Home Buying a home without a realtor?

[LauraLoo]

Hubs and I hope to buy a home soon and at this point, we are looking to do it without a realtor or broker. If we find that we are in over our heads and need some professional guidance, no prob. Does anyone have any experience with this? I keep hearing and reading that you should use one, that it doesn’t cost the buyer anything, that you want someone on your side representing you, biggest purchase ever, etc… That tells me nothing.

Does anyone have any specific reasons or experiences to share regarding why we do, or do not need a realtor representing us?

I contacted a listing agent for a house I wanted to see and set up a showing. I met the broker and just as I thought he was about to advise that he represented the seller, his last sentence came out “I work for YOU”. Oh, uh, no you don’t. I apologized for any confusion – I was clear about this when I contacted the listing agent. The broker, who we thought was going to be the listing agent, became upset and told us we were making a horrible mistake.

Totally willing to accept that it''s possible. But why???

 

[April20]

IMO, unless you''re familiar with buying real estate and all the comes with it- writing up the offer, negotiating the offer and the inspection report repairs,etc, I wouldn''t buy a house without a realtor. It doesn''t cost you anything to have someone that does this kind of thing every day and is skilled in negotiating things to your advantage and has your best interest in mind.

Is there a reason that you don''t want to use a realtor as a buyer?

 

[Mara]

our realtor was so valuable but he was really good. and yes it costs you nothing as the buyer.... the seller pays the realtor costs. i second april's Q re: why you wouldn't want to use a realtor? i am very independent in general as well, i would find houses for us to look at... but it really was helpful to have our realtor do all the legwork, gruntwork, paperwork for us. he made all the appts, we just had to show up. he lined up all the paperwork and dealt as 'us' if we couldn't do something (aka had to call the bank to ask a Q about something). if we couldn't be there for an inspection or needing to pick up some papers, he would do it. i can do some property and background searches but he could almost always one-up me with his resources.

also he knew a lot of people in the industry so he would know and find out more information than was 'listed' or put out up front as well. plus he also gave us tips on things we wouldn't think about like, no this is too much of a busy street, or you want to be 4-5 houses in from a slightly busy street, or well when you pass this street here, it's not as good of an area as 2 streets back (for resale).

it IS hard to find a good realtor but as a buyer i don't know why you wouldn't want one. as a seller, that's another story... since you pay the realtor costs.

 

[MichelleCarmen]

Opposite of your situation, my husband and I sold a house w/out a realtor. We did for-sale-by-owner and it went smoothly. We sold the house for a specific amount and used a mortgage broker who was a friend of ours - who gave us all a great deal/discount. There was an inspection of the house and we handled the paperwork ourselves. It went very smoothly.

We''re kind of considering buying the house we''re renting (we have time to decide) and again will not be using a realtor, but rather approaching the owner with an offer. But we, know her. . .different than approaching a stranger.

In every house my husband and I have owned, we''ve found the house(s) we''ve purchased, but had our friend (who''s a realtor and the above mentioned broker) write up the offer. I''m not sure, unless there was an unual circumstance - like already living in the home/renting - I''d want to be representing myself. In your shoes, I''d hunt online for houses, but find a realtor to represent when a deal is laid out.

Hope you find a great house!

 

[iheartscience]

I ditto what everyone else says. I''m not sure why you wouldn''t want a realtor as a buyer because they are totally free. I certainly wouldn''t use the listing agent of a property I want as my own realtor, but a realtor who is independent from the listing is very valuable.

Honestly, my realtor gets on my nerves a bit, but he''s been great in making it happen as far as inspections and repairs. We''ve had the usual whole house inspection, a flue inspection, and now we have to get a last minute roof inspection before we close on Friday. Plus he actually gave the seller names of contractors he trusts and uses often to make the repairs needed on the house. Without all his knowledge and contacts we''d be pretty stressed out at this point, and I''m pretty educated when it comes to real estate stuff.

I''ve found pretty much every house I wanted to see myself, including the one we''re buying, but his help has been very valuable...and it''s free to me. I''d definitely reconsider.

 

[lyra]

Since the realtor would be getting a commission from the seller, it''s in your best interests to go with one. He/she will work harder to get that commission, and might be able to get you a better deal in the end. I would look at selling without a realtor, but buying is so much easier with one.

