contains the agreement between you and the seller Take your time and examine everything (and, if possible, have your lawyer present). You do not want to include your signature in a legal document you don’t understand.
There are a whole lot of moving parts that go into purchasing a house, and working with a Realtor can save you money and time and stave off potential headaches. If you are concerned about being able to pay for a Realtor’s commission, know the purchaser’s agent’s fees are usually paid for by the vendor, not the buyer — although it is frequently worked into the record price of the home, so the buyer is “paying” it, anyhow.
Still, most homebuyers associate using a Realtor. Those of us who don’t have a tendency to be seasoned buyers or are familiar with the house they’re seeking to buy. If you have decided to purchase a house without a Realtor, it’s best to hire a property attorney to help lead you through the complex parts of the transaction.