September 15th, 2019 9:33 AM by Jackie A. Graves, President
Most of the time, homebuyers opt to use a Realtor to help guide
them through one of life’s largest financial transactions. A real estate
agent’s job is to match you with a home that fits your budget and lifestyle
needs, and help you navigate making an offer, negotiations, the home inspection
and closing on your new place.
If you’re wondering whether you need a Realtor to buy a house,
the answer is no. Some buyers may hesitate to use a Realtor because they don’t
want to be saddled with Realtor fees.
Typically, though, buyers don’t pay the commission; sellers do. The commission
is about 5 percent to 6 percent of the home’s purchase price and is split
between the listing agent and buyer’s agent. Oftentimes, sellers build this fee
into the price of their home, which means you might pay more for the house.
Still, going it alone can be a risky bet. Before making your
decision, learn the pros and cons of buying a house without a Realtor to see if
it’s a good idea.
Real estate agents are professionals who
work on your behalf and advocate for your interests. In most cases, sellers
have a real estate agent working for them so you want someone on your side who
has your back in negotiations and can help you understand the complex lingo in
contracts, for example.
Laurie Blank, a licensed Realtor with Edina Realty in
Minneapolis, says that unless you’ve been through the process of buying
property before, it’s a better idea to go with a Realtor than not.
“There are too many legal loopholes and fancy terms that can get
overwhelming and confusing for someone who’s not well-versed in the real estate
business,” Blank says. “It seems too risky, considering real estate agents are
there on a daily basis to help people make decisions, using their experience
and continuing education requirements.”
Buyer horror stories
If you’re not careful, you could end up paying thousands of
dollars more for a home going it alone. One of a Realtor’s key tasks is to run
a comparable sales analysis (called “comps” in real estate speak) of homes that
are similar in size, condition and age to the home you want to buy.
A Realtor will evaluate the prices of homes that are currently
on the market and those that have sold in recent months to determine whether a
seller’s asking price is in line with market data. Otherwise, you could end up
overpaying for a home.
You could also wind up with a home that has serious issues,
having to sink money into repairs without help from the seller because you
didn’t have an inspection contingency in place or, worse yet, skipped the
“I’ve heard stories where buyers worked out terms for a contract
and found multiple, serious problems after they moved into the home,” Blank
says. She adds that legal jargon in the contract left those buyers with no
recourse to get their money back or require the seller to pay for repairs.
Mark B. Huntley, a former real estate attorney who now runs a
personal finance blog in San Diego, says nobody should buy a home without a
Realtor unless they know what they’re doing.
Huntley says he worked with a buyer who purchased a home without
an agent and relied on his own inspection to justify why he wanted to forgo
contingencies. That didn’t end well for the buyer, Huntley says.
“Turns out, the house was riddled with termites, and the buyer
had no legal way to get out of the contract, so he lost his $5,000 deposit,”
Reasons for buying a house without a Realtor
Buying a home without the guidance of a real estate agent might
make sense if you have a strong handle on how the process works and confidence
in your ability to navigate the deal on your own. Here are some common reasons
for buying a house without a Realtor:
There are a lot of moving parts that go into buying a house, so
you’ll want to ensure you have all the details down. Using a Realtor can save
you time and possible headaches down the road. After all, the buyer’s remorse
and money lost if you make mistakes will be more painful. If you decide to buy
a house without a Realtor, though, consider hiring a real estate attorney to
review the offer and purchase agreement.
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