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Buying A House Without A Realtor

Written by:  

Andrew Tavin

Andrew Tavin

Andrew Tavin

Personal Finance Writer

Andrew Tavin a contributing writer for Own Up.

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Fact Checked by:  

Dan Silva

Dan is the Vice President of Marketplace Lending at Own Up. Throughout his career, he has held executive leadership positions in the mortgage and banking industry.

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a bush with an Open House sign in it

Real estate transactions are expensive. It's understandable that a potential buyer will look for any way to cut costs. Some homebuyers may try to save money by cutting out agent fees and searching for a home on their own. However, it isn’t common practice. According to a report by the National Association of Realtors, 86% of home buyers who purchased a home between June 2021 and June 2022 used a real estate agent.

While it is possible to find and purchase a home without an agent, it may not be a good idea – especially if you are new to the home buying process and don’t know which red flags to spot or contingencies to request in a purchase offer. Experienced agents can guide buyers through the search and purchase process, and while you may find it hard to believe, their commission is often paid by the seller.

What Are the Benefits of Working With a Real Estate Agent?

While you can look for homes in your price range online or attend open houses on your own, there are benefits that can only come from working with real estate professionals. Here are three:

1. Industry Knowledge

Real estate agents know the local housing market and specifics about different neighborhoods and school districts. A real estate agent can help guide you through the complexities of the purchase agreement and mortgage loan terms.

2. Access to Reliable Experts

Additionally, agents can refer you to their preferred third-party experts like inspectors, real estate attorneys, and title companies – all of which can be an important part of the home buying process.

3. Inside Intel

A good real estate agent may have inside knowledge about houses that are about to hit the market and aren't listed yet. Many times, they know the seller's agent personally and can find out if a sales price is flexible and what, exactly, it will take to get a deal done.

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Is There a Cost-Benefit to Buying a House Without a Real Estate Agent?

It depends. Many resources will tell you the seller traditionally pays the fee for both the listing agent and the buyer's real estate agent, so there's potentially no downside to having a guide for the buying process, especially if you’re a first-time home buyer.

However, according to the same report from the National Association of Realtors, that’s about half true. Their 2023 report said 48% of a buyer’s agent compensation was covered by the seller, 28% was covered by the buyer, and 14% was split between the two.

What Are the Reasons to Avoid Using a Real Estate Agent?

This really depends on your priorities and preferences.

For example, a home buyer's agent may refuse to work with properties that are listed as For Sale By Owner, or FSBO. These are homes being sold directly by the owner without the assistance of a listing agent, and typically come with some additional hurdles for buyers. So if you are set on trying to buy a property that is for sale by owner, you may have to go at it alone.

Even if your agent is willing to show you an FSBO listing, it's possible the seller will refuse to pay the commission. In that case, it'll fall to you, which means working with an agent would be more expensive.

You also may not need an agent if you have a personal relationship with the seller (for example, a friend or family member), but in that case, it's still a good idea to work with an attorney to be certain the purchase agreement is properly handled. Handling the process professionally will help to avoid the kind of situation that could damage your relationship with the seller.

Considerations for Purchasing a House Without a Real Estate Agent

As you house hunt, you'll be dealing directly with sellers or their listing agents. While you want to be polite, you should remember this is a potential business transaction and their goal is to sell the home for the highest possible purchase price. You'll be advocating for yourself, so the more research you've done on the neighborhood, the price of homes in the area, and real estate in general, the better.

If you've found a place you are interested in buying and are considering making an offer, it's time to hire a real estate attorney. Not every state requires a lawyer to buy a home, but you should almost certainly work with one regardless.

An experienced lawyer is essential for representing your interests during the negotiation process, especially without the assistance of a realtor. The lawyer will translate the complex jargon while the purchase agreement is being written. This is one of the biggest purchases you're likely to ever make, so it's worth spending money on a good real estate lawyer to avoid costly mistakes.

As long as you have access to the lawyer, you should ask any additional questions you might have about the negotiating process or closing documents. However, it’s important to remember that an attorney should not be used as a substitute for a realtor, as their roles in the transaction are not the same.

The Bottom Line

Now you're finally a homeowner! If this seems like too much, consider working with a real estate agent after all. If it looks exciting, however, then we wish you the best of luck on your search.

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