 

[packrat]

We bought our house privately and it was a disaster. If we were to ever move, we would definitely list our house w/a Realtor and buy thru a Realtor.

 

[D&T]

Date: 8/11/2009 7:01:21 PM
Author: April20
IMO, unless you're familiar with buying real estate and all the comes with it- writing up the offer, negotiating the offer and the inspection report repairs,etc, I wouldn't buy a house without a realtor. It doesn't cost you anything to have someone that does this kind of thing every day and is skilled in negotiating things to your advantage and has your best interest in mind.

Is there a reason that you don't want to use a realtor as a buyer?

ditto. The only thing I would add, is if you knew the working of real estate sometimes, it is worth it to go without a buyer's agent because essentially the seller pays their selling agent X% commission then the Selling agent actually pays a percentage to the buyer's agent. Sometimes a buyer can go to the selling agent, and say hey "i don't have a rep" but are you willing to reduce your commssion and help bring down the price slightly even if they reduce their commission by 1-2% they still net more, since they don't need to split it with anyone else. The seller actually pays the commission to the selling agent, not both unless stipulated in the contract when they first list a house. I have helped several friends get buy on their own without an agent and they did fine, But if you are not familiar then I would caution and just get a season buyer's agent to help you close smoothly and successfully

 

[neatfreak]

Unless you''ve bought and sold houses before and know what it entails-use a broker!

Can I ask why the heck you wouldn''t want to use one?

 

[Kay]

DH and I are currently looking for a house without an agent of our own. We may change our minds later, but we are trying it this way first to see if we can get a better deal. The seller does pay the commission for the buyer''s agent, but that gets factored into the price. For instance, the 3% buyer''s agent commission on a $1 million house is $30,000. If we think a house is priced fairly, we can offer 3% less than the list price and it is the same as a full price offer to the seller (of course we would probably offer less to try to get a better deal, but that 3% is a nice bonus).

We would not attempt to represent ourselves if this was our first house purchase. We have been through the process before, and we are both attorneys who regularly draft and negotiate contracts.

 

[phoenixgirl]

We had a really good experience with our realtor, whom we knew to be very savvy and experienced (unfortunately, not using a friend who was neither savvy nor experienced as our realtor led to a break in a friendship). We bought our house in December of 2006 before the market crashed and it became a buyer's market. Our realtor negotiated the asking price for our house down over 6% even though the listing has just been dropped over 10%. And he convinced us to list our condo for higher than we thought reasonable and got full price (I believe to this day we sold for the highest dollar amount per square foot in a 96 unit building). All in all his commission that we had to pay him out of the sale of our condo was about $5k, but I credit him directly with saving/earning us almost $25k on the price of our house and the price of our condo. On top of that, we didn't have to research and deal with writing offers, setting up inspections, etc. ourselves.

If, however, we had gone with the aforementioned friend as our realtor, I think we could have kissed that $25k goodbye. There's more to it than just writing offers and setting up appointments. You need an experienced person who can skillfully negotiate (our friend would always say things like, "My clients want me to try to negotiate a lower price, but they're just going to insult the sellers!" . . . wrong attitude). Otherwise, you might as well do it yourself and use your lack of a realtor as leverage to get that 3% off.

 

[lucyandroger]

If this is your first home purchase, then I would say DEFINITELY use a realtor - an experienced, realtor.

There is so much that goes into buying a house that you couldn''t even possibly imagine. Realtors spend everyday going in and out of homes in the area where you live. They know how homes compare to one another, they know the market, they know standard practices for bidding in your area, they know the listing agents, they know about houses, and inspections, and apprasials...the list goes on...

My BF and I are both attorneys and we can''t imagine going into this process without our realtors. I really can''t imagine why someone would want to go it alone, IMO you''d be setting yourself up for trouble.

 

[LauraLoo]

*hey "i don''t have a rep" but are you willing to reduce your commission and help bring down the price slightly even if they reduce their commission by 1-2% they still net more, since they don''t need to split it with anyone else.*

*If we think a house is priced fairly, we can offer 3% less than the list price and it is the same as a full price offer to the seller (of course we would probably offer less to try to get a better deal, but that 3% is a nice bonus).*

*Otherwise, you might as well do it yourself and use your lack of a realtor as leverage to get that 3% off.*

These reasons exactly...

