How to Buy a House Without a Realtor

Most people you know who have bought a home have probably done so with the help of a Realtor® or real estate agent. In fact, 92% of home purchases in 2021 involved a Realtor or broker. (Realtors, by the way, are real estate agents who belong to the National Association of Realtors, requiring them to adhere to a certain code of ethics; we’ll use the terms interchangeably here.)

But considering the commissions that agents charge, typically 5% or 6%, you might be asking yourself, “Do I need a Realtor or real estate agent to buy a house?” The answer is no — you aren’t required to go through a professional to complete the transaction.

That said, doing without an agent is not a decision to make lightly. Buying a house is likely the biggest investment you’ll ever make. Consider that the median sales price of a house sold in mid-2022 was $428,700, according to Federal Reserve Economic Data.

So if you make a mistake in the home-buying process, there’s a lot of money and possibly other risks on the line.

What Does a Real Estate Agent Do?

Before you decide whether or not to forgo a real estate agent, it can be a good idea to brush up on what they actually do.

Real estate agents are licensed to help clients buy and sell real estate. Realtors, as mentioned, have to follow an ethics code, which includes putting their clients’ interests first.

Unlike many other professionals, most agents don’t bill by the hour or job; instead, they only get paid if you actually buy or sell the property.

Among the work that real estate agents do for buyers is:

•   Look for property listings that fit their clients’ goals

•   Check out listings in person

•   Write offers and counteroffers

•   Be present for inspections

•   Help negotiate with the seller

•   Troubleshoot any roadblocks that come up

They can also often help with a variety of referrals, whether to a mortgage broker, a home stager, a real estate lawyer, or a contractor.

How to Buy a House Without a Real Estate Agent

If you want to join the few buyers who forge ahead and buy a house without a Realtor, it’s important to prepare yourself to take on the tasks agents normally do.

Especially if you’re green, it’s essential to learn how you can prepare to buy a home. Here’s a rundown of some of the key responsibilities you will likely need to manage.

Step 1. Find a Mortgage Broker

Unless you are an all-cash buyer, a mortgage broker can explain the different types of mortgage loans to you. Then you’ll fill out an application.

Step 2. Get Pre-Approved For a Home Loan

Once your application is processed, a pre-approval letter will let you know how much house you can afford and reassure sellers that you’re serious about buying. To get pre-approved for a mortgage, the lender will consider your income, your debt-to-income ratio, credit scores, and ability to make a down payment and meet closing costs.

Step 3. Research Neighborhoods

As you zero in on neighborhoods that meet your criteria, then it’s a good idea to do your research and learn the price of recent sales. This will help you understand if the homes you tour are priced correctly.

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Step 4. Hire a Home Inspector

When you find a home you’re interested in, it’s recommended that you hire a home inspector. This professional will issue a report that lets you know the ins and outs of a home’s condition and may lead to further negotiation.

Step 5. Request a Seller’s Disclosure

Ask for a seller’s disclosure, a document that can contain information about repairs and upgrades the seller did on the home as well as problems they’re aware of. You can ask them about any structural problems; condition of the HVAC, plumbing, and electrical systems; mold and mildew; termite damage; the presence of lead paint, radon, and asbestos, and so forth.

Step 6. Make An Offer

The offer will include the amount you’re offering, what you’d like to stay in the home (such as appliances), and closing dates. Including an inspection contingency in the offer means you can cancel the contract if something goes wrong without losing your deposit.

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Step 7. Hire a Real Estate Lawyer

It’s usually a good idea to hire a real estate lawyer to prepare documents and look over your contract before you sign it.

Step 8. Negotiate

Sellers, meanwhile, will likely include a loan contingency. During this part of the process, there may be counteroffers and negotiations between you and the seller about the price of the home or repairs you might want the seller to make. Keep copies of all communications as negotiations progress.

Step 9. Finalize Documentation and Close On Your Property

At the closing of the loan, you’ll need to sign documents and handle other aspects that a Realtor might typically help you with.

It is typically recommended that the buyer obtain owner’s title insurance, which protects the buyer against title defects such as mechanic’s liens and other after-closing problems. It usually costs about $1,000, but will vary with the price of your home and from state to state.

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Benefits of Buying a House Without a Realtor

Buying a home without a real estate professional can have some upsides. Here’s a closer look at the benefits you might reap.

1. Commission Savings

The main appeal of taking the DIY approach to a home purchase is keeping costs down if you are putting your home up for sale. As briefly mentioned above, in a U.S. home sale, the seller’s and buyer’s agents usually split a commission equal to about 5% or 6% of the property price.

Given the recent median home price of approximately $428,700 noted above, that means a homeowner who does not use a Realtor would save a commission of between $21,435 (5%) and $25,722. The seller is typically responsible for this fee, paid at closing from sale proceeds, unless you agree with the seller and seller’s agent on an alternative arrangement.

