Is Buying a House Without a Real Estate Agent a Good Idea?

Can I Buy a House Without a Real Estate Agent?

Yes, it's generally possible to buy a home without an agent. That said, most homebuyers choose to work with a real estate agent, and attempting to go through the process alone could be both time-consuming and complex. Or, worse, it could end up costing you: When you buy on your own, you risk overlooking home issues an agent could have helped you catch.

Broadly speaking, a buyer's agent is tasked with negotiating the best possible deal for their client using years of expertise. Since the seller is likely working with a skilled agent who's looking out for their best interest, if you're buying on your own, you risk getting the worse end of the deal.

So, while it's not legally required that you work with an agent, you should be cautious if you're considering buying a home without one.

What to Consider When Buying a Home Without an Agent

Real estate agents wear many hats. If you're considering buying a home without one, you should start by considering the services they provide. Here's a look at some of what a buyer's agent is responsible for.

• Match you to homes in your area: One of an agent's first jobs is to get to know you and your preferences, sometimes offering insight into what neighborhoods may be a good fit for you. Then, they'll help you find homes that align with your location and your budget.
• Provide localized knowledge: Agents keep their finger on the pulse of local market conditions so they can guide you through hot seller's markets or help you take advantage of leverage when buyers have the advantage. Also, they can give you a sense of whether a home is likely to sell at or below its asking price—or tip you off when a highly desirable home is priced to set off a bidding war.
• Understand seller disclosures: Agents know their way around a seller's disclosure statement, so they're well-prepared to catch deal-breaking problems (such as an active pest problem or an intrusion of water) or to guide you to order additional inspections if you decide to make an offer.
• Put in a winning offer: When it's time to put in an offer, your agent is there to give you an edge. They'll help you choose a competitive offer price and consider other non-monetary additions to your offer, such as waiving certain contingencies, adding an appraisal gap or escalation clause and offering a larger earnest money deposit, as examples.
• Navigate the closing process: Agents guide you through the closing process by reviewing all closing documents, coordinating communication between you and the buyer, scheduling inspections and looking out for you during the final walk-through.

Does Buying a Home Without an Agent Save You Money?

While it may be possible to save money if you buy a home without an agent, it isn't that clear cut.

Potential to Save on Commissions

A buyer's agent commission is typically set at around 2.5% of the home's sale price. At that rate, if you buy a house for $300,000, the buyer's agent commission would come out to $7,500.

That said, in many cases, the seller covers commissions for both the buyer and the seller. This may still be the case in your market, even after recent National Association of Realtor (NAR) rule changes shifted the precedent.

While buyers can no longer always count on the seller covering both commissions, in some markets, they still do. Finding someone familiar with current conventions in your area can help you get a sense of what to expect.

Potential to Lose Money Elsewhere

One of a buyer's agent's biggest roles is to help you get the best deal for a home that fits your needs. It's up to them to make sure you're putting in a solid offer, and help you avoid deals that could go sour.

So, for example, a good agent will point out potentially costly problems—such as cracks in the foundation or red flags of water damage—which can point to expensive underlying issues.

It's also up to them to help you factor in the material condition of the home alongside comparable homes in your market to put in a good offer. They can steer you away from offering too much on a property that's priced above market value. And, on the other hand, they can tell you when a home is likely to go for more than it's listed for, increasing your odds of putting in the winning bid. When appropriate, they can also suggest you ask for seller's concessions to cover repairs.

All in all, a buyer's agent brings professional knowledge and seasoned negotiation skills to save you money, secure needed repairs and concessions and, crucially, avoid overlooking potential problems with the property.

How to Buy a Home Without an Agent

You should be cautious if you decide to buy on your own, and prepare for a good deal of research. For an idea of what's ahead, here are some steps you'll need to go through when you buy without an agent.

1. Work With a Lender to Get Preapproved

Getting preapproved for a mortgage before you start your home search has a couple main benefits. First, the preapproval process can help you get a better sense of what you can afford based on factors such as:

• Your credit
• Your income
• How much you have saved for a down payment
• Your other debts and monthly payments

By looking at how much your monthly payments would be based on your mortgage amount, you can get a firm sense of your budget and start your home search with confidence.

Beyond that, preapproved buyers have an edge when sellers review offers. A preapproval letter shows you're serious and ready to buy. That could make the difference between having your offer chosen or missing out.

Learn more >> Can You Make an Offer on a Home Without a Preapproval Letter?