Thank you all for your input. It''s very helpful.

We figure why not try. If they don’t accept, OK - if we want it bad enough, we can go grab a realtor and the sellers agent can split the commission where they wouldn’t have to otherwise. Or we could contact a discount broker and possibly have some of the commission rebated to us. We would like most, if not all of our closing costs paid by the seller. I’ve heard to offer more than we would than if we were paying our own CCs and request they be paid by the seller. To me, that sounds no different than financing your closing costs.

I feel like at the end of the day, a broker is really working in their own best interest, not mine. I’m the only one working in my best interest.

A broker could possibly negotiate a lower price on my behalf. And I could possibly get a lower price by not using one. I won’t cost me anything but some time and effort to find that out and it could be worth it. We would never attempt this without legal guidance, by the way....

If anyone cares to share any disaster stories, I love to hear em.

Thanks!

 

[D&T]

Laura- you may want to check out Ziprealty.com they have a rebate back to the clients that use them, so they give a little bit of their earned commission back to you in the form of closing cost legally. So worth a shot. you are using a realtor still but some of their earned commission goes back to you. Sometimes, I would do that for a client when I worked in residential. whatever I earned, I would give like 25% back towards a closing cost. There are lots of ways that a realtor can still make some money and help a buyer out.

 

[Loves Vintage]

In some states, if you purchase a home from a seller who is represented by an agent, and you do not have one, then you are automatically represented by seller's agent. I doubt many of these agents would be willing (it's up to the broker really) to negotiate their commission down by much. The seller has already signed a listing agreement that says seller will pay them whatever percentage they have agreed to. The seller's agent/broker has no obligation to reduce their commission if the buyer is not represented.

Also, if you set the appointment with the listing agent directly, then you cannot go pick up an agent (after the fact) and say they are representing you in the transaction. As far as I know, the buyer's agent has to set the appointment, at least here in CT, that's how it works.

It's a buyer's market right now. You have so much negotiating power as it is. Good luck in your search.

 

[iheartscience]

Date: 8/12/2009 12:30:42 PM
Author: LauraLoo
*hey 'i don't have a rep' but are you willing to reduce your commission and help bring down the price slightly even if they reduce their commission by 1-2% they still net more, since they don't need to split it with anyone else.*

*If we think a house is priced fairly, we can offer 3% less than the list price and it is the same as a full price offer to the seller (of course we would probably offer less to try to get a better deal, but that 3% is a nice bonus).*

*Otherwise, you might as well do it yourself and use your lack of a realtor as leverage to get that 3% off.*

These reasons exactly...

Thank you all for your input. It's very helpful.

We figure why not try. If they don’t accept, OK - if we want it bad enough, we can go grab a realtor and the sellers agent can split the commission where they wouldn’t have to otherwise. Or we could contact a discount broker and possibly have some of the commission rebated to us. We would like most, if not all of our closing costs paid by the seller. I’ve heard to offer more than we would than if we were paying our own CCs and request they be paid by the seller. To me, that sounds no different than financing your closing costs.

I feel like at the end of the day, a broker is really working in their own best interest, not mine. I’m the only one working in my best interest.

A broker could possibly negotiate a lower price on my behalf. And I could possibly get a lower price by not using one. I won’t cost me anything but some time and effort to find that out and it could be worth it. We would never attempt this without legal guidance, by the way....

If anyone cares to share any disaster stories, I love to hear em.

Thanks!

But your own broker would likely negotiate the price down more than 3%. If the listing agent is getting less commission than they would usually get if they were representing both the seller and the buyer, where's the motivation to negotiate on the list price? That will cut down his/her commission even more. I'm about to close on my house Friday, and my realtor negotiated the price of my house down by 10% based on the prices of the recently sold comps in the neighborhood. You seem to have your mind made up, but I'll take 10% over 3%, personally.

 

[LauraLoo]

Yes, we would consider zip realty or Redfin. They do have minimum fees, so there could be no rebate, but again, worth looking into.