Even though you’re not directly responsible for this expense if you are buying, sellers may increase the selling price of the home in order to cover the cost of commission. So keeping agents out of the mix could reduce your overall costs.

2. Info Galore

Here’s another positive: If you’re planning on buying a house without a Realtor, you likely have access to some of the same information that the pros do. Historically, agents had lots of insider tidbits about listings.

Now, you can instantly find out about new properties and neighborhood demographics with the click of a button online. That means taking the buying process into one’s own hands is considered by some as increasingly feasible. Plus, there are an array of great tools to help you with calculations, like a home affordability calculator.

And since no one knows what you are looking for as well as you do, the search process can sometimes be more efficient.

3. A Familiar Real Estate Deal

One situation where it might make sense to eschew an agent is if a friend or family member is selling you the property.

Although risks may still be involved, the transaction may be more straightforward if you are buying a house from a relative or someone you know well. You still want to make sure you and the seller are clear on the price, closing date, what furniture or fixtures will be included, contingencies, and more.

It is typically recommended that a buyer review and approve home inspections and obtain full loan approval in writing before lifting certain contingencies.

If it is known that a contingency date cannot be met or another material change takes place after the contract is written, such as a seller credit for closing costs, a contract addendum executed by all parties outlining the change is usually obtained.

Drawbacks of Buying Without a Realtor

Not hiring a real estate agent or Realtor to assist you with your home search comes with disadvantages and risks.

1. All the Work

You have to be constantly on the ball, keeping a lookout for properties and arranging a time with sellers to visit them.

The process can be exhausting and time consuming, and if you aren’t attentive, you could let great homes slip by or make the hunt longer than it might have been with a real estate agent.

You’ll also have to navigate the world of mortgages (from the mortgage basics to possibly buying points to bring down your rate) on your own, without a referral.

2. All the Risk

You’ll be on the hook for all the details of the transaction. Without an agent, you’ll need to determine the correct bid price and terms, watch the contract contingency dates, and know the ins and outs of the purchase contract.

Agents are experienced in helping to point to hidden flaws in the property or transaction.

If you don’t have a real estate agent in your corner to help research the proper bid price, you may risk paying more than you need to on the home — which may work out to more money spent, even with the cost of commission.

3. Your Pool of Knowledge May Not Be That Deep

Agents have access to information that’s not necessarily online, thanks to their connections with other real estate agents, inspectors, etc.

Then there’s the experience factor. Most agents operate under a seasoned broker who oversees and consults on various transactions.

It could take a lot of effort to figure out what a Realtor has learned through years on the job and ongoing education. That learning curve may not be worth your time, especially if you are home shopping and the buyer’s agent commission is covered by the seller with no apparent price bump based on comparable listings.

Factors to Consider When You Buy Without an Agent

So now that you have read about how to buy a home without a Realtor, as well as the pros and cons, perhaps you are still thinking that flying solo is right for you. If so, do one more check-in and consider these factors:

Market Knowledge

You will not have in-depth, ongoing insight into housing prices in the area where you are searching. A Realtor can help you understand pricing history, potential upcoming property-tax hikes, local drainage or flood potential, and more. They are often skilled at pointing out distinctive features as well as potential problem areas with homes.

Negotiation Strategy

Real estate agents typically have years of experience knowing when a home seller is negotiable and by how much. They can guide you through offers and counteroffers, as well as bidding wars. They also know next steps if a home inspection points out significant problem areas or if there are hitches as you work through your mortgage contingencies. This can save you time and stress, as well as keep your deal in play.

Red Tape and Paperwork

Bidding on and purchasing a home involves all kinds of paperwork, including mortgage applications, offers, contracts, title searches, and more. For someone who is not familiar with the process (you, quite possibly), this can be a steep, time-consuming, and possibly frustrating learning curve. A Realtor can help alleviate a chunk of this burden.

Professional Connections

As noted above, it can take a village of professionals to finalize a home sale. Some of the people who may be involved include mortgage brokers, home inspectors, roof inspectors, real estate lawyers, contractors, and more. Most real estate agents have an extensive network to quickly get you the connections you need to qualified professionals.

The Takeaway

Do you need a real estate agent to buy a house? No, you don’t. It’s entirely possible to learn how to buy a home without a Realtor and avoid paying the commission (or higher price that a broker’s fee can trigger). Just realize all of the work and risk involved in finding a home, making an offer, handling contingencies, and closing the deal.

Whether you do or don’t use a real estate agent, if you’re not an all-cash buyer, you’ll need to finance the purchase.

SoFi can help: We offer mortgage loans with competitive rates, and qualifying first-time homebuyers can put as little as 3% down.

Check your rate on a SoFi mortgage, and see how simple getting a home loan can be.

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