Homebuyers, especially first-timers, often wonder if they need a Realtor to buy a house. Using a real estate agent isn’t required, but novice homebuyers can benefit from having an experienced professional guide them through the process.
If you’ve purchased homes previously and are familiar with the area where you plan to buy, you might be comfortable buying a home without a Realtor. In most cases, however, the pros of using a real estate agent outweigh the cons.
Do you need a Realtor to buy a house?
When you’re buying a house, there’s no rule that says you need a Realtor or real estate agent. There are more than 2 million real estate agents in the United States. This figure includes more than 1.5 million Realtors, who are members of the National Association of Realtors (NAR).
Using a licensed agent is the norm in the United States. In 2021, 87% of buyers used an agent or broker, according to data from a recent NAR report. Another 7% of buyers relied on the builder or builder’s agent while buying a new construction home.
There are some scenarios where you may decide you don’t need a Realtor to buy a house.
- You’re buying from a family member whom you trust.
- You’ve purchased property multiple times before, and you’re familiar with the process.
- You’re buying a “for-sale-by-owner” property, and the owner refuses to pay the agent’s commission.
On the other hand, there are many times when it’s beneficial to work with a real estate agent even if you technically don’t need an agent to buy a house.
Reasons you may decide to work with a Realtor include:
- You’re a first-time buyer, and you want professional guidance.
- You want to buy in an area that’s new to you.
- The agent can speed up the process of scheduling home showings and can help you find a home inspector, home repair services, and other professionals you’ll need when buying a home.
Why use a Realtor?
A Realtor is a licensed professional who specializes in helping homebuyers and sellers and is a member of NAR. If you’re buying a home, you should work with a buyer’s agent, who will represent you and put your interests first. The seller’s agent, also known as the listing agent, represents the current owner and will work to get the best deal for the seller.
There are several benefits to using an agent, which we’ll outline below.
Knowledge of the market
While you can do an online search and find homes for sale, a real estate agent can access the local Multiple Listing Service (MLS). The Realtor sees all properties as soon as they’re listed and can schedule a home tour. Agents also have access to data about previous sales, so they can tell you what similar houses in the area have sold for recently. That information helps you decide a fair price to offer for a house.
The home sellers will likely have a Realtor looking out for their interests. NAR reports that 90% of sellers used a real estate agent in 2021. With a buyer’s agent, you have a professional negotiating for you and putting your interests first. Your Realtor can advise you on comparable pricing and suggest contingencies to put in the contract when you find the right home.
Experience with the process
Buying a home is a complex process with multiple steps. You’ll need to get a loan, negotiate a contract, hire a home inspector, buy insurance, get a title search, and complete other tasks. A Realtor can guide you through the process and keep you on track to avoid missing crucial deadlines.
A network of assistance
Another reason to consider when weighing if you need a buyer’s agent is that they likely have an established network from their time in the industry. This can allow your agent to recommend who to call when you need a home inspector, insurance agent, or roof repair company.
How much do real estate agents cost? Fees when buying or selling
If you want to avoid hiring a real estate agent to buy a house because you want to save money, it’s important to understand how Realtors are paid. Realtors are paid a commission that’s usually between 5% and 6% of the home’s selling price. The seller usually pays the commission as part of the closing costs, and the agents for the seller and buyer split the commission. The agents may split the commission with their brokers, and they also cover marketing and other expenses. So, buyers don’t usually owe their agent any money.
As an example of what a Realtor’s fee is, a 5% commission on a $350,000 home would be $17,500, with each agent getting $8,750. You could argue that the agent’s fees are baked into the price of the home and try to negotiate with the seller to reduce the price by as much as they would owe a buyer’s agent. However, there’s no guarantee the seller will agree to that.
Since buyers don’t have any out-of-pocket costs for working with an agent, it may make sense to find a Realtor you want to work with.
In fact, you may even save money by working with an agent. An agent can provide you with up-to-date comparable sales to help you determine a fair price for the home. An agent will also ensure the contract has contingencies, such as an inspection contingency or mortgage contingency, that will allow you to break the contract should the home fail inspection or if you can’t qualify for an affordable mortgage.
Steps to buying a house without a Realtor
If you decide to buy a house without using a Realtor, you’ll have to do the tasks an agent would otherwise do for you during the homebuying process. That means you may have to do some of the research and negotiation the agent would typically handle, including:
- Get preapproved for a mortgage. Being preapproved by a mortgage lender confirms how much you can spend on a home and allows you to act fast when you find the house you want to make an offer for.
- Research your target neighborhood. This will allow you to get an idea of how much homes are selling for and what features are common.
- Hire a real estate attorney. A real estate attorney will help to prepare contracts and review paperwork.
- Find and visit properties. You can find properties online, and you’ll have to schedule home tours through the listing agent or the homeowner if it’s for-sale-by-owner.
- Ask to see the seller’s disclosure statement at homes you visit. Laws governing what sellers must disclose vary from state to state. These disclosures only include information the seller is aware of, however, so it’s essential to get the property inspected, too.
- Make an offer on the home. If you hired an attorney, have the lawyer help you draw up the contract and include contingencies for your financial protection.
- Get the home inspected. A home inspector will check the property’s major systems, assess the condition of the home, and help you determine possible repairs and maintenance costs. If significant repairs are needed, negotiate with the seller to lower the price or have the seller make repairs before the deal closes.
- Prepare for closing. You’ll receive the closing disclosure a few days before your closing. Review it closely and compare it to your loan estimate. Contact your loan officer if you have any questions.
Are you ready to start looking for a home? Talk to a local Finance of America Mortgage Advisor today to learn more about your options.