Also I believe you can contact a sellers agent and set up a showing and then later get a realtor. That is how discounters like Zip and Redfin work - they encourage you do to most of the leg work including viewing the house on your own. Then they step in and assist with the offer.

Stinks for the sellers agent and hence the reason these companies are not looked up that fondly, but hey, it''s a business transaction and we need to look out for us.

 

[D&T]

List prices are just list price usually over inflate if they have to use a realtor. Just to keep things in perspective, if you see a FSBO at 300k and if using a real estate agent, (if the agent thinks the price is fair) they will up it to say $318k or so then they would negotiate it maybe back to $300k. Please remember that when Listed prices have agents involved, most seller will inflate their *list* price to cover the expense of paying the seller agent. Especially if they have a loan and a home that they don't have that much in equity having to pay agents is a big chunck of change. I'm an advocate on both sides, I've been on both sides. It really depends on the comfort level and how familiar you are with real estate transaction. If it is your first home then I would suggest using an agent (not a fresh agent- either) someone in that part of town who specializes in that area at best

 

[October2008bride]

I''ll go against the grain and say that you could do it IF you are a good researcher. The ONLY thing I found useful about using an agent was that they had access to the past sale info on a particular house.

And as one person mentioned above, it is NOT free for a buyer. That extra $$ is factored into the price and if you and the seller both work privately, yes you can save that money.

If the seller has an agent, likely you will have to be represented by them (dual agency). If you are a savvy buyer, this can be a strong position and yes, the agent can negotiate a lower percentage as he/she will still get the half they were expecting to get (i.e. if the rate is 5% split between two, they can lower it to 3% or 2.5% (if you''re lucky) and pass the ''savings'' on to you).

Plus, it can work because the dual-agent is motivated to get the deal done as they can end up with more (3% instead of 2.5%) commission, so they might try to get the seller to negotiate more.

However, some agents won''t enter into a dual agency agreement because it isn''t in their client''s best interest. Worst case scenario is you have to bring in an agent at the last minute, but that would be awful in my eyes because that agent will have done almost NO work and is now getting 2.5%.

I could have lived without our realtor. I found the houses, did the research, and often knew more than him. However, I know for a fact that the seller''s agent has a policy against dual agency so that wouldn''t have worked for the house we bought.

Long winded - I''m sorry!

 

[Elmorton]

DH and I bought our house FSBO - our first house, I might add. Our broker was also the seller (they had a brokerage business on the side).

It was relatively painless. If I can help it, I''ll never work with a realtor. While others have said that it''s "free" for the buyer, you totally end up paying the price of having a realtor. The price of the house is going to be 20-30% higher because somebody has to get commission from the sale.

I''m really not sure exactly what a realtor does. In our experience, realtors couldn''t tell us anything about the house (and legally can''t tell you anything about the neighborhood). I don''t really have a problem making my own appointments to see a house. I didn''t have a problem looking up comps/knowing what I wanted, and I didn''t have a problem standing in the kitchen of the house I own "talking numbers." DH and I looked up in the online county records what the house sold for, what houses in the neighborhood were worth, and then we told the sellers that we were comfortable at a price 30% lower than their listing. They countered at 20% lower, and DH and I accepted. Granted, I''ve never worked with a realtor, but I have seen a lot of HGTV, and the process that took us 5 minutes, respectfully and face-to-face, seems to get a lot more hyped up/take longer when there''s a realtor involved.

Next, the sellers had the selling agreement printed up (which is a very simple contract in the world of contracts), we had our lawyer look over it, and that was done. We ordered a home inspection, were present when that happened, and then we re-negotiated after we saw what work needed to get done, since the selling agreement was pending the results of the inspection.

Then we waited for all our bank stuff to come through (this was all done through the broker, from what I understand, none of it would have been handled by a realtor if we had one), and then we met in a lawyer''s office and signed the paperwork.

Now, we did have a small legal issue that we took to small claims because the seller said they were going to do an update that they never did, but from what I understand, having a realtor wouldn''t have made a difference in that. Still, even with the small claims issue, I''d do a FSBO in a heartbeat. In fact, DH and I really don''t ever want to buy a house in another way. We both feel like the FSBO is a less-stress, more personable experience because you negotiate with the seller face to face instead of with a go-between.

So...from my experience, a realtor is not necessary for home buying, even if you have no clue what you''re doing. We found that there were clear instructions via the internet for every step of the way, and informing ourselves didn''t take any more time than it would have with a realtor, since we would have been double-checking everything we were told anyway.

A realtor is very helpful if you''re moving from a distance and you can''t commit to multiple visits to the property, etc, but if you''re doing a basic, cross-town move on a property that is straightforward, it''s a very simple process to buy a home without a realtor. Just make sure you''ve got a good broker that you trust and a lawyer who can advise you/be with you when you finally close.

 

[absolut_blonde]

Now, I'm not necessarily a 'fan' of realtors because I have worked with them in varying capacities and I believe they are a mixed bag. There are a fair amount of, well, crappy and lazy realtors out there (as with any profession) that I've encountered who are only focused on the volume business. I also know some very good realtors, including a cousin of mine - so I don't mean to bash the profession as a whole, I'm just pointing out that I'm hardly biased in their favour.

With that said, I'd never buy a pre-built house without one. There really isn't any downside to using a realtor, as a buyer, IF you have a good realtor. And I say that even considering that a) SO works in construction and b) I'm working towards getting my appraisal designation someday. We're obviously not newbies to the real estate scene, but even so I think a realtor can serve a very valid, helpful purpose in the process and save many people a lot of headaches. Plus, realtors have access to a whole wealth of information about sale prices (versus just list prices, which is usually all the general public can see) for comparables, and all sorts of other information to provide you with leverage when dealing with the other party & their realtor.

It's just like going through a mortgage broker, which we have also done & are currently doing right now: sure, we could go to the bank and shop around, but why not leave it up to an expert? IME, at least, you get fair better deals going through a broker than dealing with a bank directly. Letting a professional do the negotiating for you and having them deal with the BS is well worth it to me. Even if a pricetag comes attached, you generally get a better end result that makes it worthwhile. I find the same tends to hold true with a competent, skilled realtor- at least as a buyer.

ETA: Off-topic but I've not found realtors inflating list prices to be the case. If anything, they tend to lowball things ever so slightly so as to make a faster sale. We noticed this with our own home, since we know what it's worth and the comparables they tried to use were all inferior. If you ever read Freakonomics, it gives a good, brief explanation about why, as a seller, the realtor really isn't invested in getting you that extra 10k and is more invested in getting the house sold & out the door.

 

[D&T]

ETA: Off-topic but I've not found realtors inflating list prices to be the case. If anything, they tend to lowball things ever so slightly so as to make a faster sale. We noticed this with our own home, since we know what it's worth and the comparables they tried to use were all inferior. If you ever read Freakonomics, it gives a good, brief explanation about why, as a seller, the realtor really isn't invested in getting you that extra 10k and is more invested in getting the house sold & out the door.

As a realtor myself I have seen and have had to do some of these because you still have to factor the price of commission into the bottom line. Some people just don't have enough equity in their home, and can't sell for under their home prices (well nowadays you can - because the banks pays the commission not the seller - directly- in a short sale, however that means the seller needs to claim more deficiency on their home- so indirectly it does come out of the seller's pocket)
-regarding highlight, realtor still gets paid regardless if it's 6% on 10k is only less ($600) yes they want to sell the house fast, so they CAN still get paid, its sad but happens.
- I have invested several thousands of dollars in a listing before, so sometimes it is really earned by the agents. We are our own business, and we market, open houses, advertisements to help sale a house due diligence (on the selling side) just to give an idea what it also cost agents to do. Buying, not so much money invested, but time and efforts and investigation as well as mediator at times too


ETA:
-Some other items just to think about, Your realtor if you choose to have one, should really look for things that could go wrong with the house due diligence... IE: if there is a newly add overhang (is there a permit on it- did previous owners do this with out city knowledge) if not, you could be the one that could get fine should a city inspector comes around. No broker or home inspector will know this. Your realtor needs to investigate all the nuances with the particular house you are interested in. If the floor plans look a little off was there added square footage... if so, again you're going to have to see if these "were approved" so you don't happen to get stuck with a fine or anything or problems in the latter resale. Afterwards, there are ways to negotiate, that you could miss if you do it yourself.

There are pros and cons from using or not using a realtor. even on the Selling side.