2. Budget for Other Homebuying Costs

If you have money stashed away in a home savings fund, you may be planning to put all of that toward a down payment. But there are many other expenses that you should factor into the total amount of money you'll need to close, including:

• Appraisal and inspection fees
• Attorney fees (more on this below)
• Title insurance
• Loan fees (such as mortgage application fees, loan origination fees and fees to specific to FHA, USDA or VA loans)
• Private mortgage insurance (PMI) if you're putting less than 20% down on a conventional loan

Beyond your total closing costs, be sure you're also keeping cash reserves for the long-term costs of homeownership. Buyers should aim to keep a healthy store of savings—including an emergency fund—and you could also consider earmarking some funds for potential repairs after you buy.

Learn more >> How Much House Can I Afford?

3. Consider Hiring a Real Estate Attorney

Without an agent at your side, it's important that you have a legal professional to look out for your best interests.

A real estate attorney doesn't fill the shoes of an agent—they don't help you find homes or schedule a final walk-through, for instance—but they can help review legal documents with you, such as your offer and sale contract, before you sign. That can help you protect yourself and avoid leaving out necessary contingencies (which can end up costing you).

It's always a good idea to hire a real estate attorney if you don't have an agent, and in some states, it may be required. These states require that a lawyer be with you at the closing table (regardless of whether you have an agent):

• Connecticut
• Delaware
• Georgia
• Massachusetts
• South Carolina
• Vermont
• West Virginia

In other states, an attorney may not be a legal requirement, but it may still be considered customary. Be sure to research what to expect in your specific state.

4. Find the Right Home

Once you've got a set budget, you're ready to start looking at homes in your area. Without an agent to steer you toward neighborhoods and properties you may like, you'll need to find properties on your own.

• Research your ideal neighborhoods. Consider commute time, neighborhood feel, proximity to amenities, schools, walkability and other local perks that matter to you. Asking around your social network can be a good place to start. You can also check out Areavibes.com, which lets you search for a ZIP code to see scores on livability, amenities, cost of living and other rankings. Last, be sure to scope out the neighborhood in person.
• Set up home alerts. Once you have a sense of areas where you may like to buy, set up new listing alerts to get notified when a home is placed up for sale in your target areas.
• Tour homes. When you find a home you like, contact the seller's agent to schedule a tour. Without an agent at your side, you should go prepared to tour homes with scrutiny. Consider bringing a checklist to stay organized as you walk through homes.
• Request disclosures. The seller's disclosure sheet is a legal document that lists all known issues with the home, such as a damaged roof or the age of the HVAC. Carefully review the disclosures before you consider putting in an offer. Depending on what's revealed by the disclosures, you may decide to add inspection contingencies, which give you the right to negotiate repairs (or cancel the deal entirely) if the inspection uncovers issues.

Learn more >> What to Look for When Buying a House

5. Make an Offer

After you've found the perfect home and reviewed the disclosures, you may be ready to put in an offer.

When you work with an agent, they collaborate with you to draft an offer that's both competitive and aligned with your best interests. Without an agent, you'll need to be extremely cautious to ensure you're protecting yourself.

Offers become legally binding once signed by both parties. You'll need to bake all the necessary protections (such as inspection and financing contingencies) into your offer. Some states may have their own legal requirements for what goes into an offer letter, so be sure you're also conducting local research.

You can find templates online to guide you through the basics of what goes into an offer letter. But it's key to hire a real estate attorney to review the particulars of your offer letter for you and make sure that you're keeping yourself safe.

Learn more >> How Much Over Asking Price Should You Offer?

6. Navigate Closing

If your offer is accepted, you may be in the mood to celebrate. But, if you don't have an agent, you'll need to roll up your sleeves and prepare for a potentially lengthy closing process.

Without a background in real estate, it's important that you spend time researching all that's involved in settlement, including:

• The title review process
• Home inspections and appraisals (may not be required if you're paying cash, but each can help you protect yourself from financial loss)
• Final walk-throughs and what to look for
• Closing and taking ownership

Learn more >> How to Buy a House: Step-by-Step Guide

The Bottom Line

All things considered, it's probably to your benefit to work with a buyer's agent. Not only is their commission often covered by the seller, but they bring the skills to help you compete when you find the perfect home—and, conversely, to avoid putting in an offer you may later regret.

Apart from finding an agent you can trust, another big part of preparing to buy a home is getting your credit ready for a mortgage. Check your credit report and FICO^® Score^☉ for free through Experian for an in-depth view of where your credit stands now. From there, learn how to build your credit before you buy